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News Article

June 24, 2014
Web shops penalty for illegal earnings

Attorney General Allyson Maynard-Gibson said yesterday the government intends to impose a penalty on web shops for revenue generated prior to regularization.
However, she did not specify what the penalty will be.
Also addressing the issue yesterday, Tourism Minister Obie Wilchcombe, who has ministerial responsibility for gaming, said, "There will be a penalty for illegal operation, when it was illegal. So we have to penalize them for about six years. And all of that is a part of what we're doing."
Wilchcombe said the government is also determining a period of closure for web shops.
He recommended that web shops be made to close before the regularization period begins. However, he said he has faced some opposition to that.
"The web shop consultants are suggesting that it's not necessary," he said. "We're weighing it right now."
Meanwhile, Maynard-Gibson, in a separate interview, expressed confidence that web shops will be able to conduct business with banking institutions in The Bahamas once the government regulates the industry.
The Gaming Bill has not yet been debated in the House of Assembly, but web shop regularization will be retroactive to July 1.
At least two banks in recent weeks voiced strong concern about web shops meeting international standards even in a post-regulated environment.
"I didn't read what they said in that way," said Maynard-Gibson outside the Senate.
"I'll say that I am aware, as we all are aware, that in Canada gaming is conducted; gaming that is regularized is conducted.
"People who work in those institutions that are regularized in Canada receive money from those gaming institutions.
"They put their salaries etc. into banks in Canada, so I have every confidence that once gaming, including web shops, is fully regularized in The Bahamas that the Bahamians who work in those institutions, just like in Canada, will put their money in banks in The Bahamas."
When asked how web shops' proceeds prior to regularization would be handled in the event banks decide to do business with them, Maynard-Gibson said, "That is something, as the prime minister has indicated, we are benchmarking other jurisdictions.
"This is not the first time what is called an underground economy has been regularized and so we are studying what has happened in other jurisdictions.
"I think it is fair to say that there will be some type of penalty that must be paid because what we are seeing so far is that's what happens so far when these institutions are regularized."
In a position paper, RBC (Bahamas) said conducting business with web shops, even once regulated, would cause local banks to run afoul of their parent banks' global policies and U.S. federal law.
Two weeks ago, Commonwealth Bank President Ian Jennings expressed doubt that web shops would be able to meet international standards set out by agencies such as the Financial Action Task Force (FATF).
"It's not as simple as just passing an act to regularize them," Jennings said.
"They (web shops) also have to be seen within an international framework of FATF and various other money laundering issues.
"It goes back to a reputational issue for the jurisdictions, and I think a lot of people don't appreciate that and what may be issues that fall out of that.
"Just by regularizing the web shops is not going to get rid of the problem as far as the banking sector is concerned."
Maynard-Gibson said she believes Jennings was alluding to the importance of the government ensuring that its legislative framework is able to withstand scrutiny from international agencies.
During his contribution to the budget debate in the House of Assembly last week, Prime Minister Perry Christie said he expects web shops, under the Gaming Bill and accompanying regulations, to operate in conformity with "international best practices"
"Consultation led by the attorney general is taking place and will take place with the Financial Action Task Force to ensure that the provisions of the proposed legislation and procedures will be in compliance with FATF guidelines, so as to ensure acceptance by banks of proceeds from legalized and regulated casinos and web shop operators," he said.
"In this regard, consultation will continue with clearing banks operating in The Bahamas."
As it relates to the Gaming Bill, Maynard-Gibson said her team has been working assiduously to finalize the document so that Cabinet can review it.
Asked when the draft legislation would be sent to Cabinet, Maynard-Gibson said, "I really don't want to tie the hands of my team that is working really assiduously.
"And of course, we also, as the prime minister indicated, want to consult with the relevant authorities that are concerned with governing anti-money laundering and counter-financing of terrorism matters.
"I think that everybody would like to see the exercise be carried out as thoroughly as possible while pursuing expedition, and that is what we are doing."

