Internet Gaming in Panama

The privatization in 1998 of the gaming industry in Panama resulted in Panama becoming in one of the most successful gaming jurisdictions in the region. The approval of new gaming laws and regulations have provided for security in investments by major international gaming operators and thus, provided fans with the latest technological developments in gaming. Gaming has now become an attraction for tourist to come to Panama and enjoy the sport.

Although much technology has been introduced to the gaming industry in Panama since its privatization in 1998, the new gaming laws enacted at that time expressly prohibited Panama as an internet gaming jurisdiction.

In an effort to position itself as an Internet Gaming location, the Gaming Control Board passed Resolution No. 65 of October 25, 2002, whereby internet gaming is permitted in Panama. The resolution has the objective to provide for the development of gaming activities by electronic means and other long distance communications, with certain restrictions.

The resolution states that this regulation is to long distance gaming systems that operate in or from the territory of the Republic of Panama. This policy is the same as the tax regime in use in the Republic of Panama, that is, the territoriality principle. All income and revenues produced in Panama are subject to Panamanian Tax. Due to the fact that in some cases it will be very difficult to determine whether the system applies to the Panamanian jurisdiction, the Director will be in charge of determining if any gaming activity or bet is considered as subject to the dispositions of the internet gaming regulations.

Internet gaming is defined by the proposed resolution as: "All activities whereby a bet is made or received, or information related to or necessary to place a bet is sent, received or placed, or in any other manner it is intervened by means of any equipment, application, machine or system of telecommunication and where the adverse or favorable result of the game does not depend mainly of the talent or ability of the player, and/or the bets are accepted or made over sports events in general and/or over activities that originate bets.

The main aspects of this regulation for internet gaming in or from the territory of the Republic of Panamaare:

In order to operate a long distance gaming system, the operator must petition and obtain a gaming license issued by the Gaming Control Board of the Republic of Panama.

All equipment for the long distance gaming system is subject to registration, not authorization, by the Gaming Control Board of the Republic of Panama.

In order to operate an internet gaming contract a right of key of US$40,000.00 must be paid to the State.

Each internet gaming license will be subject to a yearly state tax of US$20,000.00.

The Director has the faculty to authorize the celebration of contracts for administration/operation with juridical person owned 100% by an administrator/operator previously licensed to provide internet gaming.

As in other jurisdictions, many prohibitions will apply, such as:

Prohibition for non-authorized persons to operate long distance gaming systems, independent to the name given to the same.

Prohibition to promote a commercial business or place of residence as a site with the necessary equipment to participate, play or place a bet, in gaming and activities that produce bets by ways of electronic means for long distance communication.

Prohibition for a person to deliberately seek commercial advantages from the use of his establishment as a site with the equipment necessary to participate, play or place a bet, in gaming and activities that produce bets by ways of electronic means for long distance communication.

Internet gaming operated from Panama cannot be used by persons residing with in the country of Panama.

Bets of the following nature may not be accepted:

Sports events at an amateur level in the Republic of Panama.

Events held outside of Panama, where public or private institutions located in Panamaparticipate.

Those bets regarding the result of the election to a public post, both within or outside Panama.

Any event, no matter where it is undertaken, that involves professional equipment that has as a home base the country of Panama.

Any other event where the bets are prohibited in the corresponding contract or that has been determined as such by the Gaming Control Board.

The regulations for operations of the gaming system are similar to the ones in place for the operation of complete casinos and slot machines. Rules are established for the issuance and maintenance of licenses, investigations, accounting principles and obligations, internal controls, corporate requirements, among others.