Introduction to Affiliate Licensing in the USA

The U.S. is one of the most appealing markets for affiliates today, driven by the booming market for legal Internet gambling and a large, paying audience. Since 2017, sports betting has become a licensed activity in more than 32 states, with four more states in the process of passing legislation. Approximately one-third of the nation’s population resides in states where online betting is legal.

States Requiring Licenses for Operators

As of July 11, 2022, gambling laws vary significantly by state and can be divided into two categories: states where affiliate activities are legal without a license and states where a license is required for such activities.

States Without a License Requirement

In states that do not require a local license to operate, affiliates must obtain Foreign Qualification in each state individually and hire a Registered Agent in each state. Hiring a registered agent is straightforward; affiliates must sign a contract with a company in the state that provides an address for receiving official correspondence. The cost for these services averages $125 per year per state.

What is Foreign Qualification?
Foreign Qualification allows your company to legally conduct business in another state without registering a new legal entity there. This involves filing an application and paying the state fee.

State and Fees

  • Alabama – $150
  • Alaska – $350
  • Arizona – $150
  • Arkansas – $270-$300
  • California – $0
  • Colorado – $100
  • Connecticut – $120
  • Delaware – $200
  • Florida – $125
  • Georgia – $225
  • Hawaii – $50
  • Idaho – $100
  • Illinois – $150
  • Indiana – $125
  • Iowa – $100
  • Kansas – $165
  • Kentucky – $90
  • Louisiana – $150
  • Maine – $250
  • Maryland – $100
  • Massachusetts – $500
  • Michigan – $50
  • Minnesota – $185-$205
  • Mississippi – $250
  • Missouri – $50
  • Montana – $70
  • Nevada – $425
  • New Hampshire – $100
  • New Jersey – $125
  • New Mexico – $100
  • New York – $250
  • North Carolina – $250
  • North Dakota – $135
  • Ohio – $99
  • Oklahoma – $300
  • Oregon – $275
  • Pennsylvania – $250
  • Rhode Island – $150
  • South Carolina – $110
  • South Dakota – $750-$765
  • Tennessee – $300 min / $3,000 max
  • Texas – $750
  • Utah – $70
  • Vermont – $125
  • Virginia – $100
  • Washington – $200
  • Washington DC – $99
  • West Virginia – $150
  • Wisconsin – $100
  • Wyoming – $100
  • Nebraska – $120

Once the Registered Agent is contracted and Foreign Qualification is paid, the affiliate can begin working with the state’s operators. The process takes about two weeks per state and can be initiated simultaneously in all states of interest. The entire process can be done remotely

States with License Requirements

Certain states mandate a licensing regime for suppliers, including affiliates. Regardless of the state, affiliates must hire a registered agent and obtain Foreign Qualification where they want to be licensed. The licensing process, which includes filling out forms and collecting documents, takes between two weeks and three months depending on the state. Some states may also require fingerprints.

General Licensing Requirements

  • Contract or partnership agreement with a licensed operator in the state
  • Corporate documents of the applicant’s company
  • Passports and proofs of address of directors and shareholders
  • Company ownership structure
  • Certificates of absence of criminal record
  • EIN number

The regulator can deny the application if the affiliate advertises on sites that violate U.S. law. In some states like New Jersey, the application for a license is submitted by the operator with whom the affiliate plans to cooperate.

Reporting Obligations

Affiliates have no reporting obligations akin to operators but must fulfill tax obligations in each state where business is conducted and pay federal taxes. To reduce the tax base, it is advisable to establish a company in the U.S. and link it with companies from lower tax jurisdictions.
License Fees by State
When obtaining a license, the applicant must pay the state fee. Some states require repeated payment of the state fee annually or every few years.

State:

  • Arizona 1 Year Fee – $1500; 2 Year Fee – Must Extend; 3 Year Fee – $500; 4 Year Fee – Must Extend; 5 Year Fee – $500
  • Colorado 1 Year Fee – $350; 2 Year Fee – Must Extend; 3 Year Fee – Must Extend; 4 Year Fee – Must Extend; 5 Year Fee – Must Extend
  • Indiana 1 Year Fee – $500
  • Maryland 1 Year Fee – $100-1000; 2 Year Fee – Must Extend
  • Michigan 1 Year Fee – $200; 2 Year Fee – $100
  • Pennsylvania 1 Year Fee – $500+$60+$2500
  • Virginia 1 Year Fee – $500; 2 Year Fee – Must Extend
  • West Virginia 1 Year Fee – $1000; 2 Year Fee – Must Extend; 3 Year Fee – Must Extend; 4 Year Fee – Must Extend; 5 Year Fee – Must Extend

For more information about obtaining an affiliate license for your online gambling venture in 2024, contact us.