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News Article

June 18, 2014
RBC (Bahamas) throws web shop plan into question

RBC (Bahamas) is the latest local bank to go on record as not being permitted to do business with web shops, whether they are regulated or unregulated, claiming that these establishments' entire business model ensures they fall into a "high risk" category regardless of legal regulatory status.
Signaling yet further issues for the government's plans to regularize and tax the web shops, a position paper created by the bank's compliance department reveals that opening accounts for companies that offer online gambling is "restricted under RBC policy" while the physical component of web shops' activities "is not the type of establishment RBC is interested in on-boarding, given all of the risks identified".
The paper highlights the fact that conducting business with web shops, even once formally regulated, would cause local banks to run afoul of their parent banks' global policies and U.S. federal law.
Referring to the fact that various aspects of online gambling transactions are prohibited under U.S. federal law, RBC (Bahamas) states that it "cannot put its U.S. dollar (USD) correspondent (banking) relationships at risk by on-boarding these businesses and conducting transactions in U.S. dollars for them".
"RBC has already had discussions with one of its major USD clearing banks whose position is they do not want to and will not clear USD transactions that involve online gambling businesses. It is up to RBC to ensure that it respects these prohibitions by not facilitating USD transactions for these businesses, or its USD correspondent relationships will be at risk of closure," said the report.
Obtained by Guardian Business, the position paper was quoted in Parliament by Free National Movement (FNM) Deputy Leader and MP for Long Island Loretta Butler-Turner on Monday and RBC (Bahamas) yesterday confirmed that the paper was generated by the bank.
One of the major motives of the government, with respect to the regularization of the web shops, is to ensure that they are able to deposit the money raised within the sector into the domestic banking system.
Speaking in Parliament earlier this year, Christie said: "We have to, as the Ministry of Finance and regulators, find the answer to monies that are in large amounts that are not in the bank, that are not being invested in treasury bills, that have not been allowed to be exported or open bank accounts abroad," Christie said of the web shop gaming industry.
"Therefore, that money is finding itself some purpose here in major developments. That is a major contradiction to the good order of our system, and one way or the other we have to do deal with."
However, the position paper suggests that much of what the government is seeking to achieve through regularizing the sector - including government tax revenues and the elimination of what is presently perceived as a risk, which some have charged could lead to The Bahamas being subject to another damaging financial black-listing by the G-20's Financial Action Task Force - may fail to come about.
'Restricted'
The report says that other Canadian banks with which RBC (Bahamas) conferred on the issue of dealing with web shops post-regularization took the same position as RBC.
Such banks could include First Caribbean International Bank (Bahamas) and Scotiabank.
The paper states: "As it currently stands, based on the policies outlined above, RBC is restricted from opening accounts associated with Internet gambling. It is not possible to separate the physical casino aspect of these businesses from the online aspect. Regardless, the physical component is not the type of casino and gambling establishment RBC is interested in on-boarding, given all the risks identified above.
"In all of the circumstances, and given the available information regarding web shops, RBC will continue to face challenges with these entities and the proceeds generated through same, whether they are regulated or not. Onboarding these businesses contravenes RBC Global Policy requirements and, regardless, the money laundering risks presented by them cannot be mitigated by the implementation of specific controls."
The position of RBC (Bahamas) on the matter echoes that of Bahamian-owned banks interviewed exclusively by Guardian Business last month. Commonwealth Bank President Ian Jennings was the first to go on record as stating that the Bahamian-owned bank would not be able to transact business with web shops once regularized.

'Online accounts'
Outlining the operation of the sector, the RBC (Bahamas) report states that web shops in The Bahamas are "Internet cafes that offer illegal bets on the side and operate in plain sight".
It continues: "These operations have mushroomed and become a nationwide phenomenon, evolving into a high-tech industry that employs hundreds of Bahamians and is frequented by thousands of Bahamians."
"These entities allow bets to be placed against numbers that coincide with American lottery winning number selections, such as the 'three ball and four ball games'. The web shops, in turn, place bets in the United States through individuals acting on their behalf. It is unclear how the funds (winnings) are moved from the United States to The Bahamas.
"The evolution of technology now permits persons to establish online accounts at local number houses and bet via the Internet. Once an individual wins a bet, winnings are credited to their online accounts and may be accessed via white label Automated Teller Machines which are on the inside of the web shop."
"Under RBC's international policy, an 'Internet/Online Gambling Entity' is defined as "any business involving placing, receiving or otherwise knowingly transmitting a bet or wager (i.e. for money) by any means, which involves the use, at least in part, of the Internet."
The position paper said that the methods of gambling and payouts employed in the sector "raises the very concerning issue about the source of the funds of the winnings".
The bank notes that in a 2014 U.S. State Department International Narcotics Control Strategy report, it was said that illegal gambling, along with drug trafficking and human smuggling, account for "major sources of laundered proceeds".
"This supports the proposition that proceeds from drug trafficking and human smuggling could be laundered through the web shops/numbers houses, both now and once legalized."

