Starting a Panama Online Gambling Operation
Panama’s Ministry of Economy & Finance’s Gambling Control Board issued Resolution 65 in 2002 regulating Online Gambling operations from Panama.
Administration/Operation Contract Required
That Resolution stated that in order that a natural or a legal entity operates a System for Electronic Communication Games in or from the Republic of Panama, it must enter into an Administration/Operation Contract with the Gambling Control Board.
The Gambling Control Board issues the Gambling Licenses permitting the Administrator/Operator to conduct the System or Systems for Electronic Communication Games for every Contract.
The System for Electronic Communication Games will be subject to the regulations of the Gambling Control Board, even though part of its elements function outside the Republic of Panama. Such conditions will be set forth in the Agreement with said Administrator/Operator.
The Systems for Electronic Communication Games operating in or from Panama shall not be used by persons residing in the country.
Wages will not be placed on the following types of events:
1. Sporting events at an amateur level in the Republic of Panama.
2. Events performed outside of Panama with the participation of public or private institutions located in Panama.
3. Elections for a public office, within or outside Panama.
4. All events involving a professional team headquartered in Panama, regardless of the place where the event will be held.
5. At the discretion of the Director or the Panama Gambling Control Board regarding any other event.
Any event played in Panama involving a professional team where the Directors of the governing league request that no wagering be permitted, such request to the Gambling Control Board must be made not less than thirty (30) days before the event begins.
Request for an Agreement
Requirements to Request an Agreement for the Operation and Management of Systems for Electronic Communication Games:
Every applicant applying for an Agreement shall provide the following:
a. Compliance with the pertinent Laws and Regulations;
b. Appoint a Legal Representative in the Republic of Panama;
c. Allow the investigation on its history and integrity and pay the corresponding fees and costs. Incurred expenses will not be reimbursed;
d. In regards to a corporation, it must be created in Panama or registered as a foreign corporation in the Public Registry of Panama;
e. Prove the necessary experience and knowledge for the development of the proposed operation.
f. Submit a Business Plan together with a Feasibility Study from a consulting firm not owned by the applicant evidencing the feasibility of the projected business. The Applicant and the Director must agree on the consulting firm providing the feasibility study.
g. Submit satisfactory evidence that the applicant has the financial ability to pay its obligations, to completely undertake and develop the proposed operation and to furnish the working capital detailed in the submitted Business Plan;
h. To prove that the System for Electronic Communication Games has the capacity to convincingly identify the gamblers and/or the source of their funds.
i. Submit the application in a form approved by the Director.
j. In regards to a corporation, the Articles of Incorporation must include the following:
(1) The Section relating to Corporate Purposes must include the following text: “To operate and manage systems for electronic communication games under the rules and regulations enacted by the Panama Gambling Control Board.”
(2) In regards to Corporate Shares, the Articles of Incorporation shall include words considerably stating:
“The Corporation shall only issue shares or securities created under provisions enacted by the Panama Gambling Control Board. Issuance of any shares or securities violating the provisions of the Panama Gambling Control Board shall be invalid and said shares or securities shall be considered as not issued and outstanding until: (a) the Corporation is no longer subject to the jurisdiction of the Panama Gambling Control Board; or (b) the Panama Gambling Control Board validates said issuance by resolution.”
“No share, encumbrance or interest can be transferred, except under the provisions enacted by the Panama Gambling Control Board. Any transfer violating the provisions of the Panama Gambling Control Board shall be invalid until: (a) the Corporation is no longer subject to the jurisdiction of the Panama Gambling Control Board; or (b) the Panama Gambling Control Board validates said transfer by resolution. ”
If a holder of a security or a shareholder of the Corporation is deemed unfit to own the securities by the Panama Gambling Control Board and until said securities are property of persons the Panama Gambling Control Board considers fit: (1) the Corporation shall not be authorized or required to pay any interest or dividend in relation to said securities; (2) the holder of said securities will have no voting rights in any matter and said securities shall not be included in the securities of the Corporation with a right to vote; (3) the Corporation shall pay no compensation, in any manner to the holder of said securities.”
k. Comply with the provisions of Article 12 of this Regulation.
Information and Documentation to be Submitted
The request for Agreement must include the following information together with the required documents:
a. Applicant’s name;
b. Names of the suppliers of the hardware or software of the System for Electronic Communication games to be used, specifying all terms and conditions regulating its relations with said suppliers and to submit a copy of the agreements or contracts subscribed for such purpose.
c. Name of all persons directly or indirectly involved in the proposed operation and the nature of such interest.
d. Complete and detailed information on the personal facts of the applicant and its reliable employees, indicating commercial activities, financial matters, and criminal history, including a minimum of ten (10) years prior to application submission.
