by Richard Coulson
I went over to a new Island Luck gaming site the other night and opened an account in the windowless single-purpose room, lit mainly by dozens of computer screens. I was not there to become a steady player, but to discover whether the premises were infested with shady characters likely to “pose a risk to the country’s financial sector”, as Minister of Tourism Dionisio D’Aguilar has warned us with alarmist press headlines.
It didn’t quite feel that way. A half-dozen citizens quietly tapped on their keyboards— far from the old days of numbers manually chalked-up in a seedy bar as seen in the grimly brilliant Bahamian film Cargo. Doubtless the Minister means well, but like all politicians he is bound to leap over the fence with scary claims that catch the eye but don’t stand up to hard analysis.
He tells us that sloppy web shops do not apply the same “know your customer” (KYC) rules as careful, rock-solid banks. Not so. A quietly efficient lady asked me for passport, and utility bill showing address, and I signed a form confirming that I was not a “politically exposed person”, as required deep in the Gaming Regulations, 2014, which the Gaming Board inspectors frequently drop in to spot- check, as they do the 196 highly technical sections about maintenance of accounting records and internal controls. I certainly never felt any high-pressure salesmanship enticing me to raise my playing level.
Upon depositing $50, I was not asked to verify the source of my funds, which would be an absurd demand for the modest amounts wagered by me and other players, via bets that give an uncertain, usually negative, rate of return. That’s a logical requirement only for a bank or investment company accepting multi thousands or millions to invest or immediately wire transfer abroad.
The Minister would have us believe that these alleged slip-shod habits of the gaming companies breed a class of money-launderers whose reliance on illicit income gives them finance for drug-dealing or acts of terrorism. One must ask how it would be possible for the highly irregular flow of gaming winnings to fund these criminal schemes. And where’s the evidence? I am not aware of our Financial Intelligence Unit receiving a flow of “suspicious transaction reports” about players’ illicit use of funds.
The seven licensed gaming firms are accused of being a restrictive cartel, not least by the three Canadian banks who dominate our financial business like a closed shop. These very banks now accuse the gaming shops of operating unlicensed money transfer business to make cash available to Family Islands residents. Quite true, and why not? — because the banks themselves, like any cartel, refuse to up-grade their facilities to serve small, scattered markets. Customers in Eleuthera and Cat island struggle to find a physical branch, and Bimini customers actually had to find another island after Royal Bank, “Bahamas Oldest Bank”, walked out, apparently without penalty or criticism from our Central Bank. Naturally the gaming firms, with their widespread day-long-open offices, will step in to satisfy popular needs when banks fall down on the job.
The Minister attempts to warn us with “anecdotal evidence” from the International Monetary Fund with that foreign banks won’t do business with gaming houses or banks that serve them. If that’s so, the solution is for our Central Bank to take a strong line and convince banks that gaming business does not mean illegal business. They have been fully licensed here since 2014 and are making a major contribution to the economy.
Island Luck has 32 branches throughout the county, with about 150 white-collar staff, all Bahamians. Employment for all the licensees provides a total annual payroll of $18 -$20 million dollars. The Gaming Board itself employs a steadily growing cadre of experienced professionals, and industry wide there is a heavy demand for accountants and computer technicians for audit and compliance functions. Expenditure on rent, utilities and supplies across a range of about 100 premises runs into tens of millions, with substantial charitable contributions from all the companies.
The discussion will never stop whether gaming houses (or any licensed industry, here or abroad) pays “enough” in taxes, but certainly in the Bahamas the burden is substantial. In addition to the flat annual $80,000 license fee, they pay amounts closely akin to income tax— either 11% of adjusted gross revenue (wagers received less winnings paid out) or 25% of EBITDA earnings, whichever is greater. And in these days of ever-improving mobile technology, increasing play at the gaming houses is not automatic . As the owner of one company explained to me, just as home viewing of movies is growing on TV or computer screens at the expense of theaters, so more people are finding ways to wager on-line from their living rooms. Every gaming site must be-upgraded to offer more imaginative wagering systems. Whether the number of shops should be controlled, or their locations restricted from school or church neighborhoods, are legitimate questions that can be decided with rational analysis, as with liquor stores.
It is depressing to read some of the defamatory comments following the newspaper articles. One can only shake one’s head at the ignorance, prejudice, and animosity shown by some of our (anonymous) correspondents, calling the gaming business “criminal enterprises engaged in money-laundering and all sorts of other illegal activities...run by these thugs like Sebas Bastian and Craig Flowers”—all without the slightest shred of evidence!
The Minister of Tourism expresses fears about a shadowy past. Although the 2014 Gaming Act for the first time covered the so-called “numbers” or “web shop” business by licensing and regulating mobile (on-line) gaming as well as casinos, he is concerned that earlier profits earned in the bad old pre-legislation days may have been used to fund unseen illicit activities. Again, not the slightest evidence has been produced. The two “thugs” named above have created open and visible enterprises. Sebas Bastian has invested his profits from Island Luck into successful real estate projects created by Brickell Management Group, insured through licensed agency BMG Insurance, as well broker-dealer Investar Securities licensed by our meticulous Securities Commission, with its board headed by a former Chairman of that very Commission and its senior director being the distinguished lawyer/philanthropist Lowell Mortimer. Craig Flowers, an older gentleman with international activities, used his gaming profits from the FML Group to build the FML Corporate Centre on western Bay Street, without doubt the most handsome restoration of derelict properties ever undertaken downtown, far exceeding any attempts by “legitimate” businesses.
The gaming business will never be universally accepted. Christian groups will always discourage their members from playing with vigorous spiritual reasoning—that is their privilege. Social reformers will always lament the irreducible minimum of players who become addicts and rashly spend beyond their means, but every gaming house has a formal “responsible gaming” program and wager-limit systems, which were non-existent in pre-legalization days. The gaming industry is here to stay, as an entrenched legally approved activity like bars and liquor outlets. The low turn-out referendum of 2013—when in fact a majority of registered voters did not vote against web shops or lotteries—can no longer be dredged up as the decisive negative argument.
The leaders have not done enough to stifle the negative image that still percolates. While our Central Bank, BISX, and Financial Services Board provide copious statistics, and free public relations, for all aspects of banking and finance, and the Hotels Association does much the same for the tourist industry, no similar information is available about the gaming house business Much of the continuing criticisms would be dispelled if we could find clear presentations of such key figures as: total size of the industry by assets of all companies; total number of licensed web shops. per capita per island; total employees and total payroll; total annual wagering “take” and total annual payout to winners; total charitable contributions.
The Gaming Houses Association will soon appoint a spokesperson to disseminate this information by print and digital means. The basic facts could be supplemented with a quarterly magazine telling about new gaming developments, personnel promotions and awards, controls of addictive gambling, and many other news items. Good examples can easily be found on the web-sites of the many state lottery commissions in the US, which provide full disclosure not just about the various games but about management and financial operations. These precedents could eventually lead to each Bahamian gaming house publishing its own Annual Report, just like a publicly-owned company.
There will be continuing issues of broad policy and detailed control that will continue to arise. But they will best be resolved by meetings and discussions between the gaming companies, the Board, the ministry of finance, the Attorney-General — even the churches—and not by scatter-shot accusations in the media.
Mr. Coulson has had a long career in law, investment banking and private banking in New York, London, and Nassau, and now serves as director of several financial concerns and as a corporate financial consultant. He has recently released his autobiography, A Corkscrew Life: Adventures of a Travelling Financier.
