By NEIL HARTNELL
Tribune Business Editor
nhartnell@tribunemedia.net
A leading businessman believes the legalisation of web shop gaming will be “a game changer” for the Bahamian economy and government finances, and called on ‘legitimised’ numbers operators to help “self-police” the sector.
Franklyn Wilson, the Arawak Homes chairman, said the “magnitude” of such a move was highlighted by the fact that not even the $2.6 billion Baha Mar project’s potential impact had prompted the Government to say it would reconsider its Value-Added Tax (VAT) plans.
Michael Halkitis, minister of state for finance, indicated last week that the Government might tweak its VAT plans if significant revenue inflows from a legalised web shop gaming industry materialised.
“It’s harder to get much bigger than that,” Mr Wilson told Tribune Business of the Minister’s remarks. “The reality is that this is a game changer, a material event.
“One has to see it as very significant. A project the size of Baha Mar did not cause the Government to say they need to revisit the new taxes. That gives you a sense of the magnitude; it’s huge.
“It certainly represents a change in the economic order, so from that point of view it’s very material.”
Current estimates suggest the Government might earn between $20-$40 million annually from a legalised web shop gaming industry, sums that would be between 10-20 per cent of the net $200 million revenue increase projected from VAT. Much, though, depends on the tax structure the Government would impose.
Mr Wilson, meanwhile, suggested that the economic benefits from legalising web shop gaming would spread beyond just the Government’s fiscal position.
He suggested that a legitimate industry would be able to deposit its considerable earnings within the Bahamian commercial banking system, vastly expanding the capital pool available to fund productive investment projects.
“From what I understand, the level of economic activity in the country is heavily influenced by the challenges the numbers industry has in getting money into the banks,” Mr Wilson told Tribune Business.
“The extent to which that is a problem, ones has to expect that just regularising the flow of money into the system will be a boost to the economy.
“I don’t think we’re talking about nickels and dimes that these fellas are doing. If the Government can anticipate they’ll get revenues at the level that will cause them to take another look at VAT, you’ve got to be talking about fantastic sums of money.”
With all forms of gambling currently illegal for Bahamians, web shops are currently considered as ‘money laundering risks’, with commercial banks refusing to accept their monies.
Central Bank governor, Wendy Craigg, and others have warned about the risks the web shop ‘status quo’ represents to the Bahamas and its reputation, with operators investing their profits in real estate developments and what is perceived in some quarters as a ‘parallel’ banking system.
Mr Wilson added that in return for the Government (and Parliament) legalising the web shop industry, those ‘legitimised’ operators would have to help regulators - likely to be the Gaming Board - police it.
“If you had a problem policing it before, there’s a risk a new set of guys come up and go underground,” he told Tribune Business.
“To some extent, those legitimised through this process can help this thing by helping the state protect against breeding a new category of people going underground.”
Taking this a step further, Mr Wilson said compliant web shop operators would have to play a role in exposing rivals who failed to pay their due taxes, likening this situation to importers and Customs brokers.
“To some extent we will have to look to new, legitimate web shop operators paying their taxes to protect the state against those that do not want to pay,” he explained to Tribune Business.
“From time to time, Customs catches people bringing in stuff illegally, as people paying their taxes report them.
“That’s how Customs catches crooked importers, and to some extent we’re going to have to depend on legitimate web shop operators to catch those who aren’t.”
Much remains to be done before a legalised, taxed and regulated web shop gaming (numbers) industry becomes a reality. For starters, it is possible Cabinet may reject the recommendations brought to it by Obie Wilchcombe, minister of tourism, or require them to be significantly reworked.
The draft Bill, when completed, will have to be passed by both houses of Parliament. While the Government’s significant majority will likely ensure that happens, the politicians will likely be subjected to a sustained lobbying campaign by the churches and those who successfully voted ‘No’ in last year’s opinion poll.
Mr Wilson said he had “no idea” what tax structure the Government would propose for the web shop industry, but said it could draw on work done under the former Ingraham administration, plus the regulatory experience in other countries.
The previous government is understood to have looked at a $1 million licence fee for all web shop operators. The industry itself has urged the Government to tax its winnings, not players or their gross income, but given that gambling is perceived as socially harmful - like alcohol and tobacco - many observers are likely to argue that the players themselves should be taxed.
Previous studies have indicated that the web shop industry takes in around $400 million gross turnover annually, or more than $1 million per day.
Mr Wilson also said he was unsure whether having a National Lottery, or a legalised web shop industry was “an either or proposition”.
He added, though, that the Government had to be careful that, in legalising the web shops, it did not appear to be “condoning gambling”.
“Gambling breeds poverty,” Mr Wilson said, adding that the Government would also have to “reconcile” last January’s ‘No’ vote, and the expectations of persons who voted that way, with the action it was now contemplating.
Comments
GrassRoot 10 years, 6 months ago
I am surprised that such an opinion even gets a stage. Its just bullshit, voodoo economics and trying to convince us that the Bahamas has found the goose that lays golden eggs. Here is the reality: webshops will create GoldRush 2.0, with all the crime, the money laundering, and ripping the social fabric of our society even more.
Cornel 10 years, 6 months ago
I would like to see a list of all the "leading businessmen". Who is on this list and what did they do to get on it ?????
Can I get on it? I would love to be able to spew my BS in the newspaper just like them.
jackbnimble 10 years, 6 months ago
"Mr Wilson, meanwhile, suggested that the economic benefits from legalising web shop gaming would spread beyond just the Government’s fiscal position.
He suggested that a legitimate industry would be able to deposit its considerable earnings within the Bahamian commercial banking system, vastly expanding the capital pool available to fund productive investment projects."
This from a man who was so set against legalising gambling having recounted his experience with the hobby horse race track and the harm it did to the Bahamian family. The opponents are falling one by one.
John 10 years, 6 months ago
What effect will the legalization of web shops have on the banking industry? Most banks already have large cash surpluses they cannot lend out because persons do not qualify. The web shop monies will increase cash in banks. So persons with large deposits may experience drops in interest rates, while there will be no change in the rates for borrowers, because the risk may remain high. On the other hand banks, because of a large cash surplus, may become more aggressive in their efforts to make loans and cause the mortgage rates to fall through increased competition. Interesting to watch.
sheeprunner12 10 years, 6 months ago
This is what will happen when the "Snake" is put in charge of watching the chickens.
CANDACESCOTT 10 years, 6 months ago
I think the Bahamas qualifies to be called THE MONEY LAUNDERING CAPITAL OF THE WORLD!
BahamasGamingAssociation 10 years, 2 months ago
https://www.facebook.com/pages/Bahamas-…
WHICH ON OF THE BELOW REIGNS SUPREME IN THE BAHAMAS?
The Bahamas Lottery and Gaming Act Chapter 387 Section 50 Persons prohibited from Gaming
Or
The Constitution of the Commonwealth of the Bahamas Chapter III – Protection of Fundamental Rights and Freedom of the Individual. Section 26 Protection from Discrimination on grounds of Race, Place of Origin etc.
The Bahamas Gaming Association stands by the Ideology that all human beings who are 18 years or older should be treated equally in all sectors of the Bahamian Economy which is enshrined in the Constitution of the Commonwealth of the Bahamas.
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