The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Island Luck's principal last night argued that 10-12 months is needed before web shops can successfully implement the five percent patron tax - a timeline that would cost the Government $20m.

Sebas Bastian, pictured, in a September 10, 2018, affidavit filed with the Supreme Court, said Island Luck and others had "learned a lot of expensive lessons" from rushing to complete the kind of changes that the new tax will demand of their online gaming platforms.

Laying out the "eight-step" process, required by the Gaming Act and its accompanying regulations, before modified games can be released to Bahamian patrons, Mr Bastian said Island Luck and other web shops had "no choice" but to resort to legal action to block the Government's demand for what the industry believes is an unreasonably early introduction of the 5 percent tax.

He referred to a September 7, 2018, letter from Tony Plaskow, commercial director of UK-based Black Cow Technology, an 18-year gaming software developer, as justifying his assertion that 10-12 months after the issuance of guidance notes by the Gaming Board is "a reasonable implementation date" for the 5 percent patron tax.

Mr Plaskow, in a missive also sent to the Gaming Board, said "a completely new set of processes" has to be "developed, tested, implemented and certified" to permit the levying, collection and reporting of the tax on patron deposits and over-the-counter (OTC) lottery ticket sales.

Warning about the difficulties caused by the absence of uniform guidance notes on the implementation, he added: "On a raw data basis, just the 'physical' process of calculating and adding the tax to the transaction, creating a database of all the taxes and being able to report on these is a challenging and in-depth process."

Mr Plaskow broke the process for implementing the 5 percent patron tax into two phases - online and back office operations, and then for the physical web shop locations. He estimated that the former would take four to six months, and the second some six months - making for a total of 10-12 months.

As a result, Mr Bastian argued: "In the circumstances, a reasonable period of time to complete the implementation of the Stamp Tax on the online platform of Playtech [Island Luck] is 10-12 months after the issuance of guidance notes from the Gaming Board/Ministry of Finance."

Such a potential timeline will likely send a chill through the Ministry of Finance, as it would mean missing out on potentially $20m in revenue - the sum the Government has budgeted to collect from the 5 percent patron tax in the 2018-2019 fiscal year.

"Since the regularisation of the gaming house industry, the applicant [Island Luck] has had its platform certified five times," Mr Bastian alleged. "In each instance, the applicant had to make several modifications to its proprietary system, all of which took several months to develop, test and then finally submit to an independent laboratory for certification.

"This process is very tedious and must be done under strict development guidelines to avoid irreversible damage in the form of system calculations, errors in reporting and significant financial liabilities if the platform were to develop bugs during coding."

Mr Bastian alleged that the eight steps to modifying gaming software and platforms included an analysis of the necessary requirements; design and layout; software coding; internal testing and quality assurance; independent laboratory testing; web shop staff training; on-site testing and, finally, approval by the Gaming Board.

Based on Island Luck's eight-year history of developing and upgrading its electronic gaming platform, Mr Bastian said the certification stage - testing by independent laboratories - could take as long as 147 days by itself.

The two web shop industry Judicial Reviews are challenging the alleged "arbitrary" date set by the Ministry of Finance for the 5 percent levy's introduction on customer deposits and over-the-counter (OTC) lottery sales.

Central to their case is the claim that web shops were given insufficient time to certify their games and technology platforms to accommodate the five percent levy, with the offering of any uncertified games violating the sector's governing law - the Gaming Act and its regulations - and potentially "eroding public confidence" in the sector.

The planned September 1 introduction of the 5 percent levy, which had already been pushed back twice, now awaits a further Supreme Court hearing on October 5.

Mr Bastian, meanwhile, alleged that Island Luck was already modifying its platform when the new 5 percent patron tax came in - a development that further complicated its upgrade efforts, especially in the absence of government guidance for programmers.

"At this juncture, it is abundantly clear to the applicant's senior management that the update was technically impossible and unreasonable in the mandated timeframe and that, to ensure that the applicant adhere to the Gaming Act and regulations under which it is governed, the applicant has no choice but to seek relief from the court," Mr Bastian alleged.