The regulation and taxation of the web shop sector is long overdue.
It is unfortunate the Ingraham administration bowed to the church and pulled back from its plan to do so in 2010.
Successive governments have for too long given religious leaders in The Bahamas too strong a voice in matters of governance.
It has been to the detriment of the national interest as it has slowed progress on some fronts.
It is also unfortunate the Christie administration spent precious tax dollars on a botched referendum and will now have to suffer political fallout for going against the wishes of the minority segment of the electorate that turned out to vote amid a great deal of confusion last year.
We have long known that we could not continue forever with web shops operating in an underground economy.
In April 2010, police warned of the dangers of an unregulated sector.
A police intelligence report to then Prime Minister Hubert Ingraham said intelligence received showed "the number racketeering business is a lucrative business.
"It is growing by leaps and bounds and at an alarming rate. The Central Intelligence Bureau strongly recommends that a full investigation be conducted to ascertain how it is possible for the Business License Department to issue legitimate business licenses for vendors to operate these illegal businesses without hindrance or intervention from that ministry/department."
It is unclear whether such an investigation ever took place.
What is clear, however, is that in the years since that intelligence report, the web shop sector has continued to grow.
According to a report written in April 2010 by then Acting Financial Secretary the late Ehurd Cunningham, Ingraham had been concerned that legalizing and licencing computer wagering operators would not be a viable option as it would fail to eliminate the many small illegal paper-based operators.
As a result, Cunningham continued, the licenced operators who would be liable for remitting betting taxes would be placed at a competitive disadvantage.
That, in turn, would jeopardize new revenue collections from legalized numbers wagering, the report said.
Cunningham wrote there were a number of valid reasons why such concerns should be allayed and why, as a result, legalizing the numbers business "is in fact a most viable option and a secure source of additional revenues for government".
DIALOGUE
He noted the Ingraham administration, at the official level, had initiated a two-way dialogue with the major numbers operators with a view to developing a mutually-agreed model for the numbers business.
"The operators themselves are strongly in favor of regularizing their business for their own benefit and that of patrons and their employees," wrote Cunningham in the report titled "Legalizing the numbers business. The fundamental viability of the proposed framework".
"They agree to dutifully abide with the legal requirement to remit appropriate gaming taxes to the government.
"Indeed, they see the proposed model as potentially increasing the size of the market and increasing their own revenues, as partons will want to deal with legal operators that have the backing of the government."
He added that there was also mutual agreement that the status quo is the option that is not viable as the undisciplined small operators will continue to grow and possibly could abuse and jeopardize the welfare of unsuspecting clients.
"The only way to prevent that from happening is for the government to introduce a proper legal framework with very strong sanctions to deter any illegal operators," Cunningham wrote the then prime minister.
He wrote that "under the agreed model", many of the smaller operators will have the option to become franchises of the major licensed operators and their activities will be regularized and controlled by the licensees.
Cunningham added, "The large operators with whom we have met have concurred that it will be to their advantage to report any illegal operators that attempt to continue operations. Within a regularized environment, that will be possible and beneficial to them."
He also reported to the then prime minister and minister of finance that ministry officials had visited web shops and took part in discussions with operators and "they are satisfied that security exists in the system from government's point of view".
Cunningham further advised that all operators agreed for the government to have access to their computer systems to download and to provide whatever information the government requires.
The report to Ingraham also included statistical data from "main operators of wagering transactions".
According to that report, Craig Flowers, of FML Group, estimated to the government that he had 40 percent of the market share with more than 200 employees.
Adrian Fox and Sebas Bastian of Island Luck estimated they held 50 percent of the market share with 120 employees.
Asue Draw owners also estimated they had 50 percent of the market share with 300 employees.
Island Game estimated it had 35 percent market share with 80 employees.
According to Cunningham's report, those four web shop companies' collective estimated daily sum wagered was well over $900,000.
The report also pointed to a "large number of fringe operations" not included in the statistical data.
Additionally, the then prime minister was provided with the bank account information of some of the numbers house bosses.
The report from Cunningham to Ingraham pointed to meaningful work done by the Ministry of Finance up to that point to pave the way for a regularized industry.
Faced with pressure from the religious sector, Ingraham eventually pulled back and promised that if the Free National Movement got elected at the next election it would put the matter to a referendum.
It was not elected.
TAX
Today, the Christie administration is moving ahead with regularization. It is in the process of fine tuning the regulations it intends to bring to Parliament and it is making amendments to the Gaming Bill, which has been on the shelf since it was tabled last October.
We note in the regulations the government prepared to accompany the Gaming Bill 2013 that interactive gaming in casinos would be subject to a tax of "five per centum of adjusted gross revenue".
This type of gaming is similar to the online gaming web shop operators have been involved in for years now.
It is reasonable to expect that these Bahamian businessmen will not be taxed higher than casinos on the same type of gaming.
As the government addresses the taxation of web shops, it should also start a very serious discussion about eliminating the discriminatory clause from the Gaming Bill which prohibits Bahamian nationals, permanent residents and work permit holders from gambling in casinos.
But an even more important element of the debate needs to center around Bahamian ownership of casinos.
These issues have lingered for a long time now.
They indeed are complex.
The government's handling of these matters would reflect their level of seriousness when it comes to the stated commitment of Bahamians first.

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