In regards to a corporation, the required information must also be submitted for all legal representatives, officers, directors, shareholders of ten percent (10%) or more of the corporation’s total shares and any other person named by the Director.
e. Details of the Business Plan.
f. In regards to a corporation, submit a Public Registry Certificate of its existence, date of registration, legal representative, directors and officers.
g. Submit authenticated copies of documents certifying the corporation’s structure or authenticated copies of documents certifying the natural person’s identity.
h. Describe the financial structure of the corporation, including a list of all outstanding shares, and a list of the shareholders rights.
i. Provide Corporate Secretary certification indicating the names of every shareholder.
j. Provide Corporate Secretary certification or the applicant (if not a corporation) listing all outstanding loans, encumbrances, mortgages, obligations and any other liabilities incurred.
k. To enclose a certification issued by the Corporate Secretary or the applicant, indicating the names of employees whose benefits, wages or fees correspond to the ten (10) highest amounts of the payroll, whether or not they are directors, officials, officers or employees.
l. Describe the procedures used by the applicant to issue bonds and profit-sharing.
m. Specify and submit a photocopy of the agreements (or contracts) or sub-agreements executed or to be executed in relation to the operation of the game or other activity requiring a license.
n. Provide a general Profit and Loss statement which must be prepared by an authorized certified public accountant covering three fiscal years prior to the date of application. In case the applicant has not been in operation for three (3) years, the statement must include the complete period of operation.
o. Provide copies of the last three (3) years income tax returns. An estimated income-tax return is acceptable if the applicant has not been in operation for a full fiscal period.
p. Provide a copy of a Manual on Internal Control Methods arranged according to the acceptable standards on internal control procedures.
q. Provide documents describing the organizations’ experience and/or employees developing the operation, including, with no limits, knowledge and experience in the administration of informational systems.
r. Provide any other information or documents that the Director considers necessary to guaranty the security, public health, morale, order, good image and general welfare of the inhabitants of the Republic of Panama and of the gambling industry.
Changing the Application
No changes can be made regarding any information in the application in relation to the System neither for Electronic Communication Games to be used, nor to the financial data, shareholders and Board of Directors of the applicant once it is submitted and during the investigation procedure.
If a change is necessary, the applicant must withdraw the submitted documents, and shall submit them again after making the corrections.
Once the Director receives the application and documents he will initiate an investigation where the expenses will be totally paid by the applicant.
Execution of Agreements, Competence Certificates, Consent Certificates and Registrations
The following information will assist the Gambling Control Board with deciding on the acceptance of Agreements, Certificates and Registrations:
a. To duly certify the applicant’s integrity, honesty, competence and experience.
b. To confirm that the records and activities of the applicant are not a threat to Panama’s public interest, nor will they violate applicable laws of wagering and games of chance activities, and the applicant’s participating in Panama’s gambling industry does not create a danger by introducing or increasing illegal activities in the management or administration of gambling, and that the applicant is not involved in illegal financial or commercial activities.
c. That the financing proposed for the complete operation is proper and comes from legal and acceptable sources.
d. That the capacity of the system for electronic communication games convincingly identifies the identity of the gamblers and/or the source of the money used by them.
Agreements or Competence Certificates issued to any Panama Gambling Control Board employee or any other person working for any government institution that is contributing to the Panama Gambling Control Board are prohibited.
This restriction specifically applies, without limitation, to officials of the Ministry of Economy and Finance, the Agency of the Administration, the Public Ministry, the Judicial Body, the General Comptrollership of the Republic and the National Assembly.
Procedures For Application
Duty to Investigate:
The Director or a duly appointed person will investigate the honesty, integrity, competence, qualifications, experience, financial solvency, and background of the applicant for an Agreement, Competence Certificate or Consent Certificate is issued.
All state agencies shall cooperate with the investigation. Private investigation agencies may be employed to conduct the investigation.
Cost of Investigation
All costs and fees incurred in the investigations will be completely paid by the applicant, unless otherwise provided in these Regulations.
The Director will estimate the costs and fees of the investigation and shall require payment from the applicant. The Director will require the applicant to pay a deposit as a condition for starting or continuing the investigation.
If applicant has not paid all of the investigation costs and fees, the Panama Gambling Control Board will not make any final decision on the application. If the applicant does not pay all the costs and fees of the investigation, the Director shall recommend that the application be denied. After its completion, the Director shall provide the applicant with a detailed itemized report of the costs and fees incurred in the investigation.
If a deposit has been made covering the costs and fees of the investigation the applicant will receive a reimbursement from the Director of any balance of unused funds resulting from the investigation.
Notification of Applicants
The Director will cause all persons whose names appear in the application to attend and testify before in front of him or his agent. Testimony will occur regarding any matter considered necessary by him or his agent.
If the person fails to appear at the place and time designated or lacks full testimony, without a written excuse to justify his absence, it will be grounds to deny the application.
Withdrawal of an Application
If the Director has not submitted his recommendation to the Panama Gambling Control Board, the applicant may request the withdrawal of the application in writing. The Director shall grant or deny the requested withdrawal.
If the requested withdrawal is approved, not until a full year has passed from the date of approval can the applicant apply for another Agreement or submit any other application.