Banks should assist
In an interview with Guardian Business recently, Minister with Responsibility for Gambling Obie Wilchcombe expressed confidence in the government's plan, and said he has no doubt that web shops can meet the strict standards which will be required of them once legislation governing their operations is passed this year.
Commenting on concerns raised by bank executives such as Jennings about how his bank would continue to have difficulties doing business with web shops, Wilchcombe suggested that the banks must assist the government.
President of the Clearing Banks Association, which represents local retail banks, Marie Rodland-Allen, has told Guardian Business that it is hard to know what the international reaction would be to the government's regularization plan.
"In the modern financial environment, dominated by FATF member countries, the proposed regularization covers issues that are of key concern to FATF members. Without knowing the specifics of the proposed legislation, it is difficult to anticipate what may be the reaction from the FATF and, in particular, the United States. Greater scrutiny is also being placed on AML and KYC processes of correspondent banking relationships.
"The CBA members will continue to apply their AML/KYC due diligence standards to all customers to ensure they do not assist money laundering or financing or any other activity that may be harmful to the reputation of this jurisdiction," she said.

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News Article

March 14, 2014
PM: MPs can vote their conscience on web shops

Prime Minister Perry Christie said last night he is not ashamed that his views on web shop gaming have evolved and said "the whip will not be on" when a bill to regulate web shop gaming is introduced in Parliament.
Christie, who was wrapping up debate on the mid-year budget in the House of Assembly, said every MP will be given the opportunity to vote on the "divisive" issue based on their conscience.
"Whatever might be the position which parliamentarians might personally take in this matter -- and the whip will not be on -- the reality is that businesses which operate in this country should do so in accordance with the law, and pay appropriate fees and taxes," Christie said.
In the last several months, several MPs have been very vocal about web shop gaming.
Christie said he supports regulating web shops.
"When all is said and done, however, I am not ashamed to admit that my own views on this matter have evolved in light of a new appreciation of the dangers we face from continuing to have an unregulated web shop gaming industry that is... not susceptible to sustained law enforcement under the law as it stands today and which, moreover still, is not paying its fair share of taxes," he said.
"I believe, therefore, that the time has come to legalize web shop gaming but only on the basis of new legislation that would provide for licensing, operation, regulation and taxation of this industry in accordance with best practices and international norms."
Christie said the taxes that would be derived from web shops are estimated to be "considerable".
He said a "very significant" portion could be earmarked for causes such as health, welfare, education, sports and community recreation.
Christie said provisions would also be made for a counseling and support mechanisms for those who may become addicted to gambling.
He acknowledged that many of the religious leaders do not agree with the government's position on web shops.
However, he said he welcomes their prayers as the government tackles these serious issues.
Christie also acknowledged that the majority of the people who participated in the gambling poll on January 28, 2013 voted against the regulation of web shops.
"At the same time I am keenly conscious of the fact that the citizens of this country who support the regulation and taxing of web shops are considerable," he said.
"Indeed more and more persons have become positive advocates. Authorities in law enforcement and in banking, including the central bank, both recognize the challenges of enforcement posed by unregulated web shop gaming, and the law enforcement and security dangers of having vast amounts of money earned by web shops which local banks refuse to accept."
He said that having vast amounts of money circulating through non-banking institutions create money laundering implications.
Christie said this could also pose serious problems and result in blacklisting of The Bahamas by the Financial Action Task Force and by other multinational bodies, "which would have disastrous consequences for our vital financial services sector and the reputational standing of The Bahamas in the world".
Minister of Tourism Obie Wilchcombe announced last week that he intends to present a proposal for the regularization of web shops to Cabinet by the end of the month and is pushing for this to be official by July 1.
Bahamas Christian Council President Rev. Dr. Ranford Patterson said last week that if the government goes against the results of the gambling poll, it would be setting a dangerous precedent.
He added that he would not vote in another referendum.

