The Tribune

By NOELLE NICOLLS

Tribune Features Editor

nnicolls@tribunemedia.net

THE referendum questions are out, and as predicted they are giving rise to more questions than answers. Do you support the regulation and taxation of web shop gaming? And, do you support the establishment of a national lottery?

As I said before, no question is completely objective, and many people have observed, the web shop question contains certain assumptions that betray the understanding of some in the public. Bahamians under the false impression that web shops are illegal are uncomfortable with the suggestion that is inherent in the question: that web shops are legal. The government was wise nonetheless not to be swayed by those concerns; it would have only exposed itself to judicial challenge.

Beyond that concern, I believe the real discomfort arises from the desire of Bahamians to express their will on another fundamental question: should residents of the Bahamas be allowed to gamble in the Bahamas. The questions on the table do not address this issue.

In fact, the question suggests a certain predetermined answer that quashes the Vote No campaign. After all, why shouldn’t the government regulate and tax a prolific and practically lawless industry, when it is the legislative negligence of successive governments that has produced this unregulated mess in the first place? Clearly, the government should update the Lotteries and Gaming Act or create new legislation to formalize the domestic gaming industry, and allow for taxation. There is no moral argument in the government’s posed question.

Champions of the No Vote are primarily opposed to the notion of Bahamians gambling (even though their application, hypocritically, is applied only to the practice of online gambling through web shops). Their disapproval of web shops is incidental to their moral opposition to the proliferation of gambling by Bahamians. However, the referendum does not allow them to explicitly express this dissent.

Branville McCartney, Democratic National Alliance party leader, pointed out another issue: “The way it is now, if the people vote no, the web shops can still run and operate how they are now, where is the democracy in that? What exactly are the regulations the public would be voting for, the government hasn’t announced them yet and the vote is three weeks away.” He is very right. I am certain the government did this deliberately, and they had good reason to do so: it buys them time and options should the referendum return a no vote, opposed to locking them into an outcome they would be unable to defend.

So here we are, with fourteen days left until Bahamians go to the polls. My prediction: the majority of Bahamians (who bother to vote) will vote yes on both accounts.

The Vote No campaign seems to have fizzled while the Vote Yes campaign is only gearing up. The day the government released the questions, the streets were flooded by Vote Yes campaign workers, distributing paraphernalia at major intersections.

Friday’s free Vote Yes concert is probably the first in a series of events that will have the people energised and primed to vote yes, should they show up at the polls. Freeness – particularly free food and liquor – can be persuasive, if general election politics is anything to judge.

Will voters really understand what they are signing up for when they cast their vote? No. It is not because of some intellectual deficiency; people, I am sure, will be thinking just fine, although some might be uninformed. It is not because they will be confused in their intent, either. They will likely have a very clear message in their minds when they vote yes or no.

The people will not understand because the government has not declared its hand with respect to the aftermath of the vote. What people think they are voting for might not square up with what will come to pass.

The government might be ducking now, but at some point it will have to answer the big questions. For starters: Who is going to run the national lottery? Inquiring minds want to know.

One fact that has enabled the numbers business to be successful over the years is integrity, or as one web shop owner said, “If people thought Flowers could flip a switch in his office and make the number 000 instead of 111, they would not come with the confidence and throw their money at you.”

The foundation of that trust, according to some players in the business, is the use of international numbers. When Bahamians make online wagers they bet that they can guess the number that will fall for any number of international games and lotteries: Miami, New York, California, and so on, similar to the way in which sports betting operates.

“The business is successful because we have zero involvement in the outcome,” said the owner.

The Asue Draw Ball has struggled to combat the charges of disgruntled players suggesting “that thing is fixed”. While the drawing has lived two lifetimes already, once as the Red Hot Ball and now as the Asue Draw Ball, sources claim it has struggled to gain traction, because of the simple fact of Bahamian scepticism.

Before the US had state lotteries, one industry source said gambling houses would use Cuban numbers read over the radio, all in the interest of public trust.

“The closest person to throwing their own ball successfully was Percy Munnings because he was perceived as upright and upstanding,” said the source.

In the Bahamas, payouts are often double the international standard, which also accounts for the widespread popularity, but the trust factors trumps all. Bahamians feel confident the numbers are not fixed.

So how exactly does the government plan to establish the trust of consumers in a cash-based business such as lotteries that are built entirely on public confidence? It can barely run government monopolies efficiently, much less a lottery business in a fiercely competitive environment. One lucky win by a known Progressive Liberal Party supporter (or Free National Movement supporter when they are in government), and public confidence goes down the drain.

The most obvious solution is to out-source the management of the national lottery to independent professionals. Two clear problems arise from this solution: any local professional who has the expertise is likely to also be a direct competitor, posing questions of a conflict of interest, or to be politically affiliated, which gives rise to the same problem.

If the government opts for a foreign management company that would be questionable from a nationalistic point of view: unless the lottery was immensely successful from a financial point of view, the government would essentially be creating a business to enrich a foreign-owned entity. So I am very interested to see, who is going to be running this national lottery.

