Why local licenses are becoming more important than offshore

Introduction: the era of the "gray zone" is leaving

Offshore licenses have long been a quick ticket to the global market: low taxes, flexible requirements, minimal bureaucracy. But the rules of the game have changed. Banks, payment gateways, advertising platforms and players themselves are increasingly looking at the jurisdiction of the end consumer, and not just paper from offshore. As a result, a local license from an "option for the elite" has become a key factor in competitiveness: it opens the door to legal payments, organic traffic, applications, local partnerships and reduces legal risks.

What is a "local license" and how it differs from offshore

Offshore: License from a soft claims jurisdiction, often out of alignment with the target market country. Approximate profile: low entry threshold, limited recognition by local banks and advertising ecosystems of target countries.

Local license: The permit is in the country (or state/province) where you accept bids. This synchronizes the operating, marketing and payment infrastructure with the requirements of the end market regulator.

The key difference is recognition within the ecosystem: a local license makes you "your own" for payment systems, banks, media and government agencies.

Six Drivers Why Local Licenses Win

1) Payments and conversion

Banks and payment providers prefer merchants with local authorization. This means higher aprow rate, fewer chargers and cheaper MDR.

Access to national payment rails (for example, instant payments, open banking, fast transfers) is often possible only for locally licensed operators.

Conversion to a deposit is growing due to the methods familiar to the user (local cards, bank transfers, wallets, instant systems), and not "workarounds."

2) Advertising and presence in ecosystems

Large advertising platforms, TV, sports sponsorship and influencer marketing check compliance with local law. Without a local license, access to legal advertising is limited or completely closed.

Publishing applications in the official sectors and working with local media is much easier if you have a local license and comply with the standards of a responsible game.

3) Reputation and trust of players

The local regulator icon and familiar rules (self-restraint, retaliation, hotlines, local support) increase trust.

Controversial situations are resolved faster: there is clear jurisdiction, ombudsman/alternative settlement and transparent procedures.

4) Legal sustainability

Less risk of blocking domains and payment accounts.

The probability of retrospective fines and claims from regulators and the financial sector is lower.

The possibility of long-term B2B contracts with content providers, clubs and media partners for whom "regulatory risk" is a key KPI.

5) Access to offline channels and the "physical" economy

Betting points, brand stands in retail, cross-promo with offline events - almost always require local permissions.

Banks are more willing to open settlement accounts and credit lines to operators with local status.

6) Strategic business value assessment

When entering M&A or looking for investments, multiples are higher for companies with regulated assets in key markets: less discount for compliance risks, higher cache predictability.

"Offshore arithmetic" no longer converges

Offshore used to mean savings: lower tax and CAPEX/OPEX on compliance. Now the reality is reversed:

• Hidden costs: above the commission of alternative payment methods, losses on fraud, disruption of advertising channels, costs of "workarounds" and constant domain migrations.
• Lost revenue: lack of access to native payment rails → lower conversion from registration to deposit; limited performance marketing → more expensive to buy traffic.
• Risk premium: banks and partners demand increased deposits, reservations or even refuse.

In total, offshore often loses in unit economics even before taking into account fines and locks.

Requirements of local regulators: what is really changing in the operating system

KYC/AML by local standards: identity verification, source of funds, transaction monitoring; storage of logs and cases.

Responsible play: deposit and time limits, self-exclusion, local help lines, age verification.

Data & tech: hosting/mirror data in the country or in the "trusted" zone, RNG/game mathematics audit, provider certification.

Marketing: rules of tone of messages, bans on targeting vulnerable groups, transparency of bonuses, restrictions on creatives.

Finance and accounting: reporting on GGR/VAT/excise taxes, integration with fiscal/regulatory gateways, timely registers.

Yes, this increases the costs at the start. But the attracted user pays off cheaper, above LTV and traffic stability.

