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Next Wednesday June 3, 2020, Senate Committee on Public Utilities and Housing will conduct a hearing on House bill 10-12-12-HD2, an online gaming bill.

Many are concerned, worried but I believe most are not exactly sure how to feel about this proposed measure because we lack information and knowledge on the subject and we don’t feel confident taking a stance on the issue.

Although I myself am not an expert on online gaming or gambling for that matter, I have been trying to research and understand it a little bit more.  I am definitely not an expert but I will share what I have learned so far which hopefully will make us think about the issue and ask more questions so that we can form an opinion based on some solid information.

First of all, the first thing that pops into our heads when we hear the word online gaming is gambling.  We know that Palau prohibits gambling yet existing Palau law also allows for Virtual Pachinko and Internet Lottery licenses.  Most us believe that there is no difference between online gaming and gambling.  Palau seem to differentiate the two with where the player is located as oppose to type of activity the player is engaged in.  The current law demands that operations, servers and computers operating the businesses be in Palau but the player must be outside of Palau accessing games here via internet access.

The difference between online gaming and gambling according to a research called Distinguishing Between Gaming and Gambling Activities in Addiction published in the Journal of Behavioral Addictions says,  “gaming is principally defined by its interactivity, skill-based play, and contextual indicators of progression and success. In contrast, gambling is defined by betting and wagering mechanics” but the study also said that the lines between the two are blurring as technology has rapidly evolved creating a hybrid of the two.

Also, the word gaming is becoming more commonly used in place of the word gambling because of the negative connotation connected with gambling.  Therefore, if you are confused with terms like online gaming and online casino and internet gaming, don’t feel bad.  It is confusing to try and separate them but in reality, they are nearly one and the same.  As mentioned above, our law does not differentiate based on actual definition of the words or actions, rather where the principal actor or player is when he/she plays the game.  In other words, it is not What kind of game is being played, it is Where the player is playing the game. It seems our law define an act to be gambling if the player is in Palau but if the player is outside of Palau, then it is not gambling.  A proof of that is that the law prohibits Palauans in Palau to access the games and in fact, mandate the company to ensure that their systems are closed to anyone trying to access them from Palau.

Definition is just one issue and possibly a minor one at that if we are looking at the bill being proposed.  So let us look at few of the outstanding features of the bill.

First, it increases the current number of licenses from 4 to 30.  Second, it expands the scope of licenses from Virtual Pachinko and Internet Lottery to pretty much any internet form of gaming.  Sports betting, e-casino, virtual pachinko and internet lottery, are really online gambling.  But remember, gambling in Palau is not defined by what but by where.

Thirdly, the fees.  The fees are quite huge, with $750,000 for concession agreement, $250,000 yearly fee, $1,000 per employee fee and so on.  With the pandemic at our heels, we may be pressured to find source of funds elsewhere beside tourism but it is imperative that we look beyond the surface of this fantastic number and ask questions.

For example, how many employees per company is expected?  There is an ongoing project planned in Melekeok to house perhaps a 1,000 employees for such company.  $1,000 times 1,000 employees, that is $1 million dollars.  If you have 30 companies with 1,000 employees each, that is 30,000 million dollars, nearly half of our direct tourism revenue.  It also means, Palau will have 30,000 resident employees, a 200% increase over the local population.  Last count, Palau’s local population was at 12,000.  These are people that will be living 365 days a year in Palau, impacting infrastructure, services and environment.  Food, supplies, services such as more police officers, medical support and so on.

Now, there will be benefits, such as more people to sell stuff to, more money to government, money for specific projects but we need to know and understand trade off benefit.  Can we sustain without compromising quality of life?  Is there a way to minimize impact on our limited resources?  Will it affect our international standing, particularly our financial reputation?  Based on the current language of the bill, no.  There are no safeguards, no controls.  All are left to “regulations” to be developed by a 3-people Commission to oversee 30 online gaming businesses.  People to regulate this massive and highly technical and transnational business have no specific qualifications other than to be appointed by the President and confirmed by the Senate.

We do need to look outside the box for solutions, especially given this pandemic but I think, if this is one option to look at, a lot of work needs to be done to ensure that we don’t sell ourselves short, that we don’t become victims of unintended consequences, that our country, our culture and our legacy is protected for our children and the future generations.  We need to ask our leaders to study the bill in depth, look at the impact the same industry has had in Philippines, Cambodia, Vietnam and others and learn from their mistakes and if possible, develop an online gaming policy that benefits not only Palau’s citizens today but the generations to come.

Let’s not go from being a Pristine Paradise Palau to Scam City Palau.