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Is Gambling Legal in Palau?

Partially Regulated
Most gambling is prohibited, but limited online gaming concessions are regulated for non-citizens under strict oversight by the Ministry of Finance.
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    Key Information Highlights Legislation Timeline Requirements Sources

    Key Information

    Last Update 2025
    Regulatory Authority Ministry of Finance
    License Cost Varies

    Regulation by Activity Type

    Casinos Prohibited
    Online Casinos Partially Regulated
    Betting Prohibited
    Online Betting Prohibited
    Lotteries Regulated
    Poker Prohibited

    Highlights

    • Palau regulates online gambling under Chapter 14 of Title 11 of the Palau National Code.
    • Online gaming operators must obtain a concession license and comply with strict permitting requirements.
    • Licensees must pay an annual license fee and begin operations within three years or risk license revocation.
    • Operators are required to pay a 4% tax on income generated, less winnings paid out.
    • Licensed operators must locate their servers in Palau to allow for proper auditing and tax compliance.
    • Despite issued licenses, no online gaming operator had commenced operations as of 2024.
    • A government taskforce investigates unlicensed and potentially illegal gambling activities in Palau.
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      Legislation

      Primary Legislation

      The core legal framework governing gambling in Palau is established by the Palau National Code Annotated (PNCA), specifically Title 17, Chapter 50. This legislation generally prohibits gambling activities within the country, making most forms of gambling illegal. However, there are specific statutory exceptions that allow for certain internet-based gaming activities, such as Virtual Pachinko and the Internet Digits Lottery, provided these services are offered exclusively to persons located outside Palau. These exceptions were introduced through amendments to the original law, first enacted in 2000 and subsequently amended in 2008. Social gambling and activities conducted by non-profit organizations are also exempted from the general prohibition.

      Regulatory Authority

      Oversight and enforcement of gambling laws in Palau are primarily the responsibility of government authorities as designated by the PNCA. For the specific area of internet-based gaming, regulatory functions are typically managed by the Division of Revenue and Taxation under the Ministry of Finance. Recent legislative proposals have suggested the creation of a dedicated Offshore Internet Gaming Commission, which would be responsible for monitoring operators, conducting background checks, and managing concession agreements for offshore internet gaming businesses. However, as of now, the Division of Revenue and Taxation remains the principal regulatory body overseeing permitted gambling activities.
      • Enforcement of gambling prohibitions and exceptions under the PNCA
      • Regulation and oversight of permitted internet-based gaming activities
      • Issuance and monitoring of licenses for approved gambling operations

      License Types

      Types of Gambling Licenses in Palau

      • Online Gaming Concession License: Palau issues a specific license for online gaming operations, referred to as an Online Gaming Concession. This is currently the primary form of gambling license available in the country and is designed for operators wishing to provide online gaming services.

      Application Process

      • Submission: Interested operators must submit a formal application to the relevant Palauan authorities as outlined in the official regulations for online gaming concessions.
      • Documentation: Applicants are required to provide detailed business information, including ownership structure, financial background, and operational plans.
      • Review: Applications are reviewed by the designated regulatory authority, which assesses the suitability and compliance of the applicant with local requirements.
      • Approval: Upon successful review and payment of required fees, the concession license may be granted.

      Duration and Renewal Conditions

      • License Duration: The license is typically valid for a period specified in the concession agreement. Operators must commence operations within three years of license issuance; otherwise, the license is subject to revocation.
      • Renewal: Licenses must be renewed annually. Renewal is contingent upon continued compliance with all regulatory requirements and timely payment of annual fees.

      Eligibility Requirements

      • Business Entity: Applicants must be legally registered business entities and demonstrate the capacity to operate an online gaming platform.
      • Technical Infrastructure: Operators are generally required to host their servers within Palau to ensure regulatory oversight and facilitate auditing.
      • Operational Readiness: License holders must begin operations within three years of obtaining the license, or risk revocation.
      • Compliance: Ongoing compliance with all licensing and permitting requirements is mandatory for maintaining the license.

      Licensing Costs and Financial Requirements

      • Application Fee: A non-refundable application fee is typically required upon submission, though the exact amount may vary based on current regulations.
      • Annual License Fee: Operators are required to pay an annual license fee of $180,000. This fee must be paid regardless of whether the operator has commenced gaming operations.
      • Financial Solvency: Applicants may be required to demonstrate sufficient financial resources to support ongoing operations and regulatory compliance.

