The Tribune

By STANLEY CARTWRIGHT

WHEN the government announced the regularisation and licensing process for the gaming industry in 2014, the Bahamian people were promised a detailed vetting process that required full transparency and accountability on the part of gaming operators.

Considering the months’ long wait (with the usual multiple deadline extensions and delays), the Bahamian public deserved nothing less than the thorough vetting process that was promised. Instead, recent disputes over the ownership of multiple gaming enterprises point to a possible oversight that could potentially call into question the integrity of the entire vetting process.

At the heart of this matter are the legal disputes that have arisen regarding stakes of ownership in multiple gaming operations that have received provisional licences from the government.

Given that the licensing process called for full disclosure by all principals involved with the gaming entities, these disputes, if legitimised by the courts, point to two conclusions: the willful deception on the part of applicants, and a flawed process that did not uphold the very standards that justified the need for a licensing process in the first place.

In October 2015, the government awarded provisional gaming licences to eight of the nine applicants who participated in the formal process to be eligible for licensing.

Along with millions of dollars paid in fees, penalties and back-taxes, this process required the submission of very detailed information regarding the personnel, operations, strategies and finances of each gaming entity.

It is during this process that all relevant ownership information should have been revealed to the government. The eight gaming entities that were eventually granted provisional licences include FML, A Sure Win, Chances Games, Paradise Games, Island Luck, Percy’s at the Island Game, Asue Draw + Spin and Bahama Dreams. Local gaming entity, Bet Vegas, was the only applicant that was rejected.

Now, less than six months after the granting of the provisional licences, many of the largest players in the industry are actively engaged in battles with third parties who are claiming a stake in ownership.

At issue is the fact that the gaming industry operated under a state of illegality for so long and there was no way to legally remediate issues between owners as the courts did not recognise local online gaming operations as legitimate businesses. However, the newly legalised industry, with its heavy regulations and strict taxation requirements, has given these third parties the legal foundation they needed to mount legal challenges.

This is specifically due to the government’s decision of retroactive recognition of local online gaming activities going back six years - requiring the payment of back taxes on gaming revenue for that period. This timeframe, prior to legalisation, spans a time when the “ownership” of many gaming companies was in flux and business relationships were being formed outside the law.

Therefore, any formal agreement within the last six years concerning the ownership of these gaming entities, including the sale, redistribution of shares or termination of relationships have to satisfy legal requirements to be formally recognised. Anything other than that throws the entire affair into a tailspin.

One only has to pick up the local dailies to see that some of the industry’s leading webshops could be affected by this unforeseen development.

An internal ownership dispute between owners of gaming operator, Asue Draw, led to the formation of rival company, Bet Vegas - the only company that was not granted a licence of the nine that applied. This, despite the owner’s claims that all fees, taxes and legal requirements were fulfilled. The fact that this company was the only gaming operation that had never operated as an illegal entity because it was formed after the industry was legalised, also raises considerable questions as to why this entity was denied a licence in the first place.

Then you have industry heavyweights such as Island Luck’s CEO Sebas Bastian, who had to mount a legal defence against claims of ownership from Keith Major Jr. FML, owned by industry pioneer, Craig Flowers, has also had to fend off accusations that it was involved in the purchase of another gaming entity. There are also talks of a looming legal battle as yet another gaming operator is currently embroiled in an ownership dispute.

If the courts should recognise any of the claims in these disputes, it would call into question the entire licensing process and whether or not there was a commitment to the integrity of the process by all parties involved. The stakes are very high. There are millions of dollars on the line and the legal implications could affect the legitimacy of many of the industry’s biggest players.

In the middle of all of this is the government. They have handled this entire affair over gaming poorly. With a failed Referendum in 2013 that they later ignored, this Christie Administration needs to ensure that they avoid a new round of criticism in the licensing of these entities. The last thing they need is a public spectacle and a mountain of lawsuits.

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