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Sebas: We Require 10-12 Months For 5% Patron Levy

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Island Luck's principal last night argued that 10-12 months is needed before web shops can successfully implement the five percent patron tax - a timeline that would cost the Government $20m.

Sebas Bastian, pictured, in a September 10, 2018, affidavit filed with the Supreme Court, said Island Luck and others had "learned a lot of expensive lessons" from rushing to complete the kind of changes that the new tax will demand of their online gaming platforms.

Laying out the "eight-step" process, required by the Gaming Act and its accompanying regulations, before modified games can be released to Bahamian patrons, Mr Bastian said Island Luck and other web shops had "no choice" but to resort to legal action to block the Government's demand for what the industry believes is an unreasonably early introduction of the 5 percent tax.

He referred to a September 7, 2018, letter from Tony Plaskow, commercial director of UK-based Black Cow Technology, an 18-year gaming software developer, as justifying his assertion that 10-12 months after the issuance of guidance notes by the Gaming Board is "a reasonable implementation date" for the 5 percent patron tax.

Mr Plaskow, in a missive also sent to the Gaming Board, said "a completely new set of processes" has to be "developed, tested, implemented and certified" to permit the levying, collection and reporting of the tax on patron deposits and over-the-counter (OTC) lottery ticket sales.

Warning about the difficulties caused by the absence of uniform guidance notes on the implementation, he added: "On a raw data basis, just the 'physical' process of calculating and adding the tax to the transaction, creating a database of all the taxes and being able to report on these is a challenging and in-depth process."

Mr Plaskow broke the process for implementing the 5 percent patron tax into two phases - online and back office operations, and then for the physical web shop locations. He estimated that the former would take four to six months, and the second some six months - making for a total of 10-12 months.

As a result, Mr Bastian argued: "In the circumstances, a reasonable period of time to complete the implementation of the Stamp Tax on the online platform of Playtech [Island Luck] is 10-12 months after the issuance of guidance notes from the Gaming Board/Ministry of Finance."

Such a potential timeline will likely send a chill through the Ministry of Finance, as it would mean missing out on potentially $20m in revenue - the sum the Government has budgeted to collect from the 5 percent patron tax in the 2018-2019 fiscal year.

"Since the regularisation of the gaming house industry, the applicant [Island Luck] has had its platform certified five times," Mr Bastian alleged. "In each instance, the applicant had to make several modifications to its proprietary system, all of which took several months to develop, test and then finally submit to an independent laboratory for certification.

"This process is very tedious and must be done under strict development guidelines to avoid irreversible damage in the form of system calculations, errors in reporting and significant financial liabilities if the platform were to develop bugs during coding."

Mr Bastian alleged that the eight steps to modifying gaming software and platforms included an analysis of the necessary requirements; design and layout; software coding; internal testing and quality assurance; independent laboratory testing; web shop staff training; on-site testing and, finally, approval by the Gaming Board.

Based on Island Luck's eight-year history of developing and upgrading its electronic gaming platform, Mr Bastian said the certification stage - testing by independent laboratories - could take as long as 147 days by itself.

The two web shop industry Judicial Reviews are challenging the alleged "arbitrary" date set by the Ministry of Finance for the 5 percent levy's introduction on customer deposits and over-the-counter (OTC) lottery sales.

Central to their case is the claim that web shops were given insufficient time to certify their games and technology platforms to accommodate the five percent levy, with the offering of any uncertified games violating the sector's governing law - the Gaming Act and its regulations - and potentially "eroding public confidence" in the sector.

The planned September 1 introduction of the 5 percent levy, which had already been pushed back twice, now awaits a further Supreme Court hearing on October 5.

Mr Bastian, meanwhile, alleged that Island Luck was already modifying its platform when the new 5 percent patron tax came in - a development that further complicated its upgrade efforts, especially in the absence of government guidance for programmers.

"At this juncture, it is abundantly clear to the applicant's senior management that the update was technically impossible and unreasonable in the mandated timeframe and that, to ensure that the applicant adhere to the Gaming Act and regulations under which it is governed, the applicant has no choice but to seek relief from the court," Mr Bastian alleged.

Comments

John 2 months ago

Rather than government requiring a patron taxes and itself appearing hoggish, with an insatiable appetite taxes from Bahamians, especially, it should have went about this affair in a different manner. 1. It could have increased the number of web shop operators so as to distribute the wealth from web shop profits among more Bahamians. By adding four additional operators, government would have realized additional tax revenue from business licenses and other fees. In addition the new operators would have to purchase or rent store space, hire staff, pay utilities and so more money world still revert to the government. 2. It could require or encourage the larger web shops to sell shares and become a publlicly traded company or private like Super value, where the wealth is shared among employees and the general public. Placing more taxes on gambling will not drastically decrease the desire for gambling. 3. Instead of a 'Patron Tax', government could require the web shops to set up Patron Loyalty Programs (no not PLP), where 10% of what a customer spends goes onto his account. And the customer can draw the funds only two times a year, say June and December. So if a customer spends $10,0000 gambling in the first six months, he can get back $1,000 at the end of that period. So if he is down on his luck or flat broke, at least he gets $1,000 to jump start his finances. He would be really fool hearty to gamble out the entire $1,000 if his rent is not paid or his lights are off. And even if he does be foolish and blow the entire $1,000, at least he will have $100 in his wallet to be collected in 6 months in addition to 10% of any additional money he spends in the web shops. The six months will act as a cooling off for anyone seriously addicted and will also allow the web shops to use the funds for that period. The ides of government gobbling up every loose penny in taxes is just as bad as the web shops sucking every dollar out the economy. But by at least putting something back every six months, it makes their activity less severe.

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sucteeth 2 months ago

Who is their right mind would believe anything that slimeball Sebas says. He and the others involved in this gambling syndicate have ruined the people of Bahamas. Any good programmer could do this in a few weeks including the beta testing..

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DWW 2 months ago

Governments hate competition! But seriously, the entire Bahamas was able to adjust to VAT in a matter of a month or 2, but these idiots need a year? Seems i'm missing something. And if they are that bad at numbers, percentages, programming or regulatory adherence, then maybe they shouldn't be in the gambling business. i mean, if the they can't keep the house always winning then they won't make a massive profit. this situation makes me smile.

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John 2 months ago

If you read correctly, Sebas said they needed the time , not only to adjust their software to accept the tax, but also to assess the impact of the tax on their businesses. And, according to him, in the past the government would say one thing, when it comes to taxing the web shops, and do something completely different.

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Porcupine 2 months ago

I think there was a time, not long ago, where the direction of this country could have been favorable to all. As a country it seems, the choice has been made. This is where we are. The future doesn't look bright. The loss of a country is truly something to mourn.

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