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News Article

June 11, 2014
Rollins questions projected web shop revenue

The government's projected revenue forecast of $12 million from taxing web shops only plays into the narrative that it is paying back web shop bosses, Fort Charlotte MP Dr. Andre Rollins said yesterday.
During his contribution to the budget debate, Rollins, chairman of the Gaming Board, asked if the projected $12 million is "the best we can do".
"A low tax rate and yield from web shops will only strengthen the public's view that a national lottery will be far more beneficial to the state's coffers and national development than the $12 million worth of revenue forecast in this budget," Rollins said.
"This will play into the opposition's existing narrative that we are motivated by some form of political payback as opposed to reducing the country's annual budget deficit, or funding worthy causes such as public education, healthcare, sports, cultural and infrastructural development.
"Failure of web shop tax revenue to meet the public's heightened expectations will inevitably increase public demand for a national lottery, and such an outcome will most certainly be seized upon by the opposition in the run-up to the next general election as an initiative they intend to deliver."
In his recent budget communication, Prime Minister Perry Christie said web shops will be taxed and regulated as of July 1, 2014.
Christie said the Gaming Bill will be debated following the budget debate.
Minister of Tourism Obie Wilchcombe recently suggested to The Guardian that the government will explore introducing a national lottery for the development of sports and education in The Bahamas sometime after it has regulated the web shop industry.
Minister of State for Finance Michael Halkitis said yesterday that the $12 million projected tax revenue from web shops was a conservative estimate as the government has not yet decided what rate to tax the industry.
He was responding to Montagu MP Richard Lightbourn.
Tax revenue
Rollins said since 2010 it has been stated, under successive administrations, that the yield from the taxation of web shops would range anywhere from $20 million to $40 million.
"If securing a new source of tax revenue is the motivation behind regulating and taxing web shops as indicated by the prime minister, the fundamental question we must all ask for the sake of our country and our government's depleted coffers is this: Is $12 million the best we can do?"
Rollins said while he believes the government should reap much more from the regulation and taxation of the web shop industry, he applauded the government's resolve to at long last apply law and order to it.
He added that web shops should be taxed at a higher rate than hotel-based casinos.
Minister of Financial Services Ryan Pinder has said that it is estimated the government could take in between $20 million and $100 million annually in taxes from a regulated "electronic gaming industry".
The Gaming Bill was tabled in the House of Assembly last October, but the current bill does not provide for the taxation of web shops.
Christie said the government will amend the bill to improve casino gaming and allow for the regularization and licensing of the web shop industry.
Rollins previously called on the government to regulate and tax web shops.

