The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Grand Bahama Port Authority (GBPA) “cannot carve out a special place in Freeport” where it has the authority to issue gaming licences, a web shop operator is arguing.

Jarol Investments, which trades as Chances Games, will this week argue that the objectives underpinning the 2014 reforms to Bahamian gaming laws will be “frustrated and defeated” if the Supreme Court finds the GBPA has the power to licence web shop operators in the city.

Jarol’s case against the GBPA, set to be heard on Thursday, is set to finally determine who the gaming industry regulator for Freeport is - the Gaming Board in Nassau, or the Port Authority.

The gaming house and its attorney, Carlson Shurland, are arguing that there is nothing in the Gaming Act 2014 or the Hawksbill Creek Agreement to underpin the GBPA’s claim to have the ability to licence Freeport-based web shop operators.

In their written submissions to the Supreme Court, they argue that the new legislation gave the power to invite, review and grant gaming licence applications to the Gaming Board only.

Pointing out that the 2014 Act was intended to apply throughout the Bahamas, including in Freeport, Mr Shurland and Jarol allege that it must “trump” any rival provisions in the Hawksbill Creek Agreement.

Referring to the GBPA and its president, Ian Rolle, the web shop chain alleges: “It is submitted that the first and second defendants cannot lawfully carve out, as it were, a special place in Freeport and claim to be entitled to grant gaming licences, the grant of which is, by law, in the exclusive preserve of the third and fifth defendants [the Gaming Board and minister responsible for gaming].

“There is no warrant or basis for this in the Hawksbill Creek Agreement. It would be impermissibly extending the meaning and effect of the Hawksbill Creek Agreement to found such a power in the [GBPA].”

Warning of the potential consequences should the Supreme Court find otherwise, Jarol added: “It is submitted that properly construed, the licensing provisions of the Hawksbill Creek Agreement, such as they are, cannot and should not be allowed to entitle the [GBPA] to claim the power of issuing gaming licences.

“To do otherwise would clearly frustrate and defeat the legislative purpose behind the legislation designed to modernise the gaming regulatory regime in the country, the continuation of the Gaming Board and the licensing and regulating of the gaming industry in the country.

“A body may not use a power, especially as tenuous as the licensing provisions of the Hawksbill Creek Agreement are, to usurp or frustrate the clear legislative purpose of the gaming legislation.”

The outcome of Jarol’s case against the GBPA is likely to arouse wider interest, and this will not be confined just to rival web shop operators with interests in Freeport.

For the issue of who has regulatory responsibility in Freeport, the GBPA or a national regulator created by statutory legislation, has generated frequent conflicts and court battles in recent years.

This has particularly reared its head in the context of the Utilities Regulation and Competition Authority (URCA), and whether it - not the GBPA - should be the licensing and regulatory authority for utilities in Freeport.

Cable Bahamas has successfully challenged the ability of URCA to levy Internet fees on its subsidiary, Cable Freeport, while the Grand Bahama Power Company (GBPC) is currently contesting the regulator’s ability to oversee it.

Some observers are likely to view Freeport’s founding agreement, the Hawksbill Creek Agreement, as outdated and inconsistent with global trends favouring the creation of national regulators.

The Jarol Investments case will especially irk the Christie administration, given that a key element of its recent Memorandum of Understanding (MoU) with the GBPA was designed to address the issue of regulatory conflicts in Freeport.

The MoU’s clause 1.18 commits the GBPA to ensuring its regulatory and quasi-governmental powers are ‘harmonised’ with national laws and government policies/regulations.

And the ‘harmonisation’ is supposed to occur via “existing independent regulators” such as the Utilities Regulation and Competition Authority (URCA) and the Gaming Board.

Jarol/Chances Games, meanwhile, is also alleging that in ordering it to apply for a gaming licence, the GBPA tried to impose a fee increase “that was vastly and disproportionately in excess” of what it paid previously - a greater than 500 per cent rise.

It claimed that the GBPA fee increase was “introduced arbitrarily without consultation with all the relevant stakeholders”, with the web shop chain branding the increase as “grossly disproportionate, discriminatory, borderline extortionate and unreasonable”.

Its core argument is that the GBPA was never mentioned in the Gaming Act and accompanying rules and regulations, showing that there was no intention for it to play any role in licensing or regulating the web shop industry.

And Jarol and Mr Shurland are also arguing that the Hawksbill Creek Agreement provides the GBPA with no licensing power but, rather, exemptions for itself and its licensees from the need to obtain government permits and approvals if their activities are not governed by statute law.

The web shop operator instead alleges that “the only power” the GBPA possesses to issue licences stems from its ownership of the Port area, meaning there is no basis for it to license and regulate gaming.

Jarol, in its written submissions, acknowledged that “it was felt in some quarters” that web shops did not operate “properly within the law” prior to the 2014 Gaming Act’s passage.

However, it had been licensed annually by the GBPA from 2005 to “provide Internet access to members of the public for the purpose of providing interactive gaming on its computer terminals”.

Following the Government’s move to legalise, regulate and tax the web shop industry, Jarol said it had paid the necessary penalties, fines and taxes to obtain first a transitional licence, then a full licence, from the Gaming Board.

It was then hit by the GBPA’s January 25, 2016, demand that it apply for a provisional gaming licence as per the new Gaming Act, and pay a huge increase in fees.

The GBPA and its attorney, Fred Smith QC, the Callenders & Co attorney and partner, ultimately withdrew the assertion that the Gaming Act provided the basis for the new licence/increased fees demand.

They instead justified this on the basis of the Hawksbill Creek Agreement, but Mr Shurland and Jarol are arguing that the issue is “not moot” as the GBPA has not formally withdrawn the demand based on the Gaming Act.

The web shop chain and its attorney are also arguing that the Gaming Board and responsible minister cannot delegate their licensing powers enshrined in law to the GBPA.

As a result, they are claiming that the GBPA’s position is “not simply a case of ‘double licensing’ or taxation of the plaintiff, but a plain and clear usurpation of the statutory powers and functions of the [the Gaming Board and minister responsible for gaming]”.

Jarol/Chances and Mr Shurland alleged in their written submissions: “It was only after the legitimisation of the ‘numbers game’ by Parliament by the Gaming Act 2014 that the GBPA sought to piggy-back, as it were, on this legislation to claim first that it was entitled to license the plaintiff’s activities pursuant to it; then it shifted its position to now claim to be entitled to do so by virtue of the provisions of the Hawksbill Creek Agreement.”