      Key Requirements for Obtaining and Maintaining a License

      • Maintain all business and operational records as required by the regulatory authority.
      • Ensure gaming servers are located within Palau for regulatory oversight.
      • Begin operations within three years of license issuance to avoid revocation.
      • Comply with all ongoing regulatory, technical, and reporting requirements as stipulated in the concession agreement.
      • Renew the license annually and pay all required fees on time.

      Gambling Tax

      Tax Rates for Gambling Operators in Palau

      Palau’s gambling taxation system is highly restrictive, as most forms of gambling are prohibited except for specific offshore online gaming operations. The only permitted gambling activities are Virtual Pachinko and Internet Digits Lottery, both of which are designed exclusively for players located outside Palau.
      Type of Gambling Operation Annual License/Concession Fee Other Tax Rates
      Virtual Pachinko $45,000 per year No additional gambling-specific tax reported
      Internet Digits Lottery $45,000 per year No additional gambling-specific tax reported

      Basis for Taxation

      • Taxation for gambling operators in Palau is based on a fixed annual license or concession fee for each permitted type of operation (Virtual Pachinko and Internet Digits Lottery).
      • There is no evidence of a tax based on gross gaming revenue (GGR), turnover, or other performance-based metrics for these activities.

      Tax Reporting and Payment Requirements

      • Operators must pay the annual license fee of $45,000 to the Division of Revenue and Taxation.
      • Payment is required prior to the issuance or renewal of the license each year.
      • There are no published requirements for additional periodic tax reporting or remittance beyond the annual license fee for these specific gambling activities.

      Tax Incentives, Exemptions, and Special Provisions

      • No tax incentives or exemptions specific to gambling operators are reported for Virtual Pachinko or Internet Digits Lottery operations.
      • Operators are required to ensure that only non-residents of Palau can access these games; Palauan citizens are strictly prohibited from participating.
      • There are no special provisions for reduced rates or other tax benefits for gambling operators in Palau.

      Recent Legislative Proposals

      • Recent legislative proposals (not yet enacted) have suggested higher fees for a broader range of online gambling activities, including:
        • $150,000 non-refundable application fee
        • $750,000 concession agreement fee
        • $250,000 annual concession fee
      • As of now, these proposals have not become law, and only the $45,000 annual license fee for the two allowed activities is applicable.

      Prohibited Individuals

      Age Restrictions and Identification Requirements

      The minimum age for participating in legal social gambling in Palau is 18, which aligns with the age of majority under Palauan law. Operators are required to verify the age and identity of participants to ensure compliance with this restriction. For internet-based gambling activities that are permitted under specific licenses, operators must implement measures to prevent Palauan citizens—including minors—from accessing these platforms.

      Prohibited Gambling Activities and Game Restrictions

      • Most forms of gambling are prohibited in Palau, including the operation of casinos and most commercial gambling activities.
      • Only social gambling, non-profit organization gaming, and certain offshore internet-based games (such as Virtual Pachinko and Internet Digits Lottery) are permitted under tightly controlled conditions.
      • Palauan citizens are expressly prohibited from participating in any form of online gaming, including Virtual Pachinko and Internet Digits Lottery. Operators are legally mandated to block access to these games for locals.
      • There are no physical casinos or gaming venues permitted within Palau’s territory.

      Advertising and Marketing Limitations

      • Advertising and marketing of gambling services to Palauan citizens is strictly prohibited, especially for online gaming platforms licensed to operate offshore.
      • Operators must ensure that all promotional materials are not targeted at or accessible to residents of Palau.
      • Any form of public promotion or inducement that encourages locals to participate in prohibited gambling activities is not allowed.

      Responsible Gambling Requirements and Player Protection Measures

      • Operators of permitted internet-based gambling activities must implement systems to verify the location and identity of players, ensuring that Palauan residents cannot participate.
      • There are requirements for operators to block access from within Palau, using technological means such as IP blocking and geolocation checks.
      • For social and non-profit gambling, organizers must ensure compliance with age restrictions and may be required to monitor for signs of problem gambling, although detailed responsible gambling frameworks are limited due to the overall restrictive environment.