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News Article

June 10, 2014
Banks warn over web shop 'regularization' plan

Local banking executives have thrown into question government's plans to "regularize" the web shops, suggesting that even once this occurs it may be difficult or impossible for banks to do business with them without the country facing a damaging potential 'blacklisting'.
Without banks being able to handle web shop proceeds, this would have a knock-on negative impact on government's intention to reap millions in taxes from the web shop sector, some have warned.
In an exclusive interview with Guardian Business, Ian Jennings, president of Commonwealth Bank, said with reference to the government's plans with respect to illegal web shops this year: "It's not as simply as just passing an act to regularize them; they also have to be seen within an international framework of FATF (the Financial Action Taskforce) and various other money laundering issues.
"It goes back to a reputational issue for the jurisdictions, and I think a lot of people don't appreciate that and what may be the issues that fall out of that. Just by regularizing the web shops is not going to get rid of the problem as far as the banking sector is concerned."
Jennings noted that the relationship of banks operating in The Bahamas with their "correspondent" financial institutions in the U.S. and elsewhere, which provide services on their behalf, is crucial and these foreign banks are under great pressure from their regulators to ensure that the Caribbean banks they do business with are operating to international standards.
In his Budget Communication late last month, Prime Minister Perry Christie said it is intended that with the regularization and licensing of web shops under an impending Gaming Bill, he expects such establishments to be operated in a way that upholds "laws and international obligations in accordance with best practices".
However, Jennings suggested that he has doubts that web shops would be able to meet these obligations and told Guardian Business that doing business with web shops that may be under a legislatory framework that legalizes them in the Bahamian context, but which may not be meeting international standards set out by agencies such as the FATF, could cause local banks to be called into question in this regard by their correspondent banks and international agencies.
"Internationally now the major economies continue to crack down on anything that's seen as tax avoidance, tax evasion or just offshore financial sector. We've seen developments with Switzerland; the U.S. has indicated they'll put a greater scrutiny on what's happening in the Caribbean and, certainly, for Bahamian banks who do not have any correspondent or any parents outside the country, the relationships with correspondent banks in the U.S. is extremely important because all of our transactions and trade is with the U.S. and they are coming under increasing scrutiny from their regulators to make sure that their Caribbean correspondents are performing to the highest levels.
"That's a relationship that no Bahamian bank can afford to give up so we have to make sure that we maintain our reputational position. These are all things that we are waiting to see how they develop coming out of the budget presentation and the legislation that goes behind it," said Jennings, in an interview with Guardian Business.
He called the matter one of "concern" for international agencies with respect to the reputation of the Bahamian financial system.
Jennings' comments were strongly supported by another senior banking executive locally, who spoke on condition of anonymity.
Money 'will not be accepted'
"(Jennings) is absolutely right. The government seems unaware that many banking institutions, as a matter of policy, will not deal with the gaming industry whether it is legitimate or not. At the extreme, simply because the government 'legalizes' the gaming industry in The Bahamas does not mean that their money will be accepted in the system.
"This is not simply a 'Bahamian issue' - it involves international banks who also provide correspondent banking facilities to Bahamian based institutions, and unless there is evidence of strong know your customer (KYC) procedures and anti-money laundering (AML) standards in place (and the gaming industry would need to demonstrate that), the international and local banks may be forced to distance themselves from the gaming industry."
Without local banks being able to offer banking services to the web shops, this in turn could hurt the government proceeds of taxation from the sector.
"Government's proceeds of taxation will also be impacted as the proceeds may not be accepted unless KYC and AML procedures are in place, and the industry is rid of persons who have run afoul of the law. The best solution for The Bahamas is for it to have a national lottery. Otherwise we will have a blossoming 'shadow banking system' that will be making loans, transmitting money, taking deposits etc. completely unchecked and unregulated. That can't be good for the economy," added the executive.
In his recent budget communication, Christie suggested that the government "conservatively" anticipates collecting around $12 million from the sector annually once the Gaming Bill is passed following the budget debate that is currently underway.
'Unaware'
Revenue collection potential is clearly one of the major benefits of regularizing the web shop sector, which has flourished in recent years. The anonymous banking source said it may be the case that the government is "focused simply on the revenue aspect of the legalization and seem unaware of the wider implications of their actions".
However, as Guardian Business exclusively reported in October last year, how the unregulated sector could factor into external reviews this country and its financial sector faces from entities such as the Caribbean Financial Action Taskforce, has also been recognized by officials as an impetus to regulate.
Before elected officials had suggested that legislation might be passed to make web shop gaming legal, the country's top anti-money laundering official, Stephen Thompson, coordinator for the National Anti-Money Laundering Taskforce, called the regulation of the web shops "the only responsible thing to do" in light of external pressures.
Thompson said in an interview that while he did not expect a "blacklisting" as a result of a lack of regulation, he did admit that "dire consequences" for the financial sector and economy could result from a perception among international agencies monitoring issues of money-laundering and terrorist financing that The Bahamas is being "lax" in its handling of web shops.

