Azerbaijan - legal framework

(Section: "Markets and Jurisdictions")

1) Overview and sources of law

Azerbaijan adheres to a restrictive model: private B2C casinos and online casinos are not allowed, the market is organized around state (or state-authorized) operators in the segments of lotteries and sports bets. The legal regime is formed by specialized laws on lotteries and bets, norms on administrative offenses/criminal liability, as well as by-laws on advertising, consumer protection, AML/CFT and payment services.

2) Institutions and areas of responsibility

Government/relevant ministries - form policies, determine the list of permitted forms of gambling, the procedure for admission and state supervision.
Fiscal authorities - administration of special fees and taxes, control of reporting and payment discipline.
Financial monitoring - national AML/CFT system, STR/SAR methodology and control over the execution of AML duties.
Communication/digital development - the technical implementation of blocking domains/mirrors of illegal sites.
Consumer protection and advertising supervision - control of marketing practices, including online.

3) Tolerance model and "what can/cannot"

• State/National Lotteries (including Instant).
• Sports bets in the established format through an authorized provider.

• Casino (land-based) and online casinos, slots, B2C poker rooms.
• Private B2C activity without government mandate/clearance.
• B2B interaction: possible under contracts with state-authorized operators (content, risk management, IT platform, outsourcing services), provided that they comply with security, data and AML/CFT requirements.

4) Mode of block measures and payment restrictions

Domain locks: Communication providers are required to restrict access to unlicensed gambling sites.
Payment locks: banks/PSPs must stop transfers in favor of illegal operators; routes "to gray" are interpreted as a violation.
Responsibility of affiliates/media: promotion of illegal brands in the jurisdiction entails prescriptions and fines, up to blocking advertising channels.

5) Taxes and fiscal reporting (high level)

Lotteries and permitted bets: special fee/tax in relation to the rate (handle) and/or GGR depending on the product and the current act; distribution of funds - according to the target areas established by the state.
Corporate taxes: total tax rate on income under the Tax Code; VAT usually does not apply to the bet/win, but applies to related services (IT, marketing, hosting, outsourcing).
Reporting: monthly/quarterly declarations, annual reports with audit; separate accounting by products/channels and transparent reflection of bonuses, cancellations (void), cashout.

6) AML/KYC and identification

KYC/KYB: proof of identity/age, beneficiaries and control of property; sanctions/POP-check; proof of ownership of the payment means.
Source of funds (SoF): checked by triggers (abnormal deposits, large rates, increased risks).
Transaction monitoring: behavioral risk scoring, limits, identification of account/device/card connectivity; fixation and escalation of STR/SAR to finmonitoring.
Data storage and protection: retention of CUS/logs on time; compliance with security and privacy standards.

7) Responsible Gaming (RG)

Age threshold: participation of adults only; strict check-in/check-in.
Self-limiting: deposit/loss/time limits, "timeouts," "cooling"; Record all limit changes and attempts to exceed them.
Self-exclusion: centralized or operator registry; Mandatory status checks at check-in, check-in, and before payments banning marketing to the self-excluded.
Early diagnosis: loss pursuit patterns, frequent deposits, nocturnal activity - grounds for RG team interventions.

8) Advertising, promo, affiliates

Prohibitions: targeting minors/vulnerable, aggressive inductions ("no risk," "guaranteed gain"), concealment of bonus conditions.
Mandatory elements: RG-marking, clear T&C (wagers, deadlines, mouthguards), indication of age restrictions; storage of creatives and compliance evidence (screenshots/URL/dates/geo).
Affiliates: only valid for authorized products/operators; the promotion of illegal immigrants is the basis for sanctions and blocking.

9) IT loop and supervisory access

Certification: platform, RNG/calculation modules, reporting showcases; periodic recertification.
WORM logging: immutable logs along the chain "rate → calculation → payment → adjustment," time synchronization and zone control.
Integration: uploads and/or APIs for the regulator/fiscal service; test accounts, secure communication channels.
Information security/reliability: encryption at rest/in transit, RBAC/SoD, secret management, DR/BCP with target RPO/RTO, regular pentests/scans.

