Although CEO of FML Group of Companies Craig Flowers initially predicted that new taxes for the gaming industry would be a “death sentence” and result in store closures, he said yesterday that unlike his colleagues in the industry, he is not prepared to announce layoffs before he can determine how his customers react to the decision to tax deposits.
Flowers also wants to see how the new gaming taxes will impact overall business.
“My reasoning behind that is certainly we would have in the industry probably the longest serving employees by the very nature of us being the oldest company as it relates to online gaming locally,” Flowers told The Nassau Guardian.
“We have more of a family type operation with our staff members and for us it is very important from the administration [level] to constantly assure our staff that we are going to do everything possible to secure their jobs, and at this time we have no reason to incite any type of doubt or any type of concern as it relates to their jobs – not at this junction.
“From our perspective, we believe that at the end of the day, the only determining factor that will be of any consequence to ourselves will be the response of the customers.
“And the only way we are going to find out how this is going to play out is to first and foremost see what the customers [are] saying to determine whether or not this industry is prepared to continue under the new terms and conditions.
“The only way we can find that out is by waiting and seeing what the customer is prepared to do and…because of the fact that it is the first time in the history of these types of gaming that there will be a tax imposed on the customers prior to playing the games.
“So, I do think that all of the remarks being made are preemptive here because none of us, including the government, is going to determine the future of this industry.
“The [people] who will determine the future of the industry are the customers.”
Several operators have announced that job losses are on the way.
Paradise Games CEO Kevin Knowles warned his staff that redundancies and store closures may be a possibility.
Island Luck revealed last week that it plans to lay off 350 employees and Asure Win announced that it will close 11 of its locations nationwide and terminate 50 employees.
The expected terminations follow the government’s announcement of a new sliding tax scale on the revenue of gaming houses.
On May 30, the government revealed that gaming house revenue up to $20 million will be taxed at a rate of 20 percent; revenue between $20 million and $40 million will be taxed at a rate of 25 percent; revenue between $40 million and $60 million, at a rate of 30 percent; revenue between $60 million and $80 million, at a rate of 35 percent; revenue between $80 million and $100 million, at a rate of 40 percent and revenue more than $100 million at 50 percent.
The government has also proposed taxing gaming patrons through a five percent stamp tax applied on deposits and any non-online games or digital sales.
The increases take effect July 1.
Asked about his colleagues’ decision to announce planned layoffs even before the tax is implemented, Flowers said, “They would have already done their assessment and for many of them who have been in the business for sometime, [they] will come to conclusions in reference to the way they envision the future.
“From FML’s perspective, we want to be very optimistic.
“We believe that the industry will overcome this very difficult time which it is experiencing now, and we believe at the end of the day that the industry will win over all else.”
The Bahamas Gaming Operators Association, of which FML is a member, has decried the tax increase and said the government’s justification for the increase does not hold up to scrutiny.
The association has also warned that the tax increases will result in the loss of more than 2,000 jobs across the sector.
Addressing his previous comments on possible job losses in the industry as a result of the tax increases, Flowers said, “When I spoke to store closures, I was speaking about the overall industry; it’s inevitable.
“With these new taxes, some companies in my opinion, they [will] have to really turn back, curtail; it depends on the individual company.
“Many of us have the ability to bring funds back to the industry, [but] are we prepared to bring back funds to the industry believing in the future of the industry?
“[That] is going to be the question for the shareholders and the owners of the [gaming houses].
“How many of them are going to make the decision to bring funds back to the industry in order to sustain or maintain their business?”
FML has around 32 stores and approximately 315 employees, along with supporting employees, according to Flowers.
In a memorandum to staff on June 20, Flowers said, “To all of you our hardworking and valuable employees, considering the media report of other gaming operators deciding to close 11 of their stores, we are committed to doing our best to remain open.
“The gaming industry as it relates to web shops has faced many challenges over the past years and we have overcome.
“Let me provide clarity and assurances that the company has not changed its position.
“We are devoted to remaining open to secure your jobs and continue to act in your best interest.”