Publish Licensed Real Money Gambling Apps on Google Play
A Legal and Sectoral Review in Light of Google's Decision to Add Turkey to the List of Countries Allowed to Publish Licensed Applications for Real Money Gambling on Google Play
Gambling and betting games have become highly popular in the mobile gaming industry, ranking among the most lucrative types of games. However, there are different approaches to gambling and betting games worldwide. In Turkey, playing gambling/betting games is tightly regulated by legislators. Therefore, Google's announcement that it will allow gambling games through the Play Store in Turkey has drawn attention. According to Google's announcement, only officially licensed online casino games, sports betting, and lottery games will be allowed to be published on the Google Play Store, whilst subject to application and licensing requirements.
Article 8 of Law No. 5651 on the Regulation of Publications Made on the Internet and Combating Crimes Committed Through These Publications, comes to mind and raises questions about how Google’s inclusion of Turkey will be applied in the future. Additionally, the issue of how minors under the age of 18 and consumers will be protected in this application has also come to the forefront.
The other countries where gambling games are allowed, along with Turkey, are listed as Australia, Austria, Belgium, Brazil, Canada, Colombia, the Czech Republic, Denmark, Finland, France, Germany, Ghana, Greece, Ireland, Japan, Kenya, Mexico, the Netherlands, New Zealand, Nigeria, Norway, Portugal, Romania, Serbia, Spain, Sweden, Switzerland, the United Kingdom, and the United States. However, ultimately, how can a betting license be obtained in Turkey?
In this article, we will examine the criteria offered by Google to developers for publishing gambling games on the Play Store, the requirements and regulations for obtaining a betting license in Turkey, and compare two countries, Malta and Curaçao, which are frequently applied to and have different approaches to betting licenses.
- Guidelines for Publishing Gambling and Betting Applications on Google Play Store
For application developers to publish gambling and betting applications to users in Turkey, they need to meet the requirements set by Google. In terms of Turkey, complying with the "Gambling Apps" rules in the Play Store conditions is mandatory. Upon examining the relevant rules, it is necessary for the developer to;
- Complete the application process for gambling apps published on Google Play,
- Be an approved official operator and/or be registered as a licensed operator with the competent state authority for gambling and games of chance in the specified country; and
- Hold a valid business license in the specified country for the type of online gambling product it wants to offer.
Google only allows applications related to online casino games, sports betting, horse racing (in cases where it is regulated and licensed separately from sports betting), lotteries, and daily fantasy sports. In the context of Turkey, these types are defined as online casino games, sports betting, and lotteries. Additionally, the following conditions are required for these mentioned applications:
- The developer must successfully complete the application process in order to submit the app on Google Play.
- The application must comply with all applicable laws and industry standards in each country it is distributed.
- The developer must have a valid gambling license for each country or state/administrative region where the application is distributed.
- The application must not offer gambling products that exceed the scope of the gambling license.
- The application must prevent underage users from access and use.
- The application must block access and usage from countries, states/administrative regions, or geographic areas that are not covered by the provided gambling license.
- The application must not be offered as a paid application on Google Play and must not use Google Play In-app Billing service.
- The application must be available for free download and installation from the Google Play Store.
- The application must have an Adults Only (AO) rating or an equivalent rating from IARC.
- The application must clearly display information about responsible gambling in the application and at the application's entry.
As seen here, Google's update does not grant the right to publish gambling games in Turkey on Google Play to non-licensed developers. It only provides such an opportunity to existing licensed developers with an operating license. Therefore, no application is being made that contradicts the legislation in Turkey, as will be further explained below.
- Obtaining a Betting License in Turkey, Malta, and Curaçao
- Betting License in Turkey
- Licenses Granted
In Turkey, a license for betting activities can only be granted by the Presidency of Sports Toto Organization, or it can be conducted through the authorized Sports Toto Street retailers. Online betting games can only be established when a betting license is granted by the Presidency of Sports Toto Organization, and ultimately the licenses issued are club licenses. Therefore, operating betting games without a license from the Presidency of Sports Toto Organization is considered illegal.
- Classification of Games as 'Gambling' and its Penalties
According to Law No. 7258 on the Regulation of Betting and Games of Chance in Football and Other Sports Competitions, fixed probability games are understood to be games where the results and events are organized based on the prediction of outcomes and participants earn winnings with predetermined betting odds. Due to the nature of playing these games for profit and the dependence of losses on chance, including online betting games operated through information systems, they are considered as gambling under the Turkish Penal Code and Law No. 7258.
