The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Just 45 percent of web shop gaming activities will attract the new patron “winnings” tax, a Cabinet minister yesterday revealing that online casino spins will remain untouched “for now”.

Dionisio D’Aguilar, minister of tourism and aviation, told the House of Assembly that the government had decided to focus this levy solely on lottery/numbers operations because it was too “complicated” to calculate the winnings from online casino spinning.

Leading debate on the Gaming Amendment Bill 2019 as the minister responsible for the industry, Mr D’Aguilar said this “small tax on winnings” was projected to yield between $10m-$15m annually for the Public Treasury and help take the government closer to the $50m total web shop revenue target it had envisioned under the initial tax structure for the industry.

The new winnings tax, due to take effect when changes to the Gaming House Operator Regulations are implemented at the House of Assembly’s next sitting on Wednesday coming, will see five percent paid on winnings up to $1,000 and 7.5 percent on anything greater than $1,000.

Mr D’Aguilar yesterday indicated that Bahamian gamblers had got off relatively lightly, as the comparable winnings tax rates in Jamaica and Barbados are 15 percent and 20 percent, respectively. In the US, he added that the federal tax rate was 25 percent, with state and local taxes on top of that.

“The government wishes to introduce a small tax on winnings from playing numbers only, which I already have established only makes up 45 percent of the domestic gaming market - less than half - and leave any winnings from online casino operations untaxed for now,” he told the House of Assembly.

And, with the operator tax structure also set to be codified with the new regulations, Mr D’Aguilar warned the four web shop hold-outs - Asure Win, the Island Game, Paradise Game and FML - that they now needed to pay taxes owed or face the loss of their licences when they next come up for renewal.

Expressing optimism that there would be no need for such action, the minister added: “With the introduction of greater enforcement powers to the Gaming Board in this Bill, I warn those non-compliant operators that, in order to continue to operate in the gaming industry of the Bahamas, they will have to catch up on their outstanding taxes or lose their license to operate.

“A number of the smaller houses have assured me that, with the passage of this new legislation and accompanying amendments to the regulations, they have every intention of catching up, and so, I am optimistic of a positive outcome.

“But, to those who are operating in this market without a license or have no intention to catch up on their back taxes, we will move with haste and determination to shut your illegal activities down,” Mr D’Aguilar continued.

“After all, Mr Speaker, it is simply not fair to all of us, both consumers and business owners, who faithfully pay our taxes every day of the year, to have persons/business owners living amongst us believing that they do not have to pay their fair share of the tax burden that we all carry.

However, he added that Island Luck, Ultra Game and Chances - who account for 70 percent of the web shop industry’s tax revenue - were up-to-date with their tax payments in accordance with the February 2019 settlement agreed with the Government.

With Sebas Bastian’s Island Luck now the dominant player in the web shop market by far, Mr D’Aguilar yesterday renewed predictions of “further consolidation” that is likely to reduce the number of operators who are now having to cope with a higher taxation and regulatory burden.

“Everyone knows that there is a dominant gaming house that presently, right now, reaps over 50 percent of the annual revenues derived from this industry and, as that gaming house goes from strength to strength reinvesting, innovating and expanding its menu of gaming options, it will inevitably come at the expense of the smaller players,” Mr D’Aguilar said of Island Luck.

“If you speak to persons who operated in the gaming industry in the days before 2014, they would say that, once upon a time, there were over 40 operators. That reduced to 20, that reduced to 12 and then to seven. Market forces will probably continue that trend.”

Mr D’Aguilar said web shop industry revenues had grown at an average rate of $20m per annum since regulation, now standing at just over $210m compared to the $112m earned in 2014.

While conceding that increasing the industry’s effective tax rate from 11 percent to 28 percent in the 2017-2018 Budget “was probably over-ambitious”, the minister argued that the Government’s annual tax take - at around $22m - was more than 50 percent less than the operators’ combined $45-$50m annual profit.

He described this as “inequitable”, and added of the new 15 percent and 17 percent rates: “This increase in the gaming tax rate should generate an additional $10m to $12m in gaming tax revenues, and increase the Government’s take from $22m to $32m to $34m annually.”

Mr D’Aguilar added that the seven licensed web shops employ collectively some 2,800 persons with a combined annual wage bill of $33m, which he added translated into “the equivalent of $220 per week......just $10 above the minimum wage”.