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News Article

April 02, 2013
AG tried to block web shop operations, affidavit alleges

The Office of the Attorney General sought to block the continued operations of web shops despite an order from Senior Supreme Court Justice Jon Isaacs in January to prevent a shutdown of the businesses, alleges an affidavit filed recently.
The affidavit filed by attorney Claude Hanna of Munroe & Associates said a group of web shop bosses faced significant delays in trying to get business licenses renewed and some owners have still not yet received licenses.
Hanna said the government, through the Business Licence and Evaluation Section of the Ministry of Finance has sought to adversely affect the business of the web shop owners by delaying licenses.
He said this was an attempt to circumvent the conservatory order issued by Justice Isaacs for the businesses to remain in operation pending the outcome of a substantive court challenge.
The owners filed court action after a majority of people who voted in a referendum voted against the regularization and taxation of web shops and the establishment of a national lottery. They contend that their businesses are operating legally.
Justice Isaacs granted the order the morning after Prime Minister Perry Christie ordered an end to web shop gaming.
Hanna said that in the past, the process of issuing licenses involved submitting an application, paying the required fees and the Business Licence Unit would issue the license in a matter of days.
The longest period of delay in the past has been a week, according to the affidavit.
The affidavit said that this year the web shop owners and or their agents were informed by "servants of the Business Licence Unit" that the Office of the Attorney General (the defendant) has advised the Ministry of Finance to put a halt to licenses being issued to web cafes.
According to Hanna, the matter had to be addressed by Chief Finance and Revenue Officer Joseph Mullings, who circulated a minute paper on March 15, 2013 to all staff about the issuance and renewal of business licenses to web shops.
A copy of the minute paper was filed in court.
It said, "Effective immediately, you can issue new and renewal business licenses to web shops. The only license description will be Internet cafe and Internet related services."
According to the affidavit, the process of getting licenses has been "riddled with hurdles".
The affidavit said Pete Deveaux of Percy Web Cafe reported that after submitting the business license application, paying fees in full and satisfying all other requirements, his company was told by Mullings that he could not issue the license because they were awaiting written confirmation from the Office of the Attorney General.
"It was only after insistent calling that [Deveaux] received the business license on March 27," the affidavit said, adding that some of the other plaintiffs also received licenses last week.
"This has represented a delay that in most cases has been at least three to four times the usual delay in the process."
The affidavit said Whatfall and Asue Draw were still awaiting licenses.
It said, "The plaintiffs (web shop owners) have a history of being fully compliant with all laws and regulations governing their businesses."

POLITICAL SUPPORT

The affidavit also said that during the general election campaign and during the referendum campaign members of the Free National Movement (FNM) and their bloggers suggested the web shop owners supported only the Progressive Liberal Party (PLP).
"I am advised by the plaintiffs that it was thereby being suggested that this was done because the PLP had committed to support the plaintiffs," the affidavit said.
"Indeed, much was made during the referendum campaign that the PLP government had a horse in the referendum race."
But the web shop owners have advised that this perception is incorrect, according to the affidavit.
"I am advised that the plaintiffs supported both the PLP and FNM as they always have done," Hanna said.
"If this is disputed they are able to disclose the persons and events together with the amounts that they supported."
The affidavit said the web shop owners met with the government after the general election but are unwilling to disclose the exact contents of these meetings unless it is deemed necessary to do so.
Hanna also said in the affidavit that the need to terminate staff would cause a loss to the plaintiffs "far beyond the financial costs associated with their terminations".
"I am advised by the plaintiffs that they care about the welfare of their employees to the point that they are mentally affected by the prospect of having to terminate persons with whom they have worked closely over the years."
The web shop owners and their attorneys have made an application to have the conservatory order issued by Justice Isaacs extended.
The attorney general is seeking to have that order discharged.
Chief Justice Sir Michael Barnett will today hear arguments from both sides.
Wayne Munroe represents Percy Web Cafe, Island Luck, FML Group of Companies, Asue Draw, Whatfall and Chances.
Former Attorney General Alfred Sears and Jeff Lloyd represent Paradise Games.