Furthermore, gaming operations that draw their own lotteries incur very high costs for security, accounting and broadcast fees. Because of its relationship with the Broadcasting Corporation of the Bahamas, the government would not incur major costs for the live broadcast of its lottery, but it certainly would have to invest significant resources “to make sure no one is fing with the balls”.

Dishonest people find many creative ways to game the system, sometimes by tampering with balls and bribing dishonest employees. One scheme involves attaching hidden weights or magnets to the balls so that predictable numbers fall.

This con is most effective with the air mix type of lotto machine, which uses jets of air to mix around ping-pong balls, before allowing random balls to be released through a tube for reading. Some lotteries weigh the balls before and after each drawing to ensure no tampering has taken place. Other strategies involve stocking multiple sets of lotto balls that are rotated randomly, and locking the equipment used for lotto drawings in a vault until just before the drawing. Gravity pick lotto machines are perceived by some to be more secure manual drawing systems, because they eliminate the weighing problem, but these machines are not immune to conspirators.

More details are sure to emerge after the vote, because the referendum will likely set in motion a new process of consultation, probably with foreign consultants again, to determine how to make a national lottery happen.

I imagine the consultants might recommend a random number generated (RNG) computer lottery system in the end, which is the direction dozens of US state lotteries have moved, but even those systems struggle with public distrust. Critics of RNG say no computer number is completely random.

Nonetheless, these systems are largely perceived as credible, and the little circles of public distrust have little impact overall. The US system, however, has millions of players in the betting pool. The Bahamas will have a much more fragile business environment with only a few tens of thousands of people in the betting pool.

The public has no idea how the government plans to conduct its national lottery should it obtain the mandate, and I wonder if the government even knows what it is getting itself into. Actually, the government probably does have an idea, which is why it tried to backtrack on the national lottery question a few months ago. That effort was a little belated, to say the least, given their mighty campaign promises.

But the consultants may just have been on point. With a pool of only 350,000 people, can a national lottery really be competitive and sustainable? Of that 350,000, subtract children under 18, people who are incarcerated or senile, people who oppose gambling, people who are uninterested in gambling, and you probably don’t breach 100,000. Only in a fool’s paradise would the national lottery reach a jackpot large enough to make it competitive.

The core business for local web shops is the three and four balls, which have higher odds of winning and therefore lower payouts, compared to the million dollar jackpots often associated with 6-ball lotteries. For most international lotteries, unless the potential betting pool is in the millions, they steer clear, according to some sources.

Observers have pointed to other Caribbean islands, some with smaller populations, but I wonder if they have really studied the success of those lotteries. Are they really benefiting the public treasury in those countries? I will not say anything conclusively, because I have not done so, but I do believe it requires in depth inquiry before using those as models of success.

In 2010, four jackpot winners took home winnings in the St Lucia Power Play lottery between January and September. Their combined payout only totalled $235,378. Individual winners took home $19,640 in September, $29,000.00 in June, $12,983 in April, $173,755.00 in January. Those jackpots are hardly competitive in relation to the multi-million dollar northern lotteries that are within reach of Bahamians. The Florida Powerball lottery reached $550 million this year.

The distance from Castries, St Lucia to Miami, Florida is 1487 miles, whereas the distance from Nassau to Miami is 187 miles. The significance, Bahamians can easily acquire a lottery ticket to any number of US lotteries by hopping on a plane and betting their $1 or paying $2-3 to Bahamian scalpers who sell tickets locally. There is also a thriving courier business, where Bahamians can send their money with a courier to buy anything in Florida and the wider United States, including lottery tickets.

Some in the industry are proposing the idea that the national lottery operate as a publicly owned web shop, so the national lottery would be only one of several products it may or may not exclusively be licensed to provide, such as scratch and win cards and other games.

Privately owned web shops could also sell national lottery tickets for a commission, in the same way that barber shops and beauty salons, bars and other businesses currently resell web shop services.

“If the national lottery operates on the concepts that the web shops operate, it will be profitable,” said an industry source. “I feel the government could make a minimum of $10 million per year if it is run properly,” the source said. The government could also offer public shares into the company, suggested the source, which would increase the invested interest of the public.

Where the government’s current thinking is on the question of a national lottery is completely unknown. I am not personally convinced that a national lottery is needed or viable. And I do not feel the government needs my vote at this point to explore the idea.

If those with more information than I have good reason to believe a national lottery could be viable and truly beneficial then I say investigate and lay the cards on the table. Only then, can I really answer with true conviction and understanding, the posed question: do you support the establishment of a national lottery?

My last word on the referendum is this plea to the government: On January 28 you will have fulfilled your election promise, please then go and do the right thing, which is to allow the Bahamian people to vote on the real issue of substance and consequence, which is the constitutional amendment that will allow Bahamians to express their disgust and disapproval at the practice of discrimination in the gaming industry.