Curacao gaming sub-licenses possibly in breach of local laws

12/12/2022

This article was published in Gambling Insider’s GIFriday Week 47 edition

JOINT COURT OF JUSTICE RULINGS OF OCT. 11, 2022
Curaçao legislation requires a license to operate online games platform from Curaçao. The government issued a limited number of such licences over the years, including to Cyberluck, trading as ‘Curaçao eGaming’. In the process, a practice has developed whereby the holders of a
government issued master license grant third parties the right to use theirs by issuing private “sub-licences.”

The local legislation does not provide (in so many words) for the possibility of sub-licensing, but neither does it expressly prohibit it.

In recent judgments, the Joint Court of Appeal in Curaçao (the “Court”) issued a ruling about the legality
of this practice. A journalist had deemed the practice of “sub-licensing” to be “illegal,” and had posted the names and photographs of Cyberluck’s Director on her website. Cyberluck instituted summary proceedings against the journalist in which Cyberluck demanded, amongst other
things, to remove all photos of Cyberluck’s Director and to publish a rectification. Cyberluck also sought an order that the journalist should refrain from making similar statements in the future.

In the judgments dated October 11, 2022, the Court considered that in such cases a balancing of interests must be made between, the right to freedom of expression, in particular of a journalist, and the right to private life. Based on this balancing of interests, the Court concluded that the journalist’ s statements fall under the freedom of expression of a journalist.

According to the Court, it has become sufficiently plausible in the summary proceedings that it would be impossible for the limited number of holders of master licences to properly supervise sub-licensees and that the current practice of issuing sub-licences to many sub-licensees is “illegal”, i.e., in breach of the local legislation”

IMPLICATIONS FOR THE GAMING SECTOR?
For the gaming sector, it is relevant that the Court also considered that the journalist’s assertions were supported by the facts known to the Court. According to the Court, it has become sufficiently plausible that it would be impossible for the limited number of holders of master licences to properly supervise sub-licensees, and that the current practice of issuing sub-licences to many sub-licensees is “illegal”, i.e., in breach of the local legislation. Licensing legislation which would allow the current practice would serve no legitimate purpose. The Court considers that its own previous Stacktrace ruling does not preclude the
journalist from making these assertions.

This previous ruling had been used by some to substantiate that the current practice is in line with Curaçao law. The Court has now clarified that the Stacktrace ruling should not be interpreted as such, because the Stacktrace proceedings did not specifically deal with the purpose and scope of the Curaçao licensing legislation.

The Court is somewhat more nuanced about whether the issuance of sub-licences is in itself “illegal”, for example, also in situations where, in the Court’s view, sufficient supervision by the master licensee could be exercised, but considers the assertion that the issuance of sub-licences would be illegal in all circumstances “entirely tenable”. In any case, according to the Court, making such a statement
falls within a journalist’s freedom of expression. In doing so, the Court also noted that journalists should be given ample room to expose issues of great social importance.

This ruling need not result in all licences issued by master licensees being invalid as of now. Courts in other proceedings are in principle not bound by this judgment, although they will be compelled to use it as guidance. In addition, if sufficient supervision over specific sub-licensees can be exercised, it is possible that another court will rule that the sub-licences issued to them are not contrary to the legislation.
But the ruling will create legal uncertainty for market participants and may give rise to disputes between
sub-licensees and master licensees. New legislation could remove that uncertainty. Currently, a bill for a new licensing system in Curaçao may be in the stage of completion.

Although parts of the legislation have come out through the press, the bill has not yet been made public. According to news reports, under the new legislation, supervision would shift from master licensees to a new Curaçao Gaming Authority. Currently, the Gaming Control Board is the regulator of the gambling sector under AML regulations, but this authority does not have powers in issuing licences to operate online casinos.

Please feel free to reach out to our attorney Sebastiaan Barten, in case you have any questions related to this topic.