      Geographic and Location Restrictions

      • All forms of commercial gambling venues, such as casinos, are prohibited within Palau’s territory.
      • Permitted internet-based gambling activities (Virtual Pachinko and Internet Digits Lottery) are restricted to players physically located outside Palau. Operators must ensure that no gambling activity is accessible from within the country.
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        Timeline

        Year/Date Event
        1993 Palau adopts its Constitution, which does not explicitly address gambling but establishes the legal framework for future legislation.
        Early 2000s First attempts to introduce casino legislation in Palau are made, but proposed bills fail to pass in the legislature.
        2011 The Palau Casino Gaming Control Act is discussed in the legislature, aiming to regulate and license land-based casinos; the bill does not pass into law.
        2016 Renewed efforts to legalize and regulate casino gambling are debated, with several proposed bills considered by the Olbiil Era Kelulau (National Congress), but no comprehensive law is enacted.
        2020 Government authorities increase enforcement against illegal gambling operations, highlighting the ongoing issue of unregulated gambling activities.
        2023 Palau Casino Gaming Control Commission is referenced as the licensing and regulatory authority for casino operations, indicating ongoing regulatory efforts.
        December 18, 2024 Presidential Directive 24-65 is signed, strengthening vetting and security measures in response to illegal gambling and associated crimes by foreign nationals.
        2025 Public notice issued by the Ministry of Finance regarding the extension of application deadlines for gaming concessions, reflecting continued attempts to formalize gambling regulation.

        Requirements

        Software Certification and Technical Standards

        • All gambling software used by operators must undergo independent certification to verify fairness, randomness, and compliance with technical standards established by the regulatory authority.
        • Gaming systems are required to employ certified random number generators (RNGs) and must provide regular reports on game fairness and payout percentages.
        • Operators must implement robust technical controls to ensure the integrity and security of gaming systems, including secure software development practices and regular vulnerability assessments.
        • System architecture and software updates must be documented and subject to approval by the regulatory body prior to deployment in the live environment.

        Data Protection, Privacy Measures, and Server Location Requirements

        • Operators are required to implement strong data protection measures, including encryption of sensitive player data both in transit and at rest.
        • Personal data must be stored in compliance with applicable privacy laws, with access restricted to authorized personnel only.
        • Data retention and deletion policies must be in place to ensure that personal and financial data are only kept as long as necessary for regulatory and operational purposes.
        • Servers hosting gaming operations and player data must be located in jurisdictions approved by the regulatory authority, ensuring data accessibility for audits and investigations.

        Anti-Money Laundering (AML) and Know Your Customer (KYC) Procedures

        • Operators must establish comprehensive AML programs, including the monitoring of transactions for suspicious activity and the reporting of such activity to the relevant authorities.
        • KYC procedures are mandatory and require the verification of customer identity, age, and source of funds prior to account activation and during ongoing transactions.
        • Operators must maintain detailed records of all customer due diligence and enhanced due diligence checks, including supporting documentation.
        • Automated monitoring systems should be implemented to detect unusual betting patterns and potential money laundering risks.

        Financial Reporting, Auditing Standards, and Record-Keeping Requirements

        • Operators are required to submit periodic financial reports, including audited statements, to the regulatory authority in accordance with prescribed formats and timelines.
        • All financial transactions, including deposits, withdrawals, and internal transfers, must be recorded in a secure and tamper-evident system.
        • Operators must retain all financial, transactional, and player activity records for a minimum period as specified by the regulator, ensuring their availability for inspection and audit.
        • Independent audits of gaming systems and financial operations must be conducted regularly, with findings reported to the regulatory authority.

        Technical Implementation Requirements for Responsible Gambling Tools

        • Operators must provide technical tools enabling players to set deposit, loss, and session limits, as well as self-exclusion options, directly through the gaming platform.
        • Responsible gambling features must be integrated into all player interfaces and be easily accessible at all times.
        • Systems must automatically enforce player-imposed limits and exclusions, with immediate effect and without manual intervention.
        • Operators are required to display responsible gambling information and support resources prominently within their platforms.

        Sources

        Primary Regulatory Authorities

        Legislation Resources

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          Important Information Notice

          Gambling regulations are subject to change. The information provided on this page was accurate at the time of publication, but may not reflect the current regulatory landscape. Always consult official sources for the most up-to-date information before making any gambling-related decisions.

          Last updated: 22 April 2025