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News Article
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
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
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
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
Govt could license more web shops than originally expected

There are seven to eight major web shop operators in The Bahamas, who have the "capacity to meet any conditions for licensing" if the gambling referendum is successful, according to Prime Minister Perry Christie.
"When I started off, I actually made the mistake about saying there are four web shop operators, who are major web shop operators," said Christie on Wednesday.
"Since this process began, I have seen seven or eight of them now and all of them making representations that they have the capacity to meet any conditions for licensing -- that they have store fronts; that they have the money; that they have this and they have that.
"So it is more than a limited amount of people who will make applications for licenses in this country."
Web shop owners who are eligible may qualify for licenses to operate, said Christie when asked if the government would expand its consideration beyond the four or five more prominent operators.
"It looks like there are more than four or five majors now and it is a...misrepresentation to believe there are only four," he said.
In order to qualify for a web shop license, applicants would have to meet stringent criteria, including possessing the necessary experience, integrity and expertise, Christie previously said in the House of Assembly.
He said applicants must also possess the necessary financial resources, have organizational capacity and internal controls needed to operate in an efficient, responsible and transparent manner.
His statement in November that not all current owners of numbers houses would get licenses from the government if Bahamians vote to make web shops legal, prompted criticism from the opposition.
The Free National Movement suggested the prime minister had already handpicked the web shops that would be given licenses.
However, Christie has responded that the government would consider approving new entrants into the industry, but only after his administration figures out how many participants the market could sustain.
Although he has not indicated just how many web shops could operate legally and be properly policed, Christie has said the government would place a cap on the industry, similar to the rules placed on casino gaming.
If web shop operators were to be regularized, it is contemplated that a cash bond of not less than $1 million would be paid by each licensee and annual tax of up to 15 percent on the gross sums wagered.
Christie has claimed that using conservative estimates, this could yield not less than $15 million to $20 million annually to the Public Treasury.

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News Article
Flowers praises govt on web shop move

FML Group of Companies CEO Craig Flowers said yesterday his long-time dream for the regulation of the web shop industry is drawing closer and commended the government for moving ahead with the plan.
Flowers was contacted for comment after Tourism Minister Obie Wilchcombe, who has responsibility for gaming, revealed on Monday that the amended Gaming Bill would be tabled in the House of Assembly next Wednesday.
While Flowers did not want to comment specifically on the matter, as he did not want to pre-empt the bill or the web shop regulations, he said he welcomes the news.
"It is something I have fought for from the day I walked in the door and today I see it growing nearer to reality," he said.
"A good part of my dreams in the industry is coming to fruition."
Flowers said while he has personal feelings on the time it has taken to get to this point, he commends the government for its fortitude.
"I have a great deal of appreciation for Minister Obie Wilchcombe and [Attorney General] Allyson Maynard-Gibson who are now doing the final cleaning up of the matter," he said.
"I think those two need to be recognized and commended because [web shops] have been here among us for decades and we've turned a blind eye to it (the sector)."
Wilchcombe recently began his public push for the industry to be regularized.
During his mid-year budget statement in the House of Assembly in March, he said,"We're not going to kick this down the road any [farther]".
"We had the referendum and we accepted the referendum and the opinion being given by the Bahamian people," Wilchcombe said.
"But truth be told, Mr. Speaker, that we have an issue that we have to deal with. We have an issue that has been out there a bit too long. The time for that is now over."
Wilchcombe said on Monday the government is making the final decisions on the web shop regulations.
The government is considering the rate of taxation for web shops, the number of web shop licenses that will be approved and whether there will be a period of closure for web shops.
Wilchcombe said 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."
It is projected that the government will take in about $12 million in web shop taxes.

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News Article
Strong support for web shops

