By NEIL HARTNELL
Tribune Business Editor
A web shop chain was this week urged to drop its action against the Grand Bahama Port Authority (GBPA) and focus on “the real issues” - whether the Gaming Board has regulatory authority in Freeport.
Fred Smith QC, the Callenders & Co attorney and partner, told Jarol Investment’s legal advisers that their client’s Judicial Review action was directed at the wrong target.
He said that rather than go after the GBPA, the issue at the heart of the complaint by Jarol’s Chances Games chain was whether the Gaming Board had the power to license and tax web shop entities in Freeport.
Mr Smith, in an August 31, 2016, letter to fellow attorney, Carlson Shurland, implied that Chances Games should voluntarily “discontinue” its Judicial Review so that a different action could be brought to determine who has gaming regulatory jurisdiction in Freeport.
“It is... plain that the real issue in these proceedings is not between Jarol and the GBPA, but between the GBPA and the Gaming Board and/or the Government as to whether GBPA licensees operating in the Port area are required to be licensed by the Gaming Board at all,” Mr Smith wrote.
Warning that the GBPA would file a motion designed to “strike out all or part” of Chances Games’ Judicial Review if it did not agree, Mr Smith added: “We consider that a more sensible option would be for your client to withdraw or discontinue its action so that the parties can address the real issues at hand without incurring any further unnecessary legal costs.”
Mr Smith’s suggestion is unlikely to be received well by either the Gaming Board or the Government, given their efforts to legalise and regulate the web shop gaming industry via the Gaming Act 2014.
It will especially irk the Christie administration, given that a key element of its recent Memorandum of Understanding (MoU) with the GBPA was designed to address the issue of regulatory conflicts in Freeport.
The MoU’s clause 1.18 commits the GBPA to ensuring its regulatory and quasi-governmental powers are ‘harmonised’ with national laws and government policies/regulations - something that Mr Smith’s suggestion appears to fly in the face of.
And the ‘harmonisation’ is supposed to occur via “existing independent regulators” such as the Utilities Regulation and Competition Authority (URCA) and the Gaming Board.
With the Grand Bahama Power Company already challenging URCA’s ability to regulate it, should Mr Smith’s suggestion be adopted, it would mean that the Supreme Court will be asked to rule on whether a second ‘national regulator’ has jurisdiction in Freeport.
Both Mr Smith and his GBPA client, in separate correspondence with Mr Shurland, base their legal arguments on the Hawksbill Creek Agreement, which they say gives the latter the right to license all businesses operating in the Port area.
Chances Games is one of at least two web shop chains (the other is Island Luck) who have launched separate legal challenges to the GBPA’s bid to issue gaming licences to them, and levy an associated 50-fold fee increase.
They are effectively arguing that the GBPA is trying to “usurp” the Gaming Board as the web shop industry’s regulator, and that the former has no power to issue provisional gaming licences - and charge associated fees - for their Freeport operations.
However, Mr Smith and the GBPA are seeking to disentangle the latter’s decision to levy a higher Business Licence fee on Chances Games’ Freeport operations from the wider issue of who has regulatory jurisdiction for gaming in Freeport.
Mr Smith, in Wednesday’s letter that was filed with the Supreme Court, said the GBPA was entitled to levy a higher fee because Chances Games was engaged in a business it was not currently licensed for.
Referring to the GBPA’s January 25, 2016, letter, which had sparked Chances Games’ Judicial Review, Mr Smith said all the quasi-governmental entity had been seeking to do was put their relationship “on a proper footing”.
He pointed out that Jarol/Chances current license allowed it to operate as an Internet cafe, or location where customers could engage in online(e-commerce) purchases, not web shop gaming.
Tribune Business understands that many web shop chains, prior to legalisation, circumvented the law barring gambling by Bahamians through describing themselves as Internet cafes and such like in order to obtain Business Licences.
Mr Smith said Chances Games was in breach of its license by “carrying out gaming operations”, and needed to amend it to ensure it could supply these activities.
“The GBPA is also entitled to charge a higher license fee to gaming businesses than it has charged for other businesses, such as that formerly carried out by Jarol,” he wrote in response to the complaint about a ‘50-fold’ fee increase.
“This explains the proposed increase in the license fee, which is in accordance with the GBPA’s longstanding policy of charging different types of business different levels of fees.”
Mr Smith added that GBPA business license fees typically ranged from a “token” $10 for community organisations to “the greater of $300,000 or 1 per cent of winnings for the largest casinos”.
“To the extent that your client complains of ‘double licensing’, this problem is caused not by the GBPA but by the Gaming Board,” the Callenders & Co QC added.
“It is the GBPA’s view that your client’s gaming business falls within this definition [of businesses that must be licensed by the Port], and accordingly that your client (so long as it is properly licensed by the GBPA) is not required to be licensed by the Gaming Board.”
This once again places the GBPA on collision course with the Government, although Mr Smith sought to rectify the suggestion in the GBPA’s January 25, 2016, letter that its regulatory power derives from the Gaming Act.
He acknowledged that this was “incorrect”, as the GBPA’s authority came from the Hawksbill Creek Agreement.
Chances Games had railing against its proposed GBPA licence fee increase, which was to rise from $3,000 to $150,000. Given that similar payments had already been made to the Gaming Board, it fears being subjected to ‘double taxation’ if the increases stand.
The Supreme Court has set September 5-7 this year for hearing Chances Games’ substantive Judicial Review case, should it proceed.