Off limits

Mon, Jun 30th 2014, 11:54 AM

The government will in a few days bring a new Gaming Bill to Parliament.
It would continue existing discrimination that prevents Bahamians ordinarily resident in The Bahamas, permanent residents and work permit holders from gambling in casinos.
But for the first time, this group would be known as "domestic players". They would be permitted to legally gamble in web shops.
In coming up with the new bill, the government is attempting to strike a balance between appeasing hotel owners and operators, and establishing a properly regulated web shop sector.
There is great controversy over which group should be treated most favorably under this new law.
There is also a lingering question of whether it is possible to keep the client base of casinos and web shops separate while pleasing both groups.
Under the new law, casinos would legally have exclusive access to foreign players while the domestic players would still be prohibited from gaming in those casinos.
With billions of dollars of investments in The Bahamas, hoteliers have stressed to the government the need to protect their investments and honor obligations outlined in various heads of agreement.
How to treat web shops, meanwhile, remains an issue of great debate.
In the main, web shop owners are Bahamian business people. Under the bill, only Bahamian citizens could own web shops.
Although Tourism Minister Obie Wilchcombe said last week they have "illegal operations", the web shop owners and their attorneys have argued that there is no law that prohibits them from conducting their current activities as the existing legislation does not speak in any way to online gaming.
Prior to last week, government officials were shy to use the word "illegal" when referring to web shops.
This thinking was reflected in the gambling referendum questions last year when the government spoke about taxing and regulating web shops as opposed to legalizing them.
Apart from the general contentious debate on whether web shops should be regulated, there is a debate over whether Bahamian business people should be disadvantaged as the government honors its agreement with hoteliers.
Those casinos continue to enjoy government subsidies every year.
There is also the wider issue of whether Bahamians should be allowed to legally gamble in casinos.
It is disappointing that the government will bring a bill to Parliament that would continue to discriminate against Bahamian citizens ordinarily resident in The Bahamas.
There are complex issues relating to that point, we are told, including concerns about foreign exchange.
Constitutional Commission Chairman Sean McWeeney advised last year that a simple amendment to the Lotteries and Gaming Act could address the casino issue if the government wanted.
But the government is not now prepared to address it.
Speaking to the issue recently, Wilchcombe said, "If you look at The Bahamas right now, our savings are low as Bahamians, and you do not want to create situations that could become uncontrollable.
"And of course you have to always factor in the cause and effects."
Licenses
So while Bahamians ordinarily resident in The Bahamas would not be able to legally gamble in casinos, perhaps those who choose to gamble in web shops would be a little more comfortable that they are not involved in illegality.
The latest version of the bill now makes provisions for several new licenses not a part of the old bill tabled in Parliament last October.
The newly included licenses are a gaming house operator license, a gaming premises license and a gaming house agent license.
They all relate to web shops.
The bill was drafted with the involvement of South African consultants.
It makes it clear that, "No domestic player shall take part in any gaming or betting authorized by a license issued in terms of this act, other than a gaming house operation license, or on any premises in respect of which licenses have been issued under this act, other than premises licensed in terms of section 45 and 46, save in so far as he may be required to be involved in the conduct of gaming in the course of his employment."
Premises licensed under those sections of the act would be web shops.
Again, domestic players would be confined strictly to those web shops.
They would be able to participate in "numbers games", defined by the act as games "made available by the holder of a gaming house operator license in terms of which any single number or combination of numbers ranging from 000 to 999 may be wagered upon by a player at odds which are fixed at the time of conclusion of the wager".
The web shop licenses "may be applied for only in response to a formal invitation to apply for such licenses issued by the [Gaming] Board and advertised in the prescribed manner in the Gazette."
Of note, the bill states that, "A gaming house operator license shall authorize the conduct on premises licensed in terms of Section 45 or over the medium of the Internet of interactive gaming transactions from a website established, maintained and operated by the license holder in The Bahamas, including betting on the numbers game over the medium of the Internet between the holder of a gaming house operator license and a domestic player..."
But this can happen only if "an appropriately secured betting account has been established by the license holder in the name of the domestic player on a face-to-face basis, in such a manner that the license holder has first verified with reference to valid documentation proof, that the account holder is a domestic player and the betting account operated by the domestic player has a credit balance and no gaming or betting transaction may be entered into which would cause the balance of the betting account of a domestic player to drop below zero".
The bill also provides for over-the-counter betting, but again, the domestic player must establish a "face-to-face" account and verify that he or she is indeed ordinarily resident in The Bahamas.
In other words, web shop operators would be prohibited from allowing prospective customers from establishing accounts over the Internet, the aim being to block the foreign business from the web shops.
This raises an important issue.
Local web shops are now so sophisticated that they are able to operate their websites from other jurisdictions.
While Bahamian law would ban them from allowing foreign players to game on their sites, they could still target this group using their licenses in foreign jurisdictions.
The question, therefore, is whether the government in seeking to prevent an all out competition war between casinos and web shops could end up cheating itself out of important tax revenues.
Hotel-based casinos, meanwhile, are eligible for gaming licenses, mobile gaming licenses, proxy gaming licenses, restricted gaming licenses and junket operator licenses.
Mobile gaming licenses shall authorize the conduct of mobile gaming within any permitted area of the casino resort.
Proxy gaming licenses shall authorize the resort to conduct proxy gaming on or from the casino resort.
Proxy gaming means the placement of a bet or wager using any communications technology or device, including the Internet or intranet, wireless, wire or cable, radio, light, optics, microwave, smartphone or mobile device, or computer data network.
Restricted interactive gaming licenses shall authorize the conduct of interactive gaming transactions between a license holder and citizens of permitted foreign jurisdictions from a website established, maintained and operated by the license holder in The Bahamas.
Junket operator licenses are required by every person, other than a junket representative, who is directly or indirectly involved in the planning, organization or operation of a junket for or on behalf of the holder of a gaming license where such junkets involve a visit to the casino resort of 20 or more junket visitors.
Concerns
In the lead up to this latest draft, at least one casino operator -- Baha Mar -- expressed that it is making an investment of $3.5 billion and would oppose casino games outside of the three casinos permitted in the hotel sector, National Review understands.
According to sources close to the process, Baha Mar would view this as a violation of its heads of agreement with the government.
Resort owners reportedly expressed concerns that competition from these web shop operators could eventually compromise the viability of their project.
Additionally, the resort owners believe that people who will be licensed to operate in a regulated domestic gaming industry should all be subject to the same suitability requirements as casinos.
Section 24 of the bill states that in order to qualify for a license, a person must be "a fit and proper person whose character, integrity, honesty, prior conduct, regard for the law, reputation habits and associations do not pose a threat to the health, safety, morals, good order and general welfare of the inhabitants of The Bahamas and to the provisions and policy of this act".
While the government has decided to bring one gaming bill, as opposed to two bills -- one dealing with casinos and the other dealing with web shops -- it is not yet clear whether the casinos are fully onboard with the government's full proposal on the law governing the entire gaming sector.
While National Review understands that hoteliers were reluctant to convene a meeting with the web shop operators given that they are operating in an unregulated environment, both groups have been meeting with government officials and other representatives.
The new bill does not outline specifics on taxation. Those will be fleshed out in the regulations the government intends to introduce with the bill.
National Review understands that work continues on the regulations.
We note here as well that the latest draft bill could still undergo changes as discussions continue.
But we are told that it is unlikely that any significant changes would be made.

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