Panama: The Next Hot Spot?

If all goes according to plan, a new online gaming jurisdiction could emerge by month's end and become a major player in the industry, one industry source said.

Government officials are scheduled to sign off on new interactive gaming regulations for Panama. The Central American country, with its substantial infrastructure after years of military occupation from the United States, could become a leading contender in the fierce market for online gaming jurisdictions.

Dai Leon is chairman and CEO of PanaNexus Corp., a consulting firm that specializes in working with interactive gaming operators. He sees a not-too-distant future in which leading gaming companies, both land-based and online, choose Panama as a jurisdictional base for their operations.

The Gaming Control Board targeted Sept. 25 as a final approval date for the new regulations, but had to push that back once members convened and agreed on the final set of regulations. Final regulations have been decided on and will be passed "imminently," Leon said.

"I haven't heard an exact day, but I expect it to be this month," he said.

One of the significant changes in the regulations from what went before the commission in September compared to what will be passed, said Leon, is that Panama is dropping the master licensee concept.

The initial regulations called for a master licensee that would have been able to issue sublicenses. Instead, the commission decided to have a handful of "consultancy" firms that would be approved by the commission and work with new operators wanting to come into Panama.

PanaNexus is one of those approved firms, meaning Leon and his staff will be in great position to leverage themselves within the interactive gaming sector.

"By law we are a necessary item for people to go through," he said.

The new regulations were made public last month and made their way through various private sector channels. Leon said the response so far has been great.

"It continues to move forward with very little obstacles, everyone pretty much agrees on what needs to be done," he said. "It is really just a matter of the Gaming Control Board signing off now."

Many within the Panamanian government echo the sentiments of Leon--that the jurisdiction has a good chance of becoming a leading location for offshore sports book and Internet casino operators. But the feelings and opinions of operators regarding Panama haven't always been favorable.

"About a year ago, I started bringing some of the major players from Panama up to Las Vegas just to meet with key people in the gaming industry," Leon said. "There was a lot of skepticism back then. Now a lot of the bigger players in the industry are interested in coming down to Panama."

Leon's claims aren't baseless, either. Among the leading companies that have shown "strong interest" in Panama are Steve Wynn Resorts and Icahn Gaming.

That interest rose to new heights in September when Leon made the rounds at the Global Gaming Expo, the leading trade show for the gaming industry in Las Vegas that was held in mid-September.

"At G2E there was a lot of positive response and really got no negative response whatsoever," he said. "It was a bit surprising, but I think the news has been so negative (that) the U.S. operators are just looking for a safe and reliable place to go."

"Panama is willing to fully regulate and work with the operators," he said. "England is still a good couple of years away from getting their new laws into place, and jurisdictions like the Isle of Man and others have gotten caught up in some e-commerce issues that have caused major problems for operators."

A main target for Leon and Panama regulators is the Native American gaming community. He said several of the big tribes that have ventured into interactive gaming might move their operations to Panama within the first quarter of 2003.

"I have been talking to tribes for years," he said. "I am tied in with the tribes and I think that is a definite thing at this point. Ernie Stevens, the head of NIGA (National Indian Gaming Association), is very behind what we are doing down in Panama."

To help facilitate a tribe's relocation or those that want to explore the interactive gaming opportunity for the first time in Panama, PanaNexus opened a satellite office in Los Angeles to deal specifically with the needs and regulations of Native American tribes. He predicts that the Native American sector will be the first to "heat up" in Panama.

Enter Icahn Gaming.

Leon said he expects the company to be among the first to get a footing in Panama and predicts it could be operating from the location within the next six months. He feels the company, which owns the Stratosphere Tower Hotel and Casino and other properties in Nevada and New Jersey and had many ties to the Native American community, will be just the tip of the iceberg for Panama.

"I think we will see numerous amounts of the offshore companies who have kept their noses clean," he said. "The bigger guys who have built up legitimacy and have gone public. They will be willing to deal with Panama's laws."

Chief among the regulations for Panama operators will be a very direct edict that no system will be allowed to function in the jurisdiction that allows bets to be placed from residents who are in jurisdictions where Internet gambling is prohibited or where minors can access the games. Not only will Panama-based servers not permit such bets, Leon said anyone seeking approval for their system in Panama must be able to show the Gaming Commission how the system prevents such bets from taking place.

Leon's goals for Panama are lofty, but he feels they are well within reach.

"It has just become too stressful to keep fighting politics," he said. "People keep wondering when in the world the United States in going to get a clue about all of this, but in the meantime Panama will be the No. 1 regulated jurisdiction in the world."