The Tribune

• Chances pledges to pursue further redress

• Principal: Regulator can’t use funds ‘willy nilly’

• Seeks ‘grievance’ hearing before court action

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Bahamian gaming house says “by no stretch of the imagination is this over” as it pledged to pursue further action over how the industry regulator is using its funds.

Raymond Culmer, principal of Chances Games, told Tribune Business the web shop will take the advice of Justice Andrew Forbes and seek alternative “remedy” if the Gaming Board fails to adequately address concerns it is not using the company’s funds in accordance with laws and regulations governing the industry.

Disclosing that Chances and its parent, Jarol Investments, are seeking a hearing “with the Board itself” in a bid to redress their grievances “at an administrative level”, he added that it will initiate further Supreme Court action if dissatisfied with the response.

Speaking after Justice Forbes last week dismissed Chances’ Judicial Review action on the basis it was “woefully out of time”, Mr Culmer argued that the Gaming Board was taking monies from the web shop operator’s investigative deposit accounts and using them for purposes not intended, or allowed, by the Gaming Act 2014 and its multiple accompanying regulations.

He explained that the investigative deposit accounts are funded by monies provided by the gaming house operators. These accounts, which are under the Gaming Board’s control, are then used to finance the regulator’s conducting of background checks into the integrity of all operators, locations and industry employees to ensure they are fit-and-proper to be operating in the sector.

Chances, which Mr Culmer said should have around $2.5m in its investigative deposit account, is arguing that the Gaming Act’s section 29 limits the regulator to only using funds for these purposes. However, in its Judicial Review action, it alleged that the Gaming Board has taken close to $1m from this account to help cover the costs associated with executing an industry-wide central electronic monitoring system.

“For each licence, there’s an investigative recovery reserve that you have to deposit to cover those investigation fees,” the Chances principal explained. “The money we deposited for our account, after we applied for all our licences, should be in the neighbourhood of $2.5m. But they haven’t been using it for that. They’ve been using it for other things.

“This is money that the Act says the Gaming Board is supposed to put into an interest-bearing account on our behalf and they’re supposed to regularly advise us and send some statements as to the position of the account. One, what’s been happening is that it’s not an interest bearing account and, two, unlike an escrow account we have no control over that account. The Board has complete control of that account.”

Dr Daniel Johnson, the Gaming Board’s chairman, could not be reached by phone for comment yesterday, and did not reply to Tribune Business messages seeking comment. Ian Tynes, the Gaming Board’s secretary, was said to be off-island until today and needed to run this newspaper’s inquiries past legal counsel.

Chances is alleging that, of the $947,919 allegedly withdrawn by the Gaming Board to finance its monitoring system, some $780,452 was paid to Infrasoft Technologies, an Indian-based software and technology provider, which was awarded the contract to develop it. A further $145,785 was spent on “agent fees”, and $21,692 went to a Bahamian technology provider, MicroNet.

The web shop operator, in its action, alleged that the central electronic monitoring system was on “indefinite hold” and has never been implemented or executed. It is thus claiming that, not only are its funds not being used in compliance with the law, but they are also funding something that both the gaming industry and regulator have received no benefit from.

Carlson Shurland KC, Chances’ attorney, told Tribune Business that the Gaming Act’s section 29 was “very specific and very clear” that monies deposited into the investigative deposit account can only be used to fund background vetting. And he argued that the accompanying regulations, in section 26, were just as precise in listing the costs that Chances was responsible for paying.

Yet Mr Tynes, according to Justice Forbes’ ruling, cited the Act’s same section 29, as well as sections 18 (1) and 34, as giving the Gaming Board legal authority to access the funds and use them to cover the central electronic monitoring system costs. This system is supposed to give the Gaming Board the ability to monitor transactions in real-time so that it can check operators’ games are performing as advertised.

Section 34 requires operators to install surveillance systems mandated by the Gaming Board, while 18 (1) defines the regulator’s funding as any monies lawfully paid to it. The Gaming Act’s section 29, though, appears to limit the Gaming Board’s cost recovery powers “only to such costs” incurred during a background check. It “does not extend to such costs as may be incurred by the Board” in hearing other matters.

“Our main contention was that this is an asset, and we shouldn’t be purchasing assets for the Gaming Board,” Mr Culmer said of the monitoring system. “It’s not our responsibility. It’s spelt out in the Act what they can and can’t use that money for....

“My concern, and this is not political at all, is I only want them to be compliant with the Act, set up the funds we provided to them properly according to the Act and not withdraw from it willy nilly. I want them to replace the funds they took from us.” Otherwise Chances will have to inject more money itself to replace the near-$1m taken, hence its warning about downsizing and reduced charitable donations.

Asked how the operator plans to move forward, after Justice Forbes dismissed the Judicial Review, Mr Shurland confirmed it was already exploring the other “remedies” hinted at by the judge. Mr Shurland said he has already been instructed to send the Gaming Board a “letter before action” to “once again give them an opportunity to be transparent” and resolve the matter without going to court.

Mr Culmer added: “We’re requesting a hearing with the Board itself to hear our concerns, our grievances. Out of that meeting should come a decision from the Board as to whether they’ll replace the funds or if they still feel justified in removing the funds.

“Once we get that decision, and we’re not satisfied with it, we’ll file an action in the Supreme Court. By no stretch of the imagination is this over. What disappoints me is that the Gaming Board is using these funds for their own purpose; whatever they perceive to be important to them. That’s not what the fund is set up for. Their explanation does not settle with me.”

Mr Shurland said of the Gaming Board that “the ball is in their court”, especially since it has yet to deliver on the update and accounting it promised within 14 days some five months ago on May 8, 2023. He added that the Act’s section 29, restricting the use of monies in the investigative deposit account, was “so clear you don’t need any judicial interpretation”.

“Once Mr Culmer is satisfied they are not prepared to give him the answers he needs to give him a comfort level, I’m sure with his attorney’s advice - whether it’s me or anyone else - he is going to move forward with a lot of motivation for all that is necessary,” Mr Shurland said.

However, other contacts familiar with the gaming industry and its regulation, said Chances might struggle to win its case on the grounds that there are no restrictions on the investigative deposit accounts and how monies in them can be used. They argued that these are general, not restricted, trust accounts which means there are no mandates or protocols as to what funds can be applied to.