The meteoric rise of online betting has resulted in a plethora of high-profile brands entering the market seemingly out of nowhere. Many of these platforms were based in tax-friendly offshore jurisdictions that offered several notable advantages, including friendly tax policies and an increased degree of privacy.
Some of the most successful online bookies are based in popular offshore jurisdictions, such as Curacao, the Marshall Islands, the British Virgin Islands, Bermuda, etc.
Such a sharp rise in the number of offshore betting sites has been particularly convenient for non-Gamstop brands, moving from the British Isles to more favorable tax regimes.
This trend gained momentum during the COVID-19 pandemic, which saw a surge in online betting activity worldwide. But how have offshore sportsbooks and casinos fared since then?- It will probably not come as a surprise that they are not just getting by, but thriving.
What Makes Offshore Betting Sites So Attractive?
The increasing popularity of offshore betting platforms has not been unexpected for industry insiders and punters. One of the biggest benefits of such betting sites is their accessibility, which allows punters from over 100 jurisdictions to register and fund their accounts in a matter of minutes. Despite existing KYC and AML policies, offshore betting sites are generally subject to much less regulatory scrutiny than traditional sportsbooks in the United States and the UK. Easier onboarding and account opening procedures make it much more straightforward for new clients to register and start betting. This is especially appealing for high-rollers and VIP clients.
Privacy and anonymity are also important issues. Some offshore sportsbooks allow deposits and withdrawals in cryptocurrencies like Bitcoin and Ethereum, which attract users seeking more discreet transactions and faster payouts.
Furthermore, fewer restrictions on betting types, such as player props and live betting, make offshore platforms more versatile. On the other hand, platforms regulated in the UK and the United States have to comply with stringent laws and regulations that limit their offerings.
A smaller, but important, factor to consider is familiarity. Before the 2018 repeal of PASPA, offshore sites were the only options available to most U.S. punters. For this reason, many clients of offshore bookies have remained loyal to the brand even after the repeal of PASPA.
Regulatory Challenges Facing Offshore Bookies
While offshore bookies may have retained a growing bottom line, this does not mean that they do not face any challenges. Quite the opposite, most regulators have increased pressure on offshore sportsbooks and casinos to adopt stricter AML policies to deter potentially illicit activities and money laundering through their platforms.
However, the most prominent issue facing offshore betting platforms is the lack of legal recognition, which puts their legal status in limbo, making it difficult to make long-term operational plans and consistently meet them.
Furthermore, a majority of offshore betting platforms are subject to lenient or weak laws in their home jurisdictions, coupled with a lack of third-party service providers, which greatly complicates their daily operations.
This legal ambiguity also means that surprise policy changes and license cancellations are not uncommon.
Betting and payment processing are yet another significant hurdle. Many banks and payment processors outright refuse to cooperate with offshore betting companies due to AML policies and compliance concerns, which makes it difficult for these bookies to offer secure deposit and withdrawal methods.
Long-term Opportunities for Offshore Bookies
Despite the legal hurdles, offshore bookies have numerous opportunities to continue their path to long-term growth, especially with the evolving attitudes of the world towards online sports betting.
Since more countries realize the economic prospects of legalizing online sports betting and casino platforms, the legal side of the equation is likely to liberalize in the future.
Such changes can prompt major offshore betting platforms to formalize and reshore their operations while expanding market coverage and building trust with clients.
Offshore bookmakers also benefit from being first-movers. Many of them have huge customer bases, advanced platforms, and a strong brand name. Some have already expanded their presence to Latin America, Africa, and many regions of Asia, where regulations are more lax but are emerging.
The rise of crypto presents another path for offshore bookies. As more countries become more crypto-friendly, the attitudes towards crypto sportsbooks and casinos are gradually shifting as well. This presents huge opportunities for growth, as most punters prefer using cryptocurrencies when it comes to online betting and playing casino games.
The use of decentralized finance also eliminates some of the pressure derived from the lack of financial intermediaries willing to work with offshore bookies.
Overall, despite many challenges, the offshore betting industry is alive and well, poised to take on opportunities presented by changing global attitudes.