Examples of market logic (not tied to specific dates)

Europe: countries with their own regulators require a "local presence" and compliance with the rules of a responsible game. Without this - restrictions in advertising and payments.

North America: States/provinces issue licenses based on where the service is consumed. Partnerships with sports leagues and the media are possible only in white.

Latin America: fast payment rails and national methods are often available only to licensed merchants; a local license dramatically increases conversion.

Asia-Pacific: banks and pay infrastructure are guided by internal registers of authorized operators; applications and marketing are legalized through local requirements.

Impact on content providers and affiliates

Affiliates: receive stable advertising channels (SEO, context, social networks) and above CR → deposit. Less risk of traffic "collapsing" due to blocking.

Game/platform providers: demand for certified content, local RTP profiles, compliance with audits is growing. The B2B chain is becoming more transparent, more attractive for bank acquiring.

Payment partners: they are more willing to integrate when the merchant is "in the register"; anti-fraud thresholds fall, costs are reduced.

Financial model: when localization is more profitable

Simplified scenario:

• Offshore: fee is 1-2 pp higher, transaction approval is 5-15 pp lower, advertising channels are limited → CAC is 20-40% higher.
• Local license: fixed CAPEX for launch and annual payments to the regulator, but APRU is growing due to local payment methods, CAC is decreasing, LTV is increasing (less churn due to frustration with payments and verification).

Bottom line: Even with higher taxes, EBITDA margins can be higher due to the quality of payments, advertising and loyalty.

Risks and barriers of local licenses (and how to reduce them)

The timing and cost of compliance are → resolved through a phased road map and the selection of priority regions.

Legal complexity → local consultants, shared compliance services, a modular platform with multi-jurisdictional support.

Restrictions on bonuses/marketing → creativity through a value product (payment speed, local methods, responsible play), instead of an aggressive "overlable" of bonuses.

Data and infrastructure requirements → hybrid hosting, certification providers, centralized regulatory reporting layer.

Practical checklist for switching from offshore to local licenses

1. Market portfolio: Segment countries by size, payment maturity, and expected margin. Select 2-3 priorities.

2. Compliance gap analysis: KYC/AML, responsible play, marketing, reporting, data protection.

3. Payment strategy: list of target methods (bank rails, wallets, instant payments), provider requirements, SLA.

4. Technology and certification: RNG/math audit, logging, data storage, API to regulatory gateways.

5. Operational design: local support, ombudsman/APC procedures, returns and dispute processes.

6. Marketing guide: creative rules, age limits, public T & Cs, responsible play limits.

7. Legal presence: local company/representative, tax model, accounting.

8. B2B ecosystem: game providers, payment partners, media and sports partnerships - all according to local regulations.

9. Finmodel: compare "as-is offshore" and "to-be locally" by CAC, ARPU, LTV, payment update, MDR, retention, penalty risks.

10. Pilot and scale: Run one jurisdiction at a time, capture metrics, then scale.

To whom offshore can still be useful

B2B providers working strictly with licensed B2Cs in their countries - as a basic "umbrella" license.

Niche R&D centers and startups at the prototype stage (without public traffic and without accepting deposits) - before entering the first local market.

Companies for which offshore is part of a multi-level structure, but the front office and monetization are still localized.

Important: offshore has ceased to be the "final station." This maximum is the time point of assembly while you make local tolerances.

Conclusion: regulation is a new "performance-marketing" metric

A local license is no longer just a legal attribute. It is a built-in accelerator of the commercial model: payments, advertising, brand trust, stable partnerships and predictable cash flow. In a world where ecosystems become "closed gardens" with their own access rules, those who integrate into local regulatory circuits benefit.

The strategy for 2025 + looks like this: prioritize jurisdictions with a strong payment infrastructure and clear rules, build a multi-jurisdictional architecture of the product and compliance, consider the unit economy not only in taxes, but also in real conversions, CAC and LTV. A local license is an investment that pays off with stability and growth.