The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas can “triple” its $146 million annual gross gaming revenues if the Government adopts comprehensive reforms detailed by the resort casino industry, which believes the 2013 second quarter is “not an unreasonable time” for implementing them.

Robert Sands, a former Bahamas Hotel Association (BHA) president and member of its casino committee, told Tribune Business that the casino gaming reforms it had submitted were “a win-win” for all parties. They held the potential for increased business and gaming taxes, plus future casino industry investment and job growth.

Suggesting that the industry would like to see the proposals implemented “tomorrow”, Mr Sands said doing so would “to some extent level the playing field” for the Bahamas when compared to leading gaming jurisdictions, such as Nevada (Las Vegas) and Macau and Singapore in the Far East.

With no major reforms to the Bahamas’ casino gaming legislation since it was first enacted in 1969, Mr Sands, a senior Baha Mar executive, warned that this nation was being “left far behind the rest of the world”. Particularly concerning for the industry was that revenues were declining while visitor numbers were rising.

And, especially with the recent proliferation of casino gaming in Florida, Mr Sands indicated that without the proposed reforms the Bahamas would become increasingly uncompetitive in the sector. With casino high-rollers increasingly looking elsewhere, the Bahamas would not only be negatively impacted in that sector, but also in the wider tourism industry as vistor numbers reduced.

“Our gaming gross revenues, gross win, in the Bahamas annually is about $146 million,” Mr Sands told Tribune Business, noting that this was relatively small in comparison with the likes of Biloxi, Mississippi, which generated around $1 billion. And Las Vegas and Macau were in the billions.

“Even if we treble that, ours is a small jurisdiction, but we have an opportunity for growth,” he added. “I think, quite frankly, the potential upside is that which I just mentioned to you. We have the opportunity to at least treble gross gaming revenues, and by doing that we will have treble the tax income without compromising the industry’s integrity. This is only levelling the playing field.”

Based on the figures suggested, the BHA casino committee believes that implementing its recommendations will transform the Bahamian resort industry into a sector generating an annual $438 million top line.

The sector currently has three players - Atlantis, Baha Mar’s Crystal Palace casino and the Grand Lucayan’s casino in Freeport. Yet having a competitive gaming sector is set to become increasingly important from 2014 onwards, when the $2.6 billion Baha Mar project goes operational with a new casino (this nation’s fourth) as its centrepiece.

And the South Ocean resort, which has been the recent subject of an acquisition bid by a $30 billion asset management fund, also has a potential casino licence that kicks in when the property reaches a certain number of rooms.

George Markantonis, Kerzner International (Bahamas) president and managing director, previously said casino volumes at Atlantis had been dropping slowly but steadily over several years. He attributed this to the emergence of Florida’s gaming market, and the fact it was more convenient for American patrons to gamble there than in the Bahamas.

Aside from boosting the prospects for industry expansion and investment, Bahamian casino gaming reform would also strengthen the wider Bahamian tourism industry by bringing increasing numbers of wealthy visitors to these shores. Casinos in their own right are major revenue drivers and profit centres, forming a critical component of a resort’s - and industry’s - product offering.

Asked by Tribune Business when the industry wanted to see the reforms implemented, Mr Sands replied: “Tomorrow, but we recognise this is the business case. There has to be some reasonableness in ensuring the regulatory side to manage the process is also in place.”

Yet he added of the implementation timing: “It’s not unreasonable to think by the second quarter of next year. There are some things the Government can do today.”

In its Friday half-page newspaper advertisement outlining its proposals, the BHA focused heavily on incorporating technology into the gaming experience. It noted that New Jersey and Nevada had taken the lead on mobile gaming, allowing guests to place wagers using cell phone and handheld devices from anywhere on the casino property

Nevada had also introduced technology that allowed casinos to accept bets while sporting events were underway, with major jurisdictions all having at least looked at allowing casinos to offer online, proxy and/or interactive gaming.

The BHA and its casino committee believe providing similar technology-based offerings will allow the Bahamas to compete with Florida and other emerging gaming markets.

Mr Sands said that while the Government was considering the entire substance of the BHA proposals, “Internet gaming will allow the industry to focus on lost business we cannot benefit from today, and begin to grow its revenue base”. It can only do this once it is legalised.

The 1969 Lotteries and Gaming Act, which governs the casino gaming sector, was last amended in 2004, and Mr Sands said the consequences of failing to completely overhaul it were “very obvious”.

“The fact that there has not been any meaningful changes to our regulations since they were first implemented in the 1960s, and only minor changes in the early 2000s, means that the rest of the world is leaving us far behind,” he told Tribune Business.

“I don’t know if it’s so much that we have become uncompetitive, as it’s more how far the rest of the world has advanced, increasing their pace. They’re embracing it, and leaving us far behind. We have not kept pace with the rest of the world.”

Among the other reform proposals are for high-end gaming suites and private salons for high-end clients, mirroring Macau, Nevada and Singapore. The BHA is also pushing for credit liberalisation, enhanced casino debt collection, junket standards revision and a more efficient resolution of casino disputes.

It wants to permit the import of new gaming equipment, approvals of new formats and games, and is seeking a three-year - rather than annual - casino vetting process for improved administrative efficiency in regulation.

“In some instances these reforms will put us ahead of some jurisdictions, as not all have best in class and best practices,” Mr Sands told Tribune Business. “This will put us among the best in class and level the playing field to some extent.”

The BHA was looking at taking “the best elements” from the likes of Nevada and Macau, and he added: “The fact is that our gaming revenues have been decreasing and the competition has been increasing.

“Gaming Board statistics will show that our gaming revenue has been decreasing and, at the same time, our visitor numbers have been going up.”

Mr Sands said the BHA and its casino committee had made a renewed push on casino gaming reform from April/May 2012, particularly following the change in government. The reform topic had, after all, been much discussed under the previous FNM administration.

“We recognised that this was absolutely necessary, and we jump started the push. It was necessary for us to make a new approach,” Mr Sands said, adding that the Government had “so far been very receptive”.

Acknowledging that the newspaper ad took the gaming reform push “a little bit further”, Mr Sands said the BHA felt “good progress” had been made in talks with the Government.

“The Government has not made its position known as yet, but we’ve been very much in the information gathering and presentation stage, and it is carefully being reviewed,” he added.

Mr Sands said the BHA saw the upcoming referendum on ‘numbers houses’ gaming as a separate issue, with the outcome of one not impacting the other.