Panama Gambling License

Situated between Colombia and Costa Rica, Panama has one of the most stable economies in Central America and is among the favored offshore jurisdictions for global gambling businesses. Panama’s currency, the balboa, is pegged to the US dollar which reduces foreign exchange risks and supports the competitiveness of Panama-based businesses selling their products and services abroad.

Panama’s gambling regulator has decades of experience in licensing gambling businesses and therefore is viewed by international entrepreneurs as reliable and competent. Due to the advantageous environment, a broad spectrum of international gambling operators is based in Panama, including online casinos, sports events betting agencies, slot machines, and much more.

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Advantages of Holding a Panama Gambling License

Panama has a stable, non-intrusive government and progressive legislation allowing locals and foreigners to establish new businesses with ease and certainty. According to the Ease of Doing Business in Latin America Index 2019, Panama ranks 8th on the basis of such parameters as time, cost, minimum capital, and bureaucratic procedures. Compared to other Latin American and Caribbean countries, the process of opening a new company is swift and not too complex.

Panama has high-standard telecommunications facilities corresponding with the level of the infrastructure and resources in the US, only much less expensive. Panama has access to several high-bandwidth continental fiber optic networks, which are the most state-of-the-art fiber-optic systems in the region. Moreover, the country has no active volcanoes and doesn’t suffer from earthquakes and hurricanes which means there are no severe interruptions in business operations due to the damage to the infrastructure.

Panama has a well-established gambling-friendly banking industry which makes it relatively easy to open business accounts required to run gambling operations. Around 100 international banks offer a wide range of high-standard, technologically advanced financial services that can support the growth and daily operations of every gambling business.

In Panama, gambling businesses have to demonstrate only limited accountability, the procedures of which are quite straightforward. For instance, there is no requirement to file annual returns. Generally, companies based in Panama are obligated to have a statutory annual audit only if their initial capital exceeds 100,000 USD (approx. 91,000 EUR) and their annual income exceeds 50,000 USD (approx. 45,000 EUR). This approach can help you save time and money while placing your attention on the development of your gambling business.

Such Panama-based offshore companies as online gambling operators are eligible to complete exemptions from Income Tax, Sales Tax, VAT, Stamp Duty, and Withholding Tax, and can operate completely tax-free when serving only players outside of Panama. They aren’t subject to foreign exchange control either. Corporate income generated from serving customers within Panama is taxed at a 25% rate which is close to the worldwide average.

Gambling Regulations in Panama

The Gambling Control Board (Junta de Control de Juegos) is responsible for the licensing, control, inspection, and supervision of gambling activities conducted in Panama. The authority aims to make Panama’s gambling industry a viable part of the economy and therefore strives to promptly respond to the needs of the market participants while also ensuring that the gambling industry in Panama is lawful, transparent, and free of risks for the government, players, and licensed gambling businesses.

Laws and regulations applicable to gambling businesses in Panama:

• Resolution No. 65 of October 25, 2002, which approved the regulations for the operation of games of luck and chance and the activities that originate bets, through electronic communication systems
• Resolution No. 92 of December 12, 1997, which approved the regulations for the operation of type A slot machine rooms and complete casinos
• Resolution No. 77 of August 4, 1999, which approved the regulations for sports event betting agencies
• Resolution No. 25 of August 28, 2003, which approved regulations for the operation of bingo halls
• Resolution No. 18 of May 15, 2001, regulates the operations of the bingo halls in relation to the prevention of money laundering activities
• Resolution No. 28 of December 18, 1995, Gazette 22948 for the operations of electronic machines powered by coins, paper money, tokens, or credit system
• Law 23 of April 27, 2015, concerns the prevention of money laundering, financing of terrorism, and the financing of the proliferation of weapons of mass destruction

Previously Panama-based operators weren’t permitted to offer their services to Panama’s residents. However, as of September 2020, Panamanian operators are allowed to have up to 5 domains ending with “.pa” which makes Panama a fully regulated gambling market where you can legally offer your gambling services in addition to international customers.

Types of Gambling Licenses in Panama

There are several types of licenses in Panama that are granted based on the nature of intended gambling activities. Specific types of authorizations are also required for some employees in order to conduct gambling operations. Below we share the information about the main gambling licenses for operators but if you wish to gain a deep insight into the types of licenses and authorizations applicable to your gambling business model, please reach out to our legal consultants here at Regulated United Europe and we’ll schedule a personalized consultation.

