El Salvador has recently opened its doors to regulated gambling operations, offering a clear legal framework for both online and offline activities. The country has made significant changes in its legal system to support a regulated market. The shift began in December 2021 when the Ministry of Finance and the National Lottery (LNB) became responsible for issuing licences and overseeing operations. This article examines the benefits, challenges, requirements, and costs of obtaining a gambling licence in El Salvador.
Overview of Gambling Regulation
Gambling was illegal in El Salvador until the mid-1990s, when offline casinos began operating with local approval. Changes to the legal system paved the way for worldwide betting sites in recent years. In December 2021, a new law was adopted. Under the law, the National Lottery (LNB) became the main authority for all forms of gambling, including online games and sports betting. The Ministry of Finance and the General Tax Administration also monitor the industry’s financial activities and tax payments.
New regulations seek to provide transparency and stability to this developing market. Authorities aim to address issues such as money laundering and ensure that operators follow strict compliance standards. Companies that fail to secure the required authorisation face swift penalties, including closure within six months of non-compliance.
Benefits of a Gambling Licence
Obtaining a gambling licence in El Salvador offers several advantages for operators. The legal framework encourages investment and supports business operations through various measures. The following list highlights some of the key benefits:
- Cryptocurrency Transactions: Bitcoin is recognised as legal tender. Operators may transact in Bitcoin and convert funds to US dollars at market rates through the Development Bank of El Salvador (BANDESAL).
- Business-Friendly Setting: The regulatory structure is open and supports business growth with simplified registration processes and tax incentives.
- Straightforward Company Registration: Registration is made easier through reduced bureaucracy, allowing companies to set up in a matter of weeks.
- Low Start-Up Capital: With minimum capital requirements of $2,000 for a limited liability company and $10,000 for a corporation, small or new companies can access the market.
- Global Market Access: The licence issued is recognised internationally. Operators can legally offer their services worldwide.
- Unified Licence: One licence covers both business-to-business (B2B) and business-to-consumer (B2C) activities.
- Quick Processing: The entire process generally takes between two to three months.
- No Server Restrictions: Operators may host servers in any location that meets their technical needs.
- Attractive Tax System: The tax system includes a 13% value-added tax (VAT) and a 10% dividend tax, with several exemptions available for profits earned outside of El Salvador.
Advantages Table
| Benefit | Description |
| Cryptocurrency Acceptance | Allows Bitcoin transactions with official currency conversion. |
| Business-Friendly Approach | Streamlined registration processes and various tax incentives for foreign investors. |
| Low Capital Requirements | Minimum capital set at $2,000 for LLCs and $10,000 for corporations. |
| Global Recognition | Licence recognised worldwide, enabling international service provision. |
| Fast Licence Processing | Typically issued within 2-3 months. |
Challenges and Considerations
While the gambling licence offers many benefits, there are some challenges that operators should be aware of:
- Limited Regulatory Experience: The regulatory framework is new. This may result in uncertainty in compliance and future enforcement practices.
- Market Volatility: Political and economic changes in the country can impact business operations over the long term.
- Language Barrier: Spanish is the official language. Foreign operators may face difficulties in legal and administrative procedures.
- Cryptocurrency Volatility: Although Bitcoin is legal tender, its price fluctuations may affect financial stability.
- Jurisdiction Reputation: Being a newer market, the licence might not have the same prestige as those from long-established jurisdictions.
- Infrastructure Issues: While improvements are ongoing, some areas of infrastructure may still fall behind compared to more developed regions.
Disadvantages List
- Limited experience in the gambling sector
- Possible market fluctuations
- Language differences in official documents
- Cryptocurrency price instability
- Lower global reputation compared to older markets
- Ongoing infrastructure development
Types and Requirements of the Gaming Licence
El Salvador does not issue traditional licences as seen in other jurisdictions. Companies must register with the National Lottery (LNB) to operate legally. The authorisation covers both B2B and B2C operations, giving companies the flexibility to provide services in different aspects of gambling.
Key Requirements
Operators must meet several criteria to secure a licence. The requirements include:
- Capital Requirements:
- Limited liability company: minimum start-up capital of $2,000
- Corporation: minimum start-up capital of $10,000
- Limited liability company: minimum start-up capital of $2,000
- Management Structure:
- At least two directors
- At least two shareholders (natural or legal persons)
- A designated secretary
- At least two directors
- Local Representation:
- A local office in El Salvador is mandatory
- Appointment of a registered representative (resident or foreigner)
- A local office in El Salvador is mandatory
- Financial Controls:
- A corporate bank account with a Salvadoran bank
- External audits and annual financial statements are required
- A corporate bank account with a Salvadoran bank
- Legal Compliance:
- Company name must use the Latin alphabet
- Registration of the trading name
- Adherence to local labour laws
- Submission of documents in English or with a notarised translation
- Company name must use the Latin alphabet
Application Process for a Gambling Licence
The application process is methodical and involves several steps. Operators must prepare a detailed package of documents before submitting their application to the LNB.
Steps to Apply
- Request the licence application form from the LNB website.
- Complete the form and assemble all required documents, including notarised passport copies, proof of address, bank account statements, letters of recommendation, detailed resumes, educational certificates, and criminal record checks.
- Submit the application along with the documents to the LNB for inspection.
- The Compliance and Inspection Department reviews the submission, verifies financial and technical details, and passes the case to the Board of Directors.
- The Board decides to grant or deny the licence, and the decision is communicated.
- Payment of the relevant state fees must be completed.
- The licence is issued if all checks are passed.
Cost and Taxation
The total cost of obtaining a gambling licence depends on several factors, such as the legal form of the company and additional administrative expenses. Besides the start-up capital, operators should factor in registration taxes, notary fees, and consulting costs.
Tax Details
- Corporate Income Tax: Set at 30% on income generated within El Salvador.
- Value-Added Tax (VAT): Fixed at 13% on goods and services.
- Advance Income Tax: A monthly payment of 1.75% (known as “Pago a Cuenta”).
- Special Rates for Non-Residents: Dividend tax at 5% or 25%, while interest and royalties are generally taxed at 20%.
Taxation Table
| Tax Type | Rate/Details |
| Corporate Income Tax | 30% on domestic income |
| Value-Added Tax (VAT) | 13% on goods and services |
| Monthly Advance Payment | 1.75% (“Pago a Cuenta”) |
| Dividend Tax | 5% for non-residents (up to 25% without exemptions) |
| Interest and Royalties | Typically 20% |
Frequently Asked Questions
- Are gambling activities licensed in El Salvador?
Yes, since 2021, the National Lottery has been responsible for issuing licences for gambling operations.
- What is the process for obtaining a licence?
Applicants must submit a detailed package of documents, undergo inspections, and wait for the Board’s decision.
- Can a licence cover both online and offline operations?
The licence covers both B2B and B2C activities in the online gambling market.
- Is a corporate bank account required?
Yes, operators must open a corporate bank account with a Salvadoran bank.
- How long is the licence valid?
The licence is typically valid for 10 years.
- Are non-residents allowed to own or direct the company?
Yes, there are no restrictions regarding the residency of shareholders or directors.
- Do companies need to undergo audits?
An external audit is mandatory, along with annual financial reports.
- Is there an annual fee for the licence?
There is no fixed annual fee; costs vary depending on the operation and additional administrative expenses.