Article 228 of the Turkish Penal Code regulates the offense of providing a place and opportunity for gambling, and Article 5 of Law No. 7258 is a special provision of the same offense. According to this article, engaging in illegal betting games, providing a place or opportunity for their operation, facilitating the transfer of money related to illegal betting offenses, advertising domestic and international betting games, and encouraging individuals to participate in these games constitute criminal offenses. The penalty prescribed for the offense of operating illegal betting and providing a place is imprisonment for a term of 3 to 5 years and a fine of up to 10,000 days. The penalty for the offense of providing a place for the playing of betting games conducted abroad in Turkey is imprisonment for a term of 4 to 6 years. The offense of facilitating the transfer of money is punishable by imprisonment for a term of 3 to 5 years and a fine of up to 5,000 days. Finally, the penalty for advertising and encouraging individuals is imprisonment for a term of 1 to 3 years and a fine of 3,000 days. In case an investigation is initiated by the prosecutor's office regarding these offenses, it is possible to block the suspects' bank accounts and credit card accounts or impose a travel ban.
When these offenses regulated in Article 5 of Law No. 7258 are committed through information systems, it constitutes a qualified form of the offense. Article 8 of Law No. 5651 on the Regulation of Publications Made on the Internet and the Fight Against Crimes Committed Through These Publications stipulates that access to the website will be blocked if a place and opportunity are provided for gambling. In cases where the offense is committed over the internet, the location of the content provider and the place where the hosting service is provided by the hosting provider come into play. If there is sufficient suspicion that the content provides a place and opportunity for gambling, regardless of whether they are located outside of Turkey, a decision to block access may be made.
- Betting License in Malta
- Conditions for Obtaining a License
In 2018, the Virtual Financial Assets Act (VFAA) came into effect. The legal framework for obtaining a betting game license is provided in Article 13 of the VFFA. According to the relevant article, the license must be issued by the Malta Financial Services Authority (MFSA), and the cryptocurrencies used must be approved virtual financial assets under the VFAA and Maltese laws. Additionally, individuals who wish to manage virtual financial assets under the VFAA services are required to have a corporate entity status in Malta, as stated in Section 3 of the Virtual Financial Assets (VFA) Rulebook.
The application for a betting license will be structured as a game license application.
The conditions required in the application include:
1. A detailed business plan as a primary requirement.
Within the scope of the business plan, it is necessary to ensure the appointment of officials who comply with Anti-Money Laundering (AML) and Know Your Customer (KYC) measures and demonstrate the necessary diligence. Additionally, compliance requirements are essential. In this context, regulations should be made regarding compliance activities, principles, and appointments. Information and documents related to risk methods, precautionary measures, business plan, applicants' strategies, and financial situations are required.
Planning and document preparation should be carried out concerning audit and control mechanisms, as well as the board of directors and senior management. Provision should be made for reconciliation methods and regulations regarding the protection of customer assets. Furthermore, details regarding outsourcing and white label arrangements need to be elaborated upon. Regulations should be made regarding system audits and the placement of key roles such as the VFA representative.
2. Applicants for the game license will undergo an eligibility test, examining the applicant's honesty, reputation, competence, expertise analysis, and financial stability. This test will also be applied to the board members, beneficial owners, and individuals in senior positions within the company.
3. The applicant company in the license application must have a board of directors consisting of at least two individuals. The board members must possess appropriate and sufficient knowledge and experience.
4. There is a requirement for the appointment of certain officials, such as the VFA agent/auditor, system auditor, technical system administrator, custodian, auditor, and an officer for preventing money laundering.
5. An Initial Capital payment of 730,000 Euros must be made. The application fees vary depending on the license type (Class 1, Class 2, Class 3, or Class 4).
The license application process can take around 6 months to 1 year, including the collection, submission, and examination of the necessary documents, as well as the issuance of the license. The validity period of the issued license is 10 years, and upon its expiration, reapplication may be required.
- Cost and Valid Countries/Regions
The Malta Gaming Authority defines four types of license categories for gaming licenses. Specifically, licenses for games played by placing bets on outcomes, such as "betting exchange," are considered to fall under the Class 3 license category. However, applicants for a gaming license can also apply for Class 1, Class 2, or Class 4 licenses based on the games they offer. According to the Virtual Financial Assets Act (VFAA) enacted in 2018, applicants can now directly apply for this gaming license as B2B or B2C, depending on the type of game, and it is considered to encompass licenses that cover other types of games as well. B2C licenses are granted for betting licenses, and the Annual Fixed Fee for a Class 3 B2C license ranges from a minimum of 25,000 euros to a maximum of 500,000 euros, which is non-refundable. The fees for other license categories vary for betting games. The Class 1 B2C license has a fee ranging from a minimum of 15,000 euros to a maximum of 375,000 euros. The fee for Class 2 B2C gaming licenses ranges from a minimum of 25,000 euros to a maximum of 600,000 euros, while for Class 4, it is between a minimum of 5,000 euros and a maximum of 500,000 euros.
The requirement for the Initial Capital Payment is 730,000 euros. Additionally, Regulatory Fees, Reporting Fees for System Audit Reports, and fees for the appointment of associated partners should also be taken into account. The Annual Supervisory Fee paid to the MFSA starts from 50,000 euros and can reach up to 1,000,000 euros. Furthermore, the transaction fee for the System Audit Report, which must be approved by the Malta Digital Innovation Authority, is 3,000 euros.