Almost one year after the January 28 gambling referendum, a new scientific poll shows strong support for the legalization of web shops in The Bahamas.
The survey, conducted by Public Domain, a local market research and public opinion polling company, comes as the government and the church continue to lock horns over the prickly issue of regulating the numbers industry.
Respondents were asked whether they support the legalization of web shops.
Thirty-seven percent said they "strongly support" and 18 percent said they "somewhat support".
Thirty-two percent said they "strongly oppose" and another eight percent said they "somewhat oppose".
Five percent of respondents did not know or did not answer.
Asked to expand on the results of the survey, M'wale Rahming, president of Public Domain, said the "real story" is in the silent majority.
"You're going to have people who feel strong about an issue, and no matter what you do they're not going to change," he told The Nassau Guardian.
"The story then becomes what about the people who don't have any skin in the game...As you can see, we have twice as many people who support rather than oppose in that category."
Rahming was referring to respondents who did not have a strong feeling either way.
These non-polarized people include the 18 percent who said they "somewhat support" and the eight percent who said they "somewhat oppose".
"So the category of the silent majority is really saying 'yes, we want this'," Rahming said.
Public Domain conducted a similar survey in November 2012, a few weeks before the referendum. Respondents were asked whether they support the legalization of web shops and whether they would vote yes or no.
The results showed that 53.4 percent said they would vote no, and 43.3 percent said they would vote yes. Another 3.3 percent said they did not know or did not answer.
Rahming said the previous survey did not allow the silent majority a place to speak.
The survey was commissioned by Philip Galanis, the former parliamentarian who served as the co-ordinator for the Vote Yes campaign, which was unsuccessful in convincing a majority of the electorate to vote in favor of regulating and taxing web shops.
Asked to comment on the results, Galanis said, "We are very pleased to observe that today the majority of Bahamians still support the legalization of web shops, slightly higher than they did just a year ago.
"The fact is that although the majority of Bahamians voted against such legalization in last year's referendum is neither persuasive nor conclusive. We maintain that the referendum results do not represent the national sentiment on this issue, particularly in light of the low voter turnout."
Galanis noted that the total number of votes cast against the legalization of web shops was 51,146 or 62 percent of the votes cast versus 31,657 or 38 percent of the votes cast in favor of legalization. The voter referendum turnout of 48 percent of the 2012 registered voters was extremely low compared to the 156,000 votes cast in the 2012 general election, a 91 percent turnout, Galanis noted.
"Hence, it would be erroneous to conclude that a majority of Bahamians are opposed to legalizing web shops," he said.
In the year since the gambling referendum, web shops have continued to operate in the open as a court challenge remains outstanding.
Last week, the Bahamas Christian Council and the Save Our Bahamas Committee questioned if the government was seeking to "overturn" the results of last year's gambling referendum by allowing the status quo on web shops to remain unchanged.
The groups have stressed that the results of the referendum must stand.
REVENUE
In its recent survey, Public Domain also asked respondents, 'Do you agree or disagree that the government needs to increase revenue?'
Sixty-six percent of respondents strongly agreed; 20 percent somewhat agreed; four percent somewhat disagreed; seven percent strongly disagreed and three percent said they did not know or did not answer.
"Bahamians have overwhelmingly indicated that the government needs to increase revenue, notwithstanding the perceived sentiment that they are uncertain that value-added tax (VAT) is the best means for doing so," Galanis said.
"The $20 million to $30 million annual tax windfall that would have resulted from a 'yes' vote would have significantly strengthened the public coffers. The 'no' vote has deprived the country of that significant revenue injection.
"Armed with the recent polling data, we hope that the government will do the right thing by legalizing and regulating the web shops so that this significant economic activity can be brought into the real economy with the consequential benefits that will inevitably inure to the country by so doing.
"The time is long overdue for the government to demonstrate bold, decisive leadership in this regard."
Rahming also commented on the strong acknowledgement on the revenue question.
"The government has been saying that it needs to raise revenue and we wanted to find out if the public agreed with them on this matter. And what's interesting here is I've never really seen support that comes out at nearly 90 percent," he said.
Public Domain polled 575 people in its survey.
Rahming said this sample size is considered "respectable".
"If you look at America, America does a survey of 1,500 people to represent 300 million. So we're actually being more specific here than we would in the United States," he said.
"But 575 in our population is a very respectable sample size. We generally suggest a minimum of 400 with a maximum of 1,000 and generally around 600 is what we tend to aim for. So a very respectable sample size. It is also randomly selected."
The survey was conducted between January 2 and January 6.

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News Article
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
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
The web shop problem

We are moving toward what the government is calling the "regularization" of web shop gaming. Web shops offer Internet-based gambling. Gambling is illegal in The Bahamas for Bahamians and legal residents. Those who have facilitated gambling for Bahamians and legal residents have engaged in illegal activity. The money they have received from this would be the proceeds of crime.
Attorney General Allyson Maynard-Gibson said yesterday in an interview that web shops will be penalized for revenue generated prior to regularization. In a separate interview, Minister of Tourism 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."
We seem to finally be at a place where all are accepting that wrongdoing occurred. Now the issue regards whether financial institutions will be able to accept money from the men who run these businesses the day after gambling is made legal. The answer to that question appears to be "no", as the money that established these businesses came from crime. It is illegal for financial institutions to knowingly accept the proceeds of crime.
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 regularizing the web shops is not going to get rid of the problem as far as the banking sector is concerned."
Maynard-Gibson, however, expressed confidence that web shops will be able to conduct business with financial institutions in The Bahamas once the government regulates the industry.
The Gaming Bill has not been debated in the House of Assembly, but web shop regularization will be retroactive to July 1. Wilchcombe said the proposed law will be tabled in Parliament next week.
We think the government is being naive and hopeful on this issue. Nothing it has said explains how a responsible and law-abiding financial institution could allow a web shop boss or his company to deposit millions of dollars into that institution without jeopardizing that company's standing.
The government has a problem. It wants to start a legal sector by giving licenses to people rich with the proceeds of crime. Bahamian financial institutions have laws and standards they have to follow. They cannot go along with this and accept the money if they are to maintain their reputations.

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