The main types of gambling licenses in Panama are as follows:

• Online Gaming License permits internet gaming companies located within or hosted in Panama to start online international wagering activities
• Casino License permits gambling companies to open a casino within hotels and resorts located in Panama
• Sports Events Betting Agency License – for businesses facilitating bets on a wide range of sports broadcast from around the world
• Registry of Type A Slot Machine Providers, Gaming Devices, or Associated Equipment permits gambling-related service providers to partner with Panamanian gambling operators
• Type C Gaming Machine Hall License – for slot machines parlors

According to Panama’s regulations, online gambling businesses are called Systems for Electronic Communication Games, and their license is an Administration/Operation Contract with the Gambling Control Board. A Master License is granted to run a business of electronic games of chance and wagering activities, and it also enables licensees to grant sub-licenses. A Master License is granted once the license fee of 40,000 USD (approx. 36,000 EUR) is paid. After that, the annual license fee is 20,000 USD (approx. 18,000 EUR).

Panamanian gambling licensees aren’t permitted to organize wagering events for the following:

• Sporting events at an amateur level in Panama
• Events performed outside of Panama with the participation of public or private institutions located in Panama
• Elections for a public office, within or outside Panama
• Events involving a professional team based in Panama, regardless of the place where the event takes place
• Any event played in Panama involving a professional team where the directors of the governing league request not to permit any wagering, provided that the Gambling Control Board receives such a request at least 30 days prior to the start of the event

GAMBLING LICENSE IN PANAMA

Requirements for Panama Gambling License Applicants

Some requirements for license applicants vary depending on the type of license to be granted. However, there are certain general prerequisites that every applicant is obligated to fulfill. They include the provision of evidence that involved individuals have no criminal records, the demonstration of game payouts being up to acceptable international standards, proof that the financing proposed for the operation is proper and comes from legal and acceptable sources, and compliance with national and international anti-money laundering regulations.

To apply for any of the gambling licenses in Panama, you should essentially fulfill the following requirements:

• Appoint a legal representative in Panama
• Incorporate a foreign corporation in Panama
• Allow the investigation of the company’s history and integrity and pay the corresponding non-refundable fees and costs
• Prove that you possess the experience and knowledge required to manage intended gambling operations

Regarding licensing fees, the Panama Gambling Control Board provides an applicant with a detailed itemized report of the costs and fees incurred in the investigation which must be paid by the applicant in full upon the authority’s request. The authority only makes a final decision if an applicant pays all of the investigation costs and fees in full. If the full payment is missing, the application is eventually rejected regardless of the suitability of the applicant. If a deposit was made to cover the provisional costs and fees of the investigation, the applicant may receive a reimbursement from the authority for any balance of unused funds during the investigation.

Whether you’re applying for an Administration/Operation Contract for your online gambling business, a Land-Based License, or a Sports Betting License, you should provide the following documents:

• Power of attorney authorizing a lawyer to carry out the process
• A business plan
• A Public Registry Certificate of the applying corporation
• A feasibility study from a consulting firm not owned by the applicant evidencing the feasibility of the intended gambling business
• Evidence that the applicant is financially capable of fulfilling its obligations, undertaking and developing its intended operations, and providing working capital in accordance with the business plan
• Evidence that the applicant is able to convincingly identify the gamblers and/or the source of their funds
• Copies of passports of directors, shareholders, and other officers mentioned in the application
• Copies of the agreements with suppliers of the hardware or software for the gambling business
• A recommendation letter from a bank containing information on accounts
• Authenticated copies of documents certifying the corporation’s structure
• A description of the financial structure of the corporation, including a list of all outstanding shares, and a list of the shareholders’ rights
• A certificate issued by the corporate secretary indicating the names of every shareholder
• A certificate issued by the corporate secretary listing all outstanding loans, encumbrances, mortgages, obligations, and any other liabilities
• A certificate issued by the corporate secretary indicating the names of employees whose benefits, wages, or fees correspond to the 10% highest amounts of the payroll, whether or not they are directors, officials, officers, or employees in lower positions
• A description of the procedures used by the company to issue bonds and profit-sharing
• A copy of the agreements or sub-agreements executed in relation to the operations of the games
• A general statement of profit and loss, prepared by an authorized certified public accountant covering 3 fiscal years prior to the date of the licensing application (if the company hasn’t yet been operating for 3 years, the statement must include the complete period of operations)
• Copies of the last 3 years of Income Tax returns (if the company hasn’t yet been operating for 3 years, an estimated income-tax return will suffice)
• A manual of internal control methods arranged according to the acceptable standards for internal control procedures
• Documents describing the organizations’ experience and/or employees developing the gambling operations, including, knowledge and experience in the administration of informational systems
• Evidence of the personal, criminal, commercial, and financial records of each director, official, trusted employee, and each shareholder who owns at least 10% of the shares of the applicant company, and of any person who has a significant relationship with the proposed operations, detailing the 10 years prior to the date of presentation of the corresponding application

The application must also include the following information:

• The name of the applying company
• Date of registration, legal representative, directors, and officers of the applying corporation
• Names of all persons directly or indirectly involved in the proposed operations and the nature of their interests
• For online gambling businesses, names of the suppliers of the hardware or software of the System for Electronic Communication games to be used, as well as all terms and conditions regulating its relations with these suppliers
• For land-based casinos, the location of the game room
• For a sports events betting agency, the location of the sports event betting agency(s)

