Net Betting on Panama's Agenda for September

The Assembly in Panama will begin its next session less than a month from now, and there is a good chance the final steps will be taken to make the country the next viable option for the interactive gaming industry.

When the legislative branch resumes its work in mid September, one of the leading bills on its plate will be aimed at legalizing and regulating online casinos and sports books. The move comes almost five years after the country privatized the land-based gaming industry. Since that time, Panama has grown into a successful gaming jurisdiction.

"Panama is already missing the boat, but I think the Assembly and others are ready to make us the leading jurisdiction for the offshore gaming industry."

-Nils Petterson
Alta Tecnologia

The privatization of the industry brought with it security in investments by major international gaming operators and provided consumers with the latest technological developments in gaming. The casinos have turned into a tourist attraction for those visiting Panama.

Although technology was introduced to the gaming industry in Panama, the new gaming laws enacted at that time expressly prohibited Internet gambling.

But, a movement has been building within the private and public sector in the last year to turn Panama into a legalized I-gaming jurisdiction.

The Gaming Control Board drafted for review a proposed regulation making Internet gaming legal in Panama. The regulation has the objective to provide for the development of gaming activities by electronic means and other long distance communications, with certain restrictions.

The draft regulation states that it will be applicable to long-distance gaming systems that operate in or from the territory of the Republic of Panama. This rule applies the territoriality principle, which is the same used for tax purposes. All foreign source income is exempted, but income and revenues produced within Panama are subject to Panamanian tax.

The main aspects of the draft regulation for Internet gaming in or from the territory of the Republic of Panama are as follows:

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.
To operate an Internet gaming contract, a right of key of $40,000 must be paid to the state. In the event that the administrator/operator is represented by a gaming promoter, the sum of $10,000 must be paid as right of key. Gaming promoters are persons that petition and are obligated before the Gaming Control Board to file at least 10 annual contracts for Internet gaming.
Each Internet gaming license will be subject to a yearly state tax of $10,000, named "participation in revenues of the administrator/operator." The tax was created because of the privatization of the casino industry, whereby it was sought to guarantee the minimum income of the state from this business. This provision is not applicable to betting agencies, which must pay annually a sum according to the volume of operations and levels of bets in each particular case.
The director has the faculty to authorize the entering into of contracts for administration/operation with juridical person owned 100 percent by an administrator/operator previously licensed to provide Internet gaming.

As in other jurisdictions, many prohibitions will apply, including:

Non-authorized persons cannot operate long-distance gaming systems, independent to the name given to the same.
Promoting 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 is prohibited.
A person cannot 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.
Persons residing within the country of Panama cannot use Internet gaming operated from Panama.

Bets of the following nature may not be accepted:

betting sports events at an amateur level in the Republic of Panama;
betting on events held outside of Panama, where public or private institutions located in Panama participate;
betting on the results of the election to a public post, both within or outside Panama;
betting on any event, no matter where it is undertaken, that involves professional equipment that has as a home base the country of Panama;
betting on any event played in Panama that involves a professional team, for which the directors of the regent league, request that no bets be made, these must petition the authorization no later than 30 days before the initiation of activities; and
Betting on 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 those in place for the operation of complete casinos and slot machines.

Nils Petterson, President of Alta Tecnologia, a Panama-based firm that specializes in specific hosting and related needs of small to medium-sized businesses to enterprise customers, said his firm is already busy targeting online gaming operators and helping them prepare for a possible relocation to Panama once the bill is passed.

"Panama is already missing the boat, but I think the Assembly and others are ready to make us the leading jurisdiction for the offshore gaming industry," he said.

Petterson said the bill that will go before the Assembly has wide support among the legislature, but he isn't guaranteeing anything.

"There are a lot of people that think this is a great idea, but you never know who will come out against it when it goes before the assembly," he said.