10) Inspections and enforcement

Office: comparison of reporting and payments, analysis of GGR/NGR anomalies, audit of bonuses/void/cashout.
On-site/IT audit: sampling sessions/transactions, log/infrastructure inspection, secret buyers, advertising and payment route verification.
Measures: fines, AML/RG/advertising prescriptions, domain and payment block lists, suspension/cancellation of admission.
Mitigation: voluntary disclosure of errors, corrective plans, strengthening of internal controls and training.

11) Roadmap (operator & provider playbook)

For potential B2C

1. Assess the compliance of the product portfolio with the permitted segments (lotteries/bets).
2. Check the possibility of participation in tenders/purchases or within the framework of technological partnership.
3. Prepare compliance package: AML/KYC, RG, security, reporting, tax accounting model.
4. Debug IT: module certification, WORM logs, API/uploads.
5. Configure marketing for local bans and whitelists of creatives/channels.

For B2B provider (content/platform/risk/payments)

1. Map of requirements for safety, reporting and integration with state operators.
2. RNG/platform certification, version control, SDLC/DevSecOps.
3. Contractual framework: SLA, data protection, content rights, escrow mechanisms.
4. UAT: test cases for calculating GGR/NGR, exceeding limits, self-exclusion, STR/SAR flow.
5. Operations: incident runbook, compliance log (advertising/affiliates), regular audits.

12) Compliance checklists

Legal regime

• Confirmed: products/channels on permitted list (lotteries/bets)
• Authorized Operator Contract/Mandate (for B2B)
• AML/RG/IS responsible assigned

Taxes and reporting

• Separate accounting by product/channel; transparent accounting of bonuses/void/cashout
• Calendar of declarations and payments; discrepancy otchetnost↔billing <0.5%
• Annual Audit and Primary/Log Storage

AML/KYC & RG

• KYC/KYB Policies, Sanctions/PEP, SoF Procedures
• Deposit/loss/time limits; "timeouts," self-exclusion
• STR/SAR algorithms and logs; personnel training

IT and Security

• RNG/Platform Certification; WORM logs, time synchronization
• Encryption, RBAC/SoD, secret management
• DR/BCP tests; regular pentests/scans

Marketing & Affiliates

• RG markings, correct T&C; lack of "dark patterns"
• Creative magazine (screenshots/URL/dates/geo); quick feedback
• Banning the promotion of illegal immigrants; geo/age filters

13) First year KPI

Fiscal: timely filing ≥99%; discrepancy otchetnost↔billing <0.5%.
AML/KYC: average verification time; share of false positives; SLA STR/SAR.
RG: proportion of players with active limits; Self-exclusion lock TTR <1 min.
Information security: MTTR incidents; completion of DR tests; closing critical vulnerabilities on time.
Marketing: 0 advertising violations; 100% filtering of self-excluded and minors.

14) FAQ

Is it possible to open a private online casino?
No, it isn't. Private B2C activities in casino/slots/poker are not allowed; permitted segments - state lotteries and sports bets through authorized operators.

What remains the real path for business?
B2B model: technology/content/risk services concluded with authorized operators on the basis of compliance with security, data and AML/RG requirements.

How are bonuses interpreted in the tax base?
Reflected according to local rules for GGR/NGR with transparent tracing; errors lead to additional charges and prescriptions.

Is affiliate marketing allowed?
Only for authorized products/operators and in strict compliance with advertising standards; the promotion of illegal immigrants is punishable.

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Regulatory framework and enforcement practices are updated (including fee rates, advertising restrictions, AML/RG methodologies, and technical reporting formats). Before making legally significant decisions, check the current texts of the laws and the current explanations of the competent authorities.