Gaol is an obsolescent spelling of the word now usually spelled jail. Other than the spelling, there is no difference between the words. Gaol was common outside North American until fairly recently (it was stamped out of American English in the early 19th century, and dropped out of Canadian use about a century later), but it underwent a steady decline through the 20th century and now appears only rarely. Its most common use today is in the names of jails, but it is still possible to find a few scattered instances of gaol as a common noun in recent writing. For reasons mysterious to us, it appears to be most common in Ireland and Australia.
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