A look at recent iGaming expos in Europe and beyond reveals that the established, and often unspoken, hierarchy of licensing jurisdictions is changing rapidly.

Not too long ago, there was a clear understanding in the iGaming industry that an online gambling license from a “white” jurisdiction like the Isle of Man or Malta was seen as the gold standard, a badge of credibility that signaled trust and a commitment to robust regulatory oversight.

These licenses facilitated access to key markets, strong banking relationships, and partnerships with leading software providers. It was somewhat implied that obtaining such a higher tier license should always be the preferred course of action, ahead of any lower tier options.

However, a noticeable shift is now underway, with a number of recent conferences serving as a window into this changing landscape. Faced with increasingly burdensome compliance costs and a complex regulatory maze, many companies are quietly migrating towards “grey” licenses from jurisdictions such as Anjouan, Nevis, Tobique, and Curacao.

This strategic pivot is driven by several factors, chief among them the sheer weight of regulatory obligations. The cost of maintaining a license in a top-tier jurisdiction has grown exponentially, extending far beyond the initial application fee.

It now includes extensive and ongoing audits, mandatory local directorships, rigorous anti-money laundering (AML) protocols, and complex reporting requirements. For many companies, particularly new entrants and smaller operators, these overheads are becoming financially prohibitive.

The pressure is not only on the operators but also on the corporate service providers (CSPs) who facilitate their licensing. As discussed at a recent industry gathering, the cost of staying compliant for a CSP has become so high that many are re-evaluating their business models. Instead of offering a broad menu of licenses, some are now specializing in a curated, and more manageable, portfolio.

At one conference, a corporate service provider noted they had ceased offering licenses for many jurisdictions and were now focused exclusively on Anjouan, Nevis, and Curacao. This strategic consolidation allows them to streamline their own compliance processes and provide a more focused, and ultimately more profitable, service to their clients.

This trend of specialization is also leading to a broader movement within the industry. As the regulatory noose tightens in established jurisdictions, some CSPs are relocating their own operations to more accommodating locales. This internal shift allows them to more easily manage the compliance needs of the jurisdictions they now represent, further cementing the move towards these grey markets.

Anjouan, a semi-autonomous island of the Comoros, is a prime example of this new wave of popularity. It offers a fast and straightforward licensing process with a single license covering all iGaming verticals. The cost is a fraction of that in a top-tier jurisdiction, and the tax benefits are a major draw.

Similarly, Nevis, with its history in financial services, is gaining traction. It markets a competitive, tax-neutral framework that allows for a swift and cost-effective market entry. The Tobique First Nation in Canada offers another interesting alternative, providing a unique licensing framework that appeals to a specific segment of the market.

Even Curacao, long seen as the most prominent of the grey jurisdictions, is undergoing a transformation. While it has traditionally offered a “one size fits all” license with minimal oversight, the jurisdiction is currently overhauling its framework to introduce more stringent AML and responsible gambling measures.

This move, while aimed at improving its global reputation, highlights the growing pressure on even the most relaxed regulators to adapt to international standards. However, the costs and procedural burdens of the new Curacao license still remain significantly lower than those of Malta or the Isle of Man, maintaining its appeal to a wide range of operators.

For companies operating with these licenses, the benefits are clear: reduced costs, speed to market, and operational flexibility. They can allocate more resources to marketing and product development, giving them a competitive edge, especially in emerging markets where a white license is not a prerequisite for business.

However, the shift is not without its trade-offs. The move to a grey license can impact a company’s ability to secure partnerships with major banks and payment processors, who may be hesitant to work with a jurisdiction that does not have a robust reputation for compliance.

Similarly, attracting players in highly regulated markets can be a challenge. Consumers in these regions are often educated on the importance of licensing and may be more reluctant to trust an operator with a lesser-known license.

For many onlookers, the industry appears to be at a paradoxical crossroads. On the one hand, ever stricter regulations and compliance requirements are being called for by banks, governments, and international organizations. On the other hand, corporate service providers are openly offering low compliance options to operators at iGaming events, where some gaming companies with problematic regulatory background are also present and happy to openly advertise their legally questionable wares.

In some extreme cases, certain turnkey iGaming providers were even seen offering unlicensed solutions to the market or indicated that obtaining or holding any kind of B2C license was not a requirement to work with them.

This, paired with an increasing number of country specific licensing frameworks, will now leave iGaming company owners with some tough future choices. Embrace the need to be more compliant and work on the lighter side of the industry, or hide in the shadows and choose to work in the dark fringes that will always exist.