The business plan should include the following information:

• For online gambling businesses – details of the gambling hardware and software to be used in the operations, a detailed description of games to be provided, and markets to be entered
• For land-based casinos – the number of arcades that the applicant intends to operate, their locations, and the number and type of gaming tables and slot machines of Type A to be operated by the casino
• For sports events betting agencies – the number of sports events betting agencies that are intended to operate and their location, the sports to be broadcast and the types of bets to be accepted

A business applying for the Registry of Type A Slot Machine Providers, Gaming Devices, or Associated Equipment must also supply the following:

• An affidavit where the manufacturer states that it will only manufacture, sell and/or distribute gaming devices or associated equipment that fully complies with all applicable Panamanian laws and regulations
• A certified check for 1,000 USD (approx. 912 EUR) in favor of the National Treasury for the Registry of Suppliers

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Panama’s Gambling License Application Process

Provided that all the required documents are duly prepared and submitted, the application process usually takes 1-2 months. If the applicant completely withdraws the application, it’s only possible to re-apply after a year.

The main steps of applying for a gambling license in Panama:

• Paying a deposit specified by the Gambling Control Board in order to initiate the investigation process
• Submitting the application to the Gambling Control Board for investigation in a form approved by the authority
• The authority may request all persons whose names appear in the application to attend and testify in front of the competent persons (failure to attend may result in the rejection of the application)

Once the application is submitted and the process of investigation has been initiated, the information relating to shareholders, financial data, the board of directors, or the gaming systems can’t be modified. If the change is unavoidable,  the applicant must withdraw the submitted documents and submit them again once the amendments are made.

During the investigation process, the authority examines the integrity, competence, qualifications, and financial solvency of the applicant to ensure that a license is granted only to capable and trustworthy businesses that can safeguard players, public interests, and the reputation of the jurisdiction. Additionally, the authority can employ private agencies to conduct the investigation.

How to Establish a Gambling Company in Panama

In Panama, there are a variety of legal business structures but they don’t include a separate type of corporation to conduct business solely outside of Panama. The most common type is a Sociedad Anonima which is often called a Panama Corporation and is considered a Corporation of Shares, perfectly suitable for international businesses as foreigners can own 100% shares.

There is no legal obligation to disclose shareholders’ names, and their assets are separated from the corporation. On the other hand, the information about shareholders must be shared with the bank where the corporation has a bank account. You’ll find it easy to establish such a corporation as the process is straightforward and cost-effective. Provided that all the required documents are duly supplied, it may take 5 business days to set up a Panama corporation.

Key requirements for a Panama Corporation:

• At least 2 individual founders which are called subscribers (no residence or citizenship requirements)
• 3 directors – president, secretary, and treasurer (can be one person occupying all 3 positions, either natural or legal person)
• At least one shareholder (either a natural or legal person who must be present post-incorporation to receive the issuance of one share)
• Standard authorized share capital – 10,000 USD (approx. 9,000 EUR) although there are no legal requirements
• A resident agent who can be either a lawyer or a law firm domiciled in Panama to participate in legal proceedings

The following documents are required to establish a Panama Corporation:

• Articles of Incorporation
• Copies of passports of subscribers, shareholders, directors, and a resident agent
• Proof of address of each director and a resident agent
• Minutes of the Board of Directors authorizing registration in Panama
• A copy of the recent financial statements
• Evidence of the capital transfer for the operations in Panama
• A certificate from the Panamanian Consul certifying that the organization of the company has been established according to the law of the place where it has been subscribed

The process of establishing a Panama Corporation is as follows:

• Founders reserve a legal company name that includes one of the following suffixes: Incorporation (Inc), Corporation (Corp), or Sociedad Anónima (S.A.)
• Subscribers sign the deed of formation of the Articles of Incorporation in front of the Public Notary in Panama
• Optionally, a corporate bank account is opened with a bank in Panama although the bank accounts can also be opened at foreign banks
• The Articles of Incorporation are inscribed in the Public Registry of Panama which is an act of incorporation
• Once a company is incorporated, company shareholders are appointed on a physical share certificate
• The corporation registers with the Directorate General of Revenues (DGI) to obtain a Tax Identification Number (TIN)
• The corporation registers with the Panama Emprende System (MICI) to obtain an Operation Notice
• The corporation registers at the municipal level, usually with the Treasury of the corresponding municipality where the corporation is headquartered
• The corporation registers with the Social Security Fund (CSS)

If you think that Panama is a promising jurisdiction for your gambling business, our team of gambling license consultants here at Regulated United Europe will be delighted to support you in incorporating a company and obtaining a gambling license in Panama. With dedicated legal advisors, tax experts, and financial accountants at your side, you will find the incorporation and application processes easy, frictionless, and transparent. Contact us now to schedule a personalized consultation and set the stage for long-lasting success.