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Gov’T Permits Multiple Web Shop Equity Stakes

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Web shop owners will be allowed to hold an equity interest in more than one legalised operator, even though the Government wishes to see ownership that is “as broad-based as possible”.

This is disclosed in the Gaming Board’s Request for Proposal (RFP) for applications for gaming house operator and premises licences, which makes clear that it is the larger web shop operators who are likely to emerge as the licensed players in a legalised, regulated industry.

The RFP, tabled in the House of Assembly by the Prime Minister yesterday, sets out a comprehensive criteria that all web shop (gaming house) operator and premises licence applicants must comply with in submitting their proposals to the Gaming Board.

The Christie administration, judging from the RFP, appears especially keen to broaden the web shop industry’s ownership beyond a handful of individuals in whose hands it is concentrated now.

Pledging that it wants to “promote entrepreneurship through a competitive bid process”, the RFP makes clear that web shop owners can hold an equity interest in more than one licensed operator.

This will likely facilitate the takeover/acquisition of smaller web shop chains by their larger counterparts, although multiple ownership interests in the sector will be subject to ‘Ministerial discretion’.

Yet the RFP states: “Persons may be permitted to hold a financial interest in more than one operator.

“The [Gaming] Board will monitor the nature of the interest of persons holding such financial interests. The overall objective, however, is to ensure that ownership in the industry is as broad-based as possible, rather than being concentrated in the hands of a limited number of persons.”

Successful web shop licence applicants would likely have no problem with this, based on the fact that they collectively pledged a public share issue, via an Initial Public Offering (IPO), prior to the January 2013 ‘opinion poll’ - no doubt a bid to sway a ‘yes’ vote.

Several operators have made similar promises since, and the RFP asks licence applicants to detail their existing shareholding structure and “measures implemented to ensure broad-based participation by Bahamian stakeholders in the project through equity sharing”.

Such approaches, the RFP says, “are encouraged”. It also wants gaming house operator and premises licence applicants to detail “the extent, if any, to which [they] intend to broaden the existing shareholder structure in the future”.

This, the RFP adds, would include employee share option schemes and the terms upon which these will be issued.

The Gaming Board tender also appears to be designed to prevent licensed web shop operators from using their premises as a parallel banking institution, as it warns that only legalised gaming activities will be permitted. Any other planned business activity will have to disclosed to the Gaming Board in the applicant’s business plan.

To obtain the RFP, web shop applicants will have to pay $10,000 to the Gaming Board just to obtain a copy. The other fees sought also set the bar high, as applicants must pay $5,000 plus another $2,000 to cover the licence application fees for each gaming house premises licence.

And a $100,000 deposit, plus another $30,000, is required to cover investigation costs into each gaming house premises licence application.

While the RFP sets no limits on the number of licenses that can be issued, the terms set out in the document suggest that the sector will have a smaller number of operators and web shop sites.

The Gaming Board tender also stipulates that the interactive games made available by operators “must have a theoretical and demonstrable return to player percentage of not less than 75 per cent”.

And an “essential minimum requirement” of the RFP is that applicants make ongoing contributions, for the duration of their licenses, to sustainable community and social causes such as education, health care, sports and the arts, culture, charities and public parks and spaces.

Similar demands are made in respect of “sustainable’ corporate social investments in the Bahamas, with applicants required to devote a “minimum amount of 1 per cent of taxable revenue” to each.

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