Curaçao’s local substance requirements: LOK compliance

As of autumn 2025, Curaçao has entered a new phase of regulatory development, marked by increased transparency, formalized oversight, and a fundamental redefinition of accountability in its online gambling sector. Central to this transformation are local substance requirements under the National Ordinance on Games of Chance (LOK), obligating licensed operators to establish genuine physical and operational presence on the island.

These measures represent a significant departure from the legacy model that positioned Curaçao as one of the most accessible and commercially advantageous offshore jurisdictions. While the island remains a top-tier destination for flexible licensing, it is now evident that continued participation in the market will demand higher levels of operational and compliance investment.

Historical context

For many years, Curaçao functioned under a sub-licensing regime that lacked transparency and direct accountability. The framework enabled thousands of operators to offer gambling services under general master licenses, with minimal reporting obligations and limited regulatory oversight. Even local authorities often lacked full visibility into the number of entities operating under their jurisdiction.

This environment, though attractive to market entrants and startups, led to reputational concerns and forfeited opportunities for public revenue. The LOK, enacted in December 2024, seeks to resolve these structural issues by introducing direct licensing, dismantling the legacy sub-license model, and empowering a newly established regulator – the Curaçao Gaming Authority (CGA).

Local substance obligations

A foundational component of the LOK’s implementation is Article 5.12, which outlines mandatory local substance criteria for all licensees. Key requirements include:

1. Key Personnel Presence. Now, each licensee must engage at least one full-time Key Person*, who:

• Is physically based in Curaçao;
• Is registered in the Civil Registry;
• Is actively involved in day-to-day operations.

2. Dedicated Office Space. Each licensee must maintain a permanent office in Curaçao, physically separated from other business activities, and appropriately equipped to support licensed operations.

It is important to note that for Key Persons, role conflicts are prohibited: AML/Compliance roles cannot be held by the CEO or operational personnel, internal audit functions must remain fully independent, and UBOs and non-executive directors are restricted from certain compliance-related functions.

Operators may contract local third-party agencies to fulfill Key Person roles, provided that safeguards are in place to avoid conflicts of interest. The CGA reserves the right to assess the integrity and independence of such arrangements.

There is also a place for exceptions. Smaller operators may apply for exemption if they:

• Were incorporated within one year prior to applying to the license;
• Have UBOs with no gambling history in the preceding two years;
• Report annual GGR under XCG 20 million (~US$ 11,1 million);
• Continue to meet this revenue threshold for three years post-licensing.

Eligible licensees must submit audited financials every six months to maintain exemption status.

Currently, the grace period is in effect until 31 December 2025. From 1 January 2026, local substance becomes an enforceable requirement. Beginning in year five, the minimum requirement increases to three Key Persons.

Industry feedback and operational challenges

While these changes aim to promote accountability and local economic benefit, industry reception has been mixed. Stakeholders have expressed concern over the broad list of qualifying Key Person roles, many of which (such as content writers or SEO specialists) may contribute little to regulatory oversight or operational transparency.

Further skepticism surrounds the use of third-party staffing models. Critics suggest that if not strictly controlled, this may allow for formal compliance without substantive presence, thus undermining the spirit of reform.

In response to increased regulatory complexity, several operators have relocated to alternative jurisdictions. For instance, Anjouan, a small island in the Indian Ocean, has openly positioned itself as a haven for those departing Curaçao’s increasingly regulated environment. Notably, high-profile platforms such as BC.GAME have cited compliance burdens as reasons for withdrawal.

Nevertheless, Curaçao remains the most prominent and commercially viable licensing hub among flexible jurisdictions. While operational costs have increased, its legal clarity, processing efficiency, and recognition by third parties (most importantly, payment and software providers) continue to offer advantages over less structured alternatives such as Anjouan, Kahnawake, or Tobique.

Conclusion

The LOK introduces a substantive departure from Curaçao’s prior model, emphasizing physical presence, regulatory visibility, and operational accountability. For the first time, operators are expected to maintain not just licensing paperwork but an actual business presence within the jurisdiction.

This transition is not without cost: operators will undoubtedly proceed with exiting the market due to elevated compliance obligations and associated overhead. Yet, such departures may ultimately strengthen the integrity of the regime, consolidating the market around more responsible and stable entities.

Curaçao’s comparative advantages remain substantial. It continues to outperform regional competitors in terms of scalability, legal certainty, and licensing infrastructure. The success of this reform will hinge on the CGA’s ability to balance enforcement with market accessibility, ensuring that Curaçao remains competitive while upholding the regulatory standards now expected of it.

The coming year will serve as a key inflection point. How rigorously the CGA enforces these new obligations will determine whether Curaçao can sustain its leadership as the most commercially relevant jurisdiction among flexible offshore licensing markets.

*A "Key Person" is broadly defined as someone with influence over governance, compliance, operations, or strategic direction. Roles include, but are not limited to, compliance officers, financial controllers, product developers, and marketing professionals.

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