"If you must play, decide upon three things at the start: the rules of the game, the stakes and the quitting time."
- Chinese Proverb

Three years ago, the government of The Bahamas conducted a referendum to determine whether domestic gaming by web shops should be regulated. The electorate, albeit in uncharacteristically unimpressive numbers, voted against the proposed regulation. Nevertheless, the government decided to proceed to regulate this nascent industry, a decision that we believe was the right one considering the adverse effects that would have resulted from acquiescing to the will of the people. Let me state in the interest of full disclosure that this author fully supported the regulation of web shops before, during and after the referendum.

Last year, the Gaming Board for The Bahamas issued the first provisional licenses to eight web shop operators. Earlier this month, the Gaming Board renewed seven licenses, Asue Draw having withdrawn from the industry. The minister of tourism, who is responsible for gaming in The Bahamas, recently stated that the government is considering issuing a license to a new applicant, stirring angst among some of the existing operators. Therefore, this week, we would like to Consider this... Should the government limit both the number of gaming operators in this industry and the number of gaming houses each licensee can operate?

The Gaming Board
Since the enactment of the Gaming Act, 2014 and the creation of relevant regulations, the Gaming Board has performed superlatively in developing the appropriate policies and implementing the requisite organizational structure to ensure a smooth transition for the previously unregulated domestic gaming industry. Verdant Scott, the secretary of the Gaming Board, and his highly professional team should be applauded for their excellent performance in fast-tracking the regulatory regime that they installed to govern this new industry.

How many gaming house operators?
There are several important issues that must be urgently addressed as this industry develops. The first is the number of gaming house operators (GHOs) that will be licensed by the Gaming Board. Initially, nine companies applied for GHO licenses and eight were granted provisional licenses. When Asue Draw - which was among the first licensees - departed the industry, that left seven GHO licensees.

We know that there is an operator in the industry, doing business as Bet Vegas, which was not licensed by the Gaming Board. When it failed to obtain a license, Bet Vegas obtained a court order allowing it to operate unregulated, paying no taxes or license fees, and without reporting of any kind to anyone about its activities. This situation cannot be allowed to persist. It offends the government's commitment to regulate this industry. It is not fair to the government that is not collecting the relevant taxes and license fees from this company.

It is not fair to persons who patronize this establishment, and certainly not fair to those licensed operators who were compelled to undergo extremely vigorous scrutiny in their quests to be licensed. It is also unfair that Bet Vegas has avoided paying its fair share of the cost of regulation that the other licensed operators paid. This anomaly must be corrected as a matter of extreme urgency.

When the minister of tourism foreshadowed that another license might be issued, he did not telegraph the name of that prospective licensee. The GHOs rapidly responded to the minister's comments about this, urging the government to resist the impulse to issue another GHO license and to establish a five to 10-year moratorium on new GHO licenses. They offered several reasons for this request.

First, they argue that, during their application process, GHO applicants were required to pay enormous retroactive taxes and a substantial penalty. Those payments were used for funding the initial start-up and infrastructural costs of the domestic gaming industry. These additional new taxes and regulatory and operating fees and expenses could not be fully recouped in the short term. Therefore, to allow new entrants into the domestic gaming industry at this stage, ones that would not share in the burden of funding the start-up of this industry but that can receive unearned benefits, would be grossly unfair to the initial GHOs who endured the burden of funding the start-up of this industry and have yet to recoup those fees.

Secondly, additional licenses will lead to a further proliferation of gaming house premises in Nassau and the Family Islands. New licensees who did not share the burden of funding the start-up of the industry will be able to operate in the black far sooner than the original licensees who are finding it very difficult as it is to earn a normal rate of return on their investments after paying those exorbitant taxes, penalties and fees levied on the industry.

Thirdly, any further proliferation of additional GHO licenses and premises will negatively impact the financial standing and operations of the current licensees, making it much more difficult for them to re-coup their start-up costs. This could adversely impact the anticipated current and future tax contributions to the government of The Bahamas from the industry.

For all these reasons, the Gaming House Operators Association requested that not only should the government resist issuing any new licenses; it should freeze the number of GHO licenses at seven for five to 10 years.

How many gaming house premises?

There is also a question of the number of gaming house premises that should be licensed by the Gaming Board.
The GHOs' positions on this question varies widely depending upon with whom you speak. Craig Flowers, the CEO of FML Group of Companies and the "Godfather" of the domestic gaming industry in the modern Bahamas, has suggested that to avoid the uncontrollable proliferation of premises on New Providence, the number should be limited to 20 per GHO.

Sebas Bastian, CEO of Island Luck and the owner of the largest number of premises on New Providence, strongly disagrees. He believes that this is a decision that should be made by each GHO, based on their ability to financially and economically sustain their operations.

One thing is certain. There has been a proliferation of premises since the commencement of regularized domestic gaming in The Bahamas, so much so that the New Providence landscape has become "unaesthetically littered" by the number of premises that are popping up almost on a weekly basis.

This cannot be in the best interest of the industry or the country. It cannot be sustained over the long run. The industry enjoys a finite number of participants, and the over-supply of premises will result in GHOs cannibalizing each other. The ultimate result would be the closure of unsustainable premises, reduced government revenue from license fees and taxes and reduced employment.

Consider this. If each GHO is permitted to operate 50 Premises on New Providence, a figure that is currently the case of at least one GHO, and given that there are seven licensed GHOs, there could be 350 premises on New Providence alone. Half that number, in our opinion, is excessive.

During and after the gaming referendum, the government promised that it would ensure that gaming house premises would not be situated too close to schools and churches. This is a pledge, like others, that seems to have been forgotten.

Anyone driving around New Providence will appreciate the exponential rate at which these premises have surfaced.

Conclusion
We believe that the time has come for the government to clearly and definitively state its position on the number of gaming house operators and gaming house premises it will allow to be licensed on New Providence and throughout the Family Islands.

We believe that the government should move expeditiously to resolve the situation with Bet Vegas, and to proceed pursuant to the court's determination. If it wishes to operate in the domestic gaming industry, Bet Vegas should be required to pay its fair share of back taxes, penalties, business license fees and all other taxes that were charged the initial licensees.

We believe that there should be a five-year moratorium on issuing further licenses, which will give the industry time to settle down, to rationalize the participants' operations and to ensure the efficient and effective regulation of the industry.

Finally, we believe that there should be a maximum number of gaming house premises allowed to each gaming house operator, and that the license fee should be tiered so that those GHOs who have more premises would pay more. For example, premises' license fees could be increased by a multiple of two for every licensee in increments of 10 premises. Therefore, a licensee who currently has 10 premises will pay the current fee of $30,000 for each premise. For additional premises between 11 and 20, the GHO will pay $60,000 for each and $90,000 for each premise between 21 and 30. This will accelerate proportionately to the limit of 50 premises.

The unfettered proliferation of gaming houses and premises will ultimately not inure to the benefit of the industry or the nation. The government must fully appreciate what so many Bahamians are feeling regarding the local gaming industry: It's getting really stupid!

o Philip C. Galanis is the managing partner of HLB Galanis and Co., Chartered Accountants, Forensic & Litigation Support Services. He served 15 years in Parliament. Please send your comments to pgalanis@gmail.com.

Click here to read more at The Nassau Guardian