Most affiliates know that entering the US market is a challenging undertaking due to the unique licensing requirements presented by individual states. But beyond securing a licence, what else do they need to consider? By ERIC FRANK
There’s a key line in season three of the West Wing as President Jed Bartlett plays chess with his communications director, Sam Seaborn. “Look at the whole board,” the president says.
Though that episode first aired nearly 20 years ago, the lesson behind that quote sticks with me to this day. At the time, Bartlett was using chess as a metaphor for the importance of strategy in dealing with a complex international military event.
Fortunately, the licensing process for marketing affiliates looking to enter the US sports betting and online gaming market is a little less complex – and has lower stakes. But Bartlett’s lesson still holds true.
Getting licensed in the US involves so much more than simply filling out the CPA gaming application and calling it a day. There are legal requirements, strategic decisions and tax consequences beyond the simple application that need to be considered and addressed.
Before sitting down to play, then, affiliates should look at the whole board and prepare thoroughly and appropriately.
Corporate requirements
In the licensing process, as in chess, it is critical to think several moves ahead. By filing a state gaming application, you are submitting yourself/your business to the jurisdiction of that state and the requirements for conducting business in that state.
While the gaming regulations and applications in various states may not specifically spell it out, conducting business in each state entails compliance with a host of non-gaming specific requirements, including those related to foreign qualifications and registered agents.
Failing to accurately and comprehensively meet these obligations can impact your gaming licence process in one or more states, your ability to sell down the line and much more.
Gaming licensing requirements
While this is the chess piece most affiliates understand the best, tackling gaming licensure submissions in a highly organised fashion is key to speed-to-market and the long game.
Seeing the whole board requires affiliates to be keenly aware of requirements well beyond the application stage, particularly relating to notification and renewal requirements.
Tax
Affiliates must also understand their tax reporting obligations vis-à-vis their sports betting and online gaming operations in each state.
Conducting business in a state often necessitates certain tax reporting obligations in that state, even when you owe no tax.
Further, there are US federal tax reporting obligations associated with a marketing affiliate business.
“In life, as in chess, forethought wins”
Charles Buxton’s famous quote is an apt message to finish on. As the US market rapidly expands, it’s critical that affiliates take the time to plan and prepare. Having forethought in the planning phase will save affiliates valuable time and money and help them avoid painful headaches down the line in trying to resolve these issues.
The information provided in this article does not, and is not intended to, constitute legal advice; instead, all information is for general informational purposes only.
Eric Frank
is the founder of EDF Compliance, LLC, a compliance consulting company for the gaming industry and beyond. Eric served as global group compliance officer for The Stars Group and has unique expertise navigating complex compliance and regulatory matters throughout the world. He also has over a decade of experience in private practice at one of the world’s largest law firms, advising gaming clients on a full range of regulatory and licensing matters.