Constitutional Reform - pt. 13... ...I urge that the Constitutional Review Commission recommend the removal of derogation clause 4 (e) from Article 26 of the Constitution ...in order to affirm the constitutional norm of non-discrimination ...regularize and tax the Bahamian community gaming industry ...and open casino gaming to Bahamian ownership, management ...and patronage

Constitutional Reform pt. 13

The Constitution: Gaming and discrimination

BY ALFRED SEARS

Since the early 1960s full-time casino gambling has been and remains the anchor attraction of the major touristic resorts in The Bahamas, without any major opposition from the Bahamian society either on moral or social grounds.  However, under the Lotteries and Gaming Act, 1969, Bahamian citizens, permanent residents, persons ordinarily resident in The Bahamas or persons in the employment of the government of The Bahamas, except with a special permit, are prohibited from taking part in any gaming and casinos in The Bahamas.  While there is a complete ban on Bahamians, visitors are invited to The Bahamas to patronize casinos.

Casino operators in The Bahamas, all of whom are foreign investors, receive each year a promotional cash contribution from the government, pursuant to their respective heads of agreements, to promote their resorts in which casino gaming is a core attraction.  As part of the public policy of The Bahamas, the government grants licenses to casinos, receives taxes of approximately $15 million annually from casinos and allows Bahamians to participate, through employment, in gaming activities in casinos, as croupiers, pit bosses and supervisors on behalf of the casinos.

On the other hand, to participate in gaming in The Bahamas, Bahamians must patronize illegal web shop operations, owned and operated by Bahamian entrepreneurs who risk, along with their patrons, arrest and prosecution.  However, in spite of this risk, the local web shops have proliferated throughout The Bahamas with thousands of Bahamian patrons.

The root of this discriminatory treatment of Bahamians and permanent residents is found in Article 26 (1) of the Constitution which declares that no law shall make any provision which is discriminatory either in itself or in its effect.  However, under the derogation clause of Article 26 (4) (e) it is stated that this article shall not apply to any law so far as that law makes provision “for authorizing the granting of licenses or certificates permitting the conduct of a lottery, the keeping of a gaming house or the carrying on of gambling in any of its forms subject to conditions which impose upon persons who are citizens of The Bahamas disabilities or restrictions to which other persons are not made subject”.

Therefore, the Constitution allows for disabilities or restrictions, in the area of gaming, against Bahamian citizens and permanent residents which disabilities and restrictions are not applicable to visitors and foreign investors.  The question is whether this blanket prohibition of Bahamians from gaming can be justified, on the grounds of public policy and constitutional principle, given the current support of and subsidy by the government of foreign-operated casino gaming in The Bahamas.

Prime Minister Perry Christie announced in the House of Assembly on October 31, 2012 that there will be a referendum on December 3, 2012 on one question: Do you support the legalization of web shops?  The prime minister disclosed that the question of a national lottery will not be included which, in the opinion of the London-based consultants, were not commercially viable and that the question of removing the prohibition on casino gambling for Bahamians will not be a part of the referendum.  The prime minister pledged to shut down web shops and enforce the gaming laws if there were to be a majority “no” vote.  If a majority of the votes in the referendum were to be in the affirmative, then the Gaming Board will issue licenses to those persons who meet a strict set of criteria, including possessing the necessary experience, integrity and expertise, as well as possessing the necessary financial resources and having organizational capacity and internal controls needed to operate in an efficient, responsible and transparent manner.  According to the prime minister, legalized web shops will pay a licensing fee of at least $1 million and a performance bond, annual taxes based on their revenue, contribute to the cost of implementing the new laws and regulations, create and maintain programs to protect gamblers from addiction and assist with the cost of setting up a system to rehabilitate gambling addicts.