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News Article

June 27, 2014
Halkitis explains low web shop tax projection

Even though data collected by the previous administration indicated that the government could collect as much as $40 million in taxes from web shops, an audit was never done to verify that projection, Minister of State for Finance Michael Halkitis said yesterday.
In 2012, Prime Minister Perry Christie indicated that the Ingraham administration had done research on the revenue that could be derived from web shops.
Christie later told Parliament that it was more likely that the government could get $15 million to $20 million in annual taxes from web shops if the sector is properly regulated.
The government now estimates that it will collect about $12 million from web shop taxes.
Halkitis said yesterday the projection is "conservative" to avoid recording a deficit. However, he added preliminary information suggests a lower revenue yield than earlier estimates.
"Around 2010 when the government was exploring legalization, it asked the web shops what their turnover was," Halkitis said. "[Web shop operators] said about $400 million per year.
"The government never did any audit or verification. So the discussion was that if you tax them at a rate of ten percent then the government would get $40 million in taxes.
"We have put in place a requirement that the shops verify their turnover by way of an audit to get an accurate picture of their turnover.
"We put a low estimate in the budget to be conservative just in case the audit shows a much lower turnover."
Several members of Parliament recently questioned the government on the projected revenue yield from web shops.
East Grand Bahama Member of Parliament K. Peter Turnquest noted that the estimates fall far below what was initially expected.
"How is it calculated and will there be a license fee in addition to this tax?" he asked in the House of Assembly during debate on the 2014/2015 budget.
Gaming Board Chairman Dr. Andre Rollins also questioned the projected revenue.
"A low tax rate and yield from web shops will only strengthen the public's view that a national lottery will be far more beneficial to the state's coffers and national development than the $12 million worth of revenue forecast in this budget," Rollins said.
"...The failure of web shop tax revenue to meet the public's heightened expectations will inevitably increase public demand for a national lottery, and such an outcome will most certainly be seized upon by the opposition in the run-up to the next general election as an initiative they intend to deliver," he added.
The Gaming Bill is expected to be tabled on Wednesday. However, Christie yesterday hinted at a possible delay in government tabling the amended bill.
The government has not indicated the rate that web shops will be taxed.

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News Article

January 02, 2014
Pastor: govt needs to keep its word on web shops

A pastor who worked on the Vote No campaign ahead of the gambling referendum on January 28, 2013 said the government needs to live up to its word and close web shops before attempting to start a new dialogue with the church on the controversial issue.
Pastor Mario Moxey, of Bahamas Harvest Church, said many religious leaders are offended by the government's attitude nearly a year after the referendum.
He was contacted by The Nassau Guardian after Minister of Tourism Obie Wilchcombe told reporters that he wanted to have fresh talks with the church about finding an "acceptable" plan to regulate the underground sector.
"I think the government of The Bahamas needs to seriously consider enforcing the law of the land," Moxey said on Tuesday. "Words like 'can't shut down an illegal establishment' [are] very disheartening and concerning to a lot of Bahamians.
"We are approaching the one year anniversary of the referendum and to this day, even though the Bahamian public voted to shut down the web shops they are still open, still very defiant and they are resolved in their attitude towards the government."
Moxey said the government needs to fulfill the pledge it made to abide by the results of the referendum.
"They need to keep their end of the bargain, they had made certain promises to the people as well as to the church that they would shut the web shops down. They need to carry that out, they need to show that they have the political fortitude to carry out their own mandate."
However Bishop Simeon Hall, of New Covenant Baptist Church, who supported regulating the sector, said he thinks its time for the church to sit down with the government and have frank talks on the matter.
"I think we should have a sensible dialogue on this issue rather than demonizing one another who have opposing views," Hall said on Tuesday.
He believes that more pastors would be open to regulating web shops now than they were before the referendum.
"I still stand by my position that web shops should be regulated. Maybe if we got some money from the web shops, we wouldn't have to have such a high percentage on VAT (value-added tax).
"Some pastors who once supported the no vote are now saying they prefer to tax the web shops rather than pay all that money on VAT."
The government intends to introduce VAT at a rate of 15 percent on July 1.
On January 28, 2013 voters were asked if they supported the regulation and taxation of web shops and the creation of a national lottery.
Most voters said no to both questions, however, only about 45 percent of registered voters turned up at the polls. Many religious leaders and the Bahamas Christian Council opposed both questions on moral grounds and urged Christians to vote against them.
On Monday Wilchcombe said the government could bring legislation to Parliament to regulate the sector, but did not want to insult those who voted in the referendum.
Still, he said a decision has to be made.
"I think the church has to come to terms with the complexity of the issue and understand that we have to govern... The church might be able to advance some ideas on how it can be done," Wilchcombe said.
"I can't ignore the fact that there are thousands of people participating every single day and millions of dollars being made from that business every single day. Shouldn't some of that money, if it's going to happen, remain in the country?
"Shouldn't some of that be utilized for sports development, cultural development, educational development - should we not find ways to do it?"
Web shop operators are engaged in a legal battle with the government to keep their businesses open.
When contacted by The Nassau Guardian, President of the Bahamas Christian Council Rev. Dr. Ranford Patterson said he was not prepared to comment.

