A proposed legislation to amend current Pachinko and Internet Lottery law by increasing the number of licenses and expanding the scope of licenses to include online gaming, eCasino, online sports betting and others, passed House of Delegates and was transmitted to Senate last week.
The House bill HD No. 10-24-12, HD2, if passed in its current form will allow to be issued 30 licenses for what is called in the bill, “Offshore Internet Gaming Business”. The scope of the licenses is expanded to E-Casino, Lottery Business, Sports Betting business, Virtual Pachinko and “other businesses that allows people not physically present within the territorial jurisdiction of the Republic to place, receive and otherwise knowingly transmit a bet or wager by any means which involves the use of internet.”
Under the current language, if it becomes law it could bring in $27 million in its first year based on fees alone, that is, if all 30 licenses are issued. The bill proposes $150k non-refundable fee for application, $750k for a concession agreement and $250k per year concession fee.
In addition to fees, the bill restricts licenses to one license per operator and require fees to change scope of licenses. The bill also allows for increase in number of licenses based on resolution by the OEK.
The measure also creates an Offshore Internet Gaming Commission, made up of 3 people, 2 appointed by President and approved by the Senate and the Minister of Finance as ex-officio member to manage and regulate the industry.
The “Offshore Internet Gaming Commission” is tasked to conduct criminal background checks of operators, monitor operators, provide reports, review and execute Concession Agreements among others.
The bill creates a different labor contracting process for employees of the “Operators”, with fee of $1,000 per person. It has an interesting note of allowing for “temporary employees” working for up to 90 days and “who are not employees of operators”. Who will they be employed by is unclear in the bill.
Furthermore, it grandfathered in the existing licensees from the Internet Lottery and Virtual Pachinko Law but exempted from criminal liability, those that had conducted internet gaming illegally before this bill would become law.
Last year, Palau arrested over a 100 chinese nationals for conducting online gaming or similar exercises in Palau. Many of these caught paid $50 dollar fines each for violating the labor laws and were sent home. Equipment such as computers, lap tops and cellphones were confiscated. Some of those that were caught in the dragnet are still here due to COVID-19 restrictions.
The bill findings state that internet gaming will generate more revenue for the Republic and may becoming the “dominant sector of our economy.”