Gaming Industry Regulations in Western Sahara: What Investors Need to Know 

• The regulatory environment around the gaming industry in Western Sahara is complicated and rapidly changing. Therefore, it is important for any potential investor to thoroughly evaluate these factors before doing business in the region. One of the key influences on regulation in Western Sahara is the territory’s political status, and there are still limited options for local licensing. Therefore, any company wishing to obtain and operate under a Western Sahara Gaming License need to carefully consider its legal framework, legitimacy, and acceptance outside of the region. 

• The overall size of the global regulated gaming market will continue to grow at a fast pace over the next several years, generating revenue of greater than US$150 billion annually. Many newer jurisdictions are gaining interest from gaming operators because of increasing levels of digitization and the introduction of cross-border gaming. However, these jurisdictions may not provide sufficient protection against the potential impact of legal, banking, and reputational risks. Therefore, there are several important considerations for these jurisdictions, including the validity of their licenses, compliance with anti-money laundering (AML) and counter-terrorism financing (CFT) regulations, ability to process payments, and alignment with international norms of corporate governance. 

• Through its strategic advisory services, Tetra Consultants helps gaming investors set up compliant, defensible, and sustainable gaming operations while providing ongoing support in establishing an international corporate business structure, meeting regulatory compliance requirements, and securing banking services. 

Things to know before entering gaming industry regulations in Western Sahara 

Regulatory and legal ambiguity 

• The political and legal ambiguity of Western Sahara creates uncertainty in the applicable regulations governing Gaming. Additionally, investors will need to determine if the licensing framework(s) in the territory is enforceable in Western Sahara and acceptable outside of its borders. This ambiguity will impact the long-term legitimacy of their operations, including dispute resolution, and the ability to defend themselves against regulatory action. 

Licensing validity and recognition 

• The value of a gaming license is determined by whether the license will be accepted by banks, payment processors, and other businesses. Therefore, investors should seek to determine whether a gaming license from Western Sahara is recognized outside of the territory and if it will be used to facilitate international transactions. 

Applicability of international gaming standards 

• Due to the lack of mature local regulations, gaming operators will still be expected to follow internationally accepted standards; therefore, operators should align themselves with global best practices for gaming, responsible gaming, and compliance. This will enhance their credibility and limit their exposure to regulatory and reputational risk. 

Compliance obligations and AML/CFT obligations 

• Due to the global regulatory environment for AML (anti-money laundering) and CFT (counter-terrorist financing), gaming operators will increasingly be subjected to scrutiny. Although AML and CFT enforcement may be less stringent in the country where your gaming operations are based, financial institutions that are providing banking and payment-processing services will require Investors to establish and implement strong compliance programs that include KYC (Know Your Customer), transaction monitoring, and reporting controls. 

Banking fees, payment processing challenges, and barriers 

• For gaming operators, gaining access to reliable banking and payment processing services may be one of their largest barriers to success in countries deemed either “high-risk” or lacking definitive regulation. Most financial institutions take the time to assess jurisdiction risk, thereby requiring proper structuring of a gaming operation along with supporting compliance documentation to ensure that a gaming operation can continue to operate in the respective jurisdiction. 

Corporate structure and substance 

• Gaming operations typically require the establishment of an adequate corporate structure that may involve the creation of one or several entities located within jurisdictions that are widely recognized. It is important for investors to ensure that their respective ownership, management and economic substance arrangements provide the investor with the necessary regulatory credibility, the ability to gain access to banks, and the ability to sustain growth over time. 

Cross-border operational risks 

• The majority of gaming revenues are generated internationally through the use of an online gaming platform. Therefore, investors should be cognizant of the relationship between the licensing requirements of the jurisdiction of Western Sahara and the laws, rules and enforcement of applicable player protections in the respective markets where the investor intends to market and sell their products. 

Cybersecurity and data protection responsibilities 

• Gaming Platforms store and maintain highly confidential customer and payment information. Regardless of the extent of development of local data protection and cybersecurity laws, an investor will have international obligations to protect the privacy of the customer and to comply with cybersecurity requirements, particularly when serving customers located in regulated markets. 

Uncertainty in taxation and reporting 

• There appears to be a lack of clarity surrounding the categorization of gaming revenue in Western Sahara for tax purposes. When evaluating gaming-related investments in Western Sahara, prospective investors should carefully consider their potential exposure to payment of indirect taxes, foreign tax claims, or a reporting requirement to any other jurisdictions that contain either their gaming players or their gaming servers. 

Flexibility for exit and restructuring 

• As investors operate in a regulatory environment that is not well defined, it would be prudent to build an exit and/or restructuring strategy that allows for the necessary steps if regulations change or the geopolitical environment shifts. Therefore, it is important for investors to build flexibility into both their licensing arrangements, corporate structure, and contracts with game operators. 

Conclusion 

• Due to the uncertain landscape of the gaming industry in Western Sahara, in addition to increasingly higher expectations for compliance and the sensitivity of banking practices, it is important for investors to develop a carefully thought-out and carefully structured business plan. Investors should first evaluate the legality of licenses, then assess cross-border enforcement and the obligations related to Anti-Money Laundering (AML) and Counter Financing of Terrorism (CFT) and finally assess the ability to sustain a viable business operation with the resources at hand. Failure to create consistency between regulatory, corporate, and financial structures can leave operators open to the risk of legal uncertainty, disruptions in payments, and reputational damage. 

• Tetra Consultants provides gaming investors with comprehensive consulting services, including the registration of international companies, creation of gaming licenses, development of nominee director and shareholder services, corporate bank account opening, and providing ongoing assistance with regulatory compliance consulting. By providing jurisdictional analysis combined with strong governance and bank coordination, Tetra Consultants assists investors in creating compliant, defensible and scalable gaming businesses that meet the requirements of the international regulatory and commercial environments. 

• Contact us to know more about gaming industry regulations in Western Sahara and we will get back to you within 24 hours.