Finally, the applicable corporate tax rate is shown as 35%. Depending on the imputation tax system, a 5% tax credit is applied to company shareholders.
Due to Malta's membership in the European Union, it is assumed that the regulations regarding the gaming license (B2C Gaming License) comply with the Treaty on the Functioning of the European Union (TFEU). Therefore, the gaming license will not be subject to restrictions in EU countries. The privileged gaming license issued by Malta is valid in any country where online betting/gambling games are not prohibited.
Countries where the license is not valid include those that have been blacklisted by the Financial Action Task Force (FATF) and countries that have laws requiring local licensing. According to the FATF's February 2020 report, two countries are on the blacklist: Iran and North Korea.
- Betting License in Curacao
- Conditions for Obtaining a License
The Curaçao Internet Gaming Association (Curaçao Internet Gaming Association - CIGA) regulates online games and betting licenses in Curaçao. To obtain a betting license, it is required to have a company based in Curaçao and a local representative. The betting license is granted as a sub-license. The main license (master license) can only be issued by the Ministry of Justice. Since 1994, there have only been four companies (Cyberluck Curaçao N.V. (Curacao-eGaming), Gaming Curaçao (GC), Curaçao Interactive Licensing N.V. (CIL), and Antillephone NV) holding the main license. Therefore, gaming licenses are generally issued as sub-licenses. Sub-license agreements are not categorized into different types and are valid for various types of betting games, similar to other gaming licenses.
New types of gaming licenses will be introduced in Curaçao in the summer of 2023: C2B, which stands for Consumer to Business, will be a new Curaçao gaming license that is adaptable, cost-effective, and supportive of the needs of gaming professionals. Additionally, the B2B, Business to Business, license will allow service providers to legally offer their services to other gaming operators, promoting industry expansion.
Some documents and requirements needed for a sub-license application:
1. Identification of the Ultimate Beneficial Owner (UBO) of the company and the UBO's eligibility test. Along with the UBO, other beneficiaries, partners, shareholders, authorized individuals, officers, and auditors of the company must meet the eligibility requirements. The applicants' criminal records are examined through an eligibility test, and there should be no criminal offenses in their records, which requires obtaining a certified document/report from the police. Copies of the approved passports of these individuals must also be provided. Finally, documents demonstrating due diligence and compliance with KYC (Know Your Customer) rules and procedures need to be submitted.
2. A document specifying the content of the game subject to the license should be provided in detail. Documents such as proof of domain ownership and copies of software agreements, if applicable, along with details of the certified Random Number Generator (RNG) software, are required. The RNG Certificate ensures the regulation of algorithms within the game to prevent situations like the highest reward not occurring in the first attempt, especially in games of chance.
3. A bank reference is required, demonstrating a relationship of more than two years. If available, a reference from an accountant or lawyer based on a relationship of more than two years is also necessary.
4. A detailed description of the betting game's content, game rules, and website rules should be provided. As a general rule, access to the game should be blocked for individuals under the age of 18 and for residents of the United States and the Netherlands Antilles.
The application process for a betting license can take 2 to 3 business days if all the necessary documents, duly notarized, are submitted. However, the process of obtaining the required documents and meeting the conditions generally takes 1 to 3 months. In Curaçao, since the betting license is in the form of a sub-license agreement, the durations are dependent on the validity period of the main license. The validity period of the main license is 5 years and is subject to renewal.
- Cost and Valid Countries/Regions
The cost of a betting license generally varies depending on the characteristics of the game. The price range for a sub-license agreement is between 15,000 euros and 20,000 euros. Sub-licenses for online games can cost around 16,900 US dollars (USD). Additionally, the fees for auditors and authorized personnel will also be added to the cost.
The sub-license agreement is valid in Curaçao. Citizens of countries outside the prohibited countries listed in the sub-license agreement, such as Curaçao, the United States, Belize, the United Kingdom, Germany, and the Netherlands, can participate in and place bets on games under this betting license.
When looking at the requirements for obtaining a betting license in Malta and Curaçao, it can be seen that accessing the online gaming industry in Curaçao is relatively easier. The cost of obtaining a license in Curaçao ranges from 15,000 euros to 20,000 euros, while in Malta, even the initial capital requirement for a license is 730,000 euros. Considering that Malta is a member of the European Union and has stricter rules against money laundering, it is evident that the laws and costs are higher. In Turkey, obtaining a betting license is quite difficult and possible only in limited cases, and decisions to block access are frequently made under Law No. 5651 upon the detection of any gambling game on the internet. Additionally, providing a place and opportunity for gambling is a punishable offense under the law. In this context, an application that allows playing betting games within the borders of Turkey on Google Play Store without an official license would not comply with Google's rules and would also constitute the offense of providing a place and opportunity for gambling under Article 228 of the Turkish Penal Code.