Island Luck’s principal last night hailed the Gaming Board’s enhanced regulatory powers as “great for the industry as a whole”, although he described the patron winnings tax as “a wild card”.
Sebas Bastian told Tribune Business that the web shop industry was now “shifting our focus” to improving its services and operations after legal reforms tabled in the House of Assembly yesterday removed “the elephant in the room” of taxation uncertainty.
He added, though, that it remained to be seen how patrons would react to the cultural change and impact created by the imposition of a tax on their winnings. Given that winnings payouts will be less due to the tax, Mr Bastian said patrons will in future have slightly less money to “re-bet” with.
And he argued that the new, higher web shop web shop operator rates may make it harder for Island Luck’s smaller rivals to remain in business.
Revealing that he only first reviewed the Gaming Amendment Bill 2019 today, he told this newspaper: “I noticed a few additional amendments that seem to be geared towards additional enforcement capabilities for the Gaming Board, which is great for the industry as a whole.”
Besides giving statutory or legal effect to the taxation structure contained in the Government’s February 2019 settlement with the web shop industry, the amendments address a loophole in the existing legislation that prevents the Gaming Board from taking enforcement or regulatory measures against unlicensed operators.
Carl Bethel QC, the attorney general, yesterday said the changes will restore the regulator’s old powers that it held before the Gaming Act 2014 was passed, whereby it could take action against both licensed and unlicensed operators.
He added that the Gaming Board will also have an investigations arm to probe persons setting up illegal gaming operations, including lotteries and numbers, and the ability to go after Internet-based sites by causing their Internet Service Providers (ISPs) to shut them down.
Mr Bastian, meanwhile, said “the elephant in the room” has always been the rate of taxation and methodology we use” to determine how web shops pay their “fair share” to the Public Treasury. While his Island Luck and Ultra Game chains, together with Chances, abided by the February agreement and paid their current and back taxes, the other four licensed operators “held out” for almost a year.
The Bill now gives the February settlement’s taxation structure legal effect. All licensed gaming operators will pay 15 percent on their first $0 to $24m of revenue, and operators earning anything greater than $24m will pay 17.5 percent on sums above that threshold.
“Though in the end the new rates are consistent with international best practices, the reality is for some operators even at this rate it would prove a challenge to stay in business,” Mr Bastian told Tribune Business.
While Island Luck, as the largest operator and market leader, is unlikely to be impacted, Mr Bastian is implying that the increase in tax rates from the previous 11 percent may not be absorbed so easily by smaller rivals.
A new tax, introduced on all winnings derived from lottery bets, will see five percent paid on winnings up to $1,000 and 7.5 percent on anything greater than $1,000. “The patron lotto winning tax is going to be a wild card, though such a tax exists in many other regulated gaming jurisdictions,” the Island Luck chief added.
“This winning tax is new to this gaming culture, so we can predict if player payout is less, that player has less to re-bet with. At the end of the day the new Bill’s changes seem to correct some errors that were made in the previous tax methodology and assumptions.
“We are shifting our focus to improving our services and operations, and reaffirming our commitment to responsible gaming. This whole ordeal has strengthened the communication and dialogue with the regulators and policymakers, and hopefully will continue so we can avoid these unnecessary impasses.”