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News Article

July 02, 2014
Former AG doubts govt will restrict web shop play

Former Attorney General Carl Bethel said yesterday he doubts the government will restrict web shop operators from offering sports betting and online slot machine games, known as "spinning".
The new law would permit "domestic players" to participate in "numbers games" with licensed web shops.
A numbers game is defined as a game 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".
"I believe it will be changed, and if it isn't changed, they (web shop owners) will change it," said Bethel, referring to the Gaming Bill.
"You have a culture of doing what they wish to do, and so far it seems they have been prevailing, even against the will of the voters.
"If the majority of Bahamians wanted it legalized or regularized, they would have voted for it.
"But the Bahamian people either voted against it or voted with their feet. Yet, where are we today?"
Web shops, including but not limited to Asue Draw, Island Luck, Chances and Paradise Games, offer sports betting for a variety of matches and events.
Spinning is common in many web shops throughout the country.
Bethel said he believes the government will bend to the will of "the barons and lords of the web shops", who he said would soon make their objections known.
"I hear them saying it is only going to be numbers, but I don't think that is going to happen...not for the barons and lords of the web shops, no sir," he said.
"I find it difficult to believe that the government is able to say no to them for whatever reason.
"...We'll see who the government is, on that issue of gambling.
"But I do not hold out any hope that the barons and lords of web shops are going to be limited to play in numbers."
The majority of voters who participated in the gambling referendum last January voted against the regulation and taxation of web shops and the establishment of a national lottery.
Prime Minister Perry Christie has repeatedly defended his decision to go against the referendum results.
Christie said his decision came after the governor of The Central Bank brought to his attention the damning situation the country faced, "where there was a new banking order and where, in fact, loan managers [were] being hired to conduct personal mortgages".
The amended Gaming Bill will pave the way for web shops to be regularized retroactive to July 1.

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News Article

July 08, 2014
Bill: Web shops must close during transition period or be disqualified

The newest draft of the Gaming Bill says that web shop operators who fail to close their businesses during the proposed closure period will disqualify their businesses from receiving licenses for gaming operations.
While no date for the transition or closure period is defined in the bill, it says that all operators must comply with the closure period and make full disclosure of all of their businesses' turnovers and gross profits.
The bill adds that all gaming taxes must be calculated at the prescribed rate and are payable between July 1, 2014 and the end of the closure period.
The rate is also not defined as yet.
Any contravention of these provisions by any business establishment permitted to operate "will render the continued operation of such business unlawful, notwithstanding anything to the contrary in the act and will be grounds for the disqualification of such business for any license provided for by this act," the bill reads.
The bill provides for several licenses for web shop operators: a gaming house operator license, a gaming premises license and a gaming house agent license.
Tourism Minister Obie Wilchcombe has said that the government is determining a period of closure for web shops.
Wilchcombe recommended that web shops be made to close before the regularization period begins. However, he said he has faced some opposition to that.
"The web shop consultants are suggesting that it's not necessary," he said. "We're weighing it right now."
Attorney Wayne Munroe, who represents a group of web shop owners, said he does not see the logic in closing down web shops for a period of time before they are regularized, as it would hurt web shop employees.
Wilchcombe said the new Gaming Bill will be tabled in Parliament at the end of this month.
During the closure period, if web shop operators wish to continue with their business, they will have to file an affidavit and serve it to the Gaming Board.
If an operator fails to supply an affidavit within the prescribed period of 14 days after the closure period, "he shall be deemed to have elected not to continue the operation of any such business during the transition period and he shall effect the closure of every such business", the bill said.
The newest draft of the Gaming Bill would continue to prohibit Bahamians from gambling in casinos.
Web shops would be permitted to legally engage in cash betting transactions with domestic players only, the bill says.
The "domestic player" refers to anyone who is ordinarily resident in The Bahamas, is the holder of a permanent residence certificate, is a work permit holder or the spouse of any of these people.
Under an early draft of the bill more than a year ago, the government had proposed that while Bahamians would still be prohibited from gambling in casinos, permanent residents and work permit holders would be able to do so.

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