According to The Nassau Guardian, as reported by Taneka Thompson on November 6, 2012 of an interview with Christie on the sidelines of a swearing in ceremony for North Abaco MP Renardo Curry as a parliamentary secretary, the prime minister conceded that while a referendum is not needed to regulate the gaming sector, his government will be conducting a referendum to glean public opinion on the issue, in the following quote:  “...Because there is nothing to do with amending the Constitution; this is not a constitutional referendum... I’m advised legally that all of the prerequisites that go into organizing a constitutional referendum do not apply, and so when I get the legal opinion I will publish it so people will see that all this is, is a government seeking an indication of the opinion of people.”

According to Article 52 (1) of the Constitution, Parliament may make laws for the peace, order and good government of The Bahamas.  Article 52 (2) provides that the power of Parliament to make laws shall be exercised by bills passed by both houses, whether without amendment or with such amendments only as are agreed to by both houses, and assented to by the governor general in accordance with Article 63 of the Constitution.  The Privy Council in Cobb & Co. Limited and Other v. Norman Eggert Kropp (1966) 3 WLR 416 stated that, “The phrase ‘peace welfare and good government’ is one that is ‘habitually employed to denote the plenitude of sovereign legislative power, even though that power be confined to certain subjects or within certain reservations.’”  Therefore, the government, given its parliamentary majority can amend the Lotteries and Gaming Act to remove the prohibition against Bahamian participation in casino and other forms of gaming in The Bahamas.  However, given the apparently divided public opinion on this issue, the government has decided to poll the Bahamian electorate by way of referendum.

Section 2 of the Constitutional Referendum Act (1977) provides that, “For the purpose of obtaining the approval of the electors qualified to vote in an election of members of the House of Assembly with respect to a bill submitted to them, which bill seeks to alter an article of the Constitution specified in Article 54 (2) or (3) of the Constitution or any of the provisions of The Bahamas Independence Act, 1973, a vote shall be taken by way of a referendum held in accordance with this act.”  It is clear that a referendum, pursuant to the Constitutional Referendum Act, is part of a legislative process reserved to amending the articles specified in Article 54 (2) or (3) of the Constitution or the provisions of The Bahamas Independence Order.  Therefore, the proposed referendum on gambling would not fit within the legislative scheme of the Constitutional Referendum Act.

If the proposed referendum on gambling is intended to be a mere consultative or advisory referendum on the issue of whether the web shops and lotteries in The Bahamas should be legalized or not, in my opinion, there would have to be an amendment of the Constitutional Referendum Act or the passing of a new law to enable the conduct of an advisory or consultative referendum, as an advisory or consultative referendum is outside the parameters of the present Constitutional Referendum Act.   The Privy Council, in the case The Prime Minister of Belize v. The Attorney General of Belize (2010) UKPC 7, held that an amendment to the Referendum Act, which is not part of the legislative process and which does not purport to alter the deeply entrenched provisions of the Constitution, but is merely advisory or consultative, imposes no obligation on the legislature and therefore could not violate the Constitution.

On the evening of November 13, 2012 Christie, in a mature acknowledgement to the public questions and concerns raised about the process, announced that the proposed referendum had been postponed from December 3, 2012 to January 28, 2013.  The prime minister also disclosed that the postponed referendum will ask whether lotteries should be legalized, in addition to web shops.  On November 14, 2012 the government tabled a bill in the House of Assembly to amend the Constitutional Referendum Act and the Parliamentary Elections Act and provide a legal framework for the conduct of advisory or consultative referenda.

The adjusted proposal of the government, intended to achieve the limited objective of determining whether the Bahamian electorate supports the legalization of web shops and lotteries by way of an advisory or consultative referendum under the supervision of the parliamentary commissioner, will avoid controversy over the process of the referendum.

On a more substantive level, however, I urge that the Constitutional Review Commission recommend the removal of derogation clause 4 (e) from Article 26 of the Constitution, in order to affirm the constitutional norm of non-discrimination, regularize and tax the Bahamian community gaming industry and open casino gaming to Bahamian ownership, management and patronage.

 

• Alfred Sears is an attorney, a former member of Parliament and a former attorney general of The Bahamas.

Nov 15, 2012

thenassauguardian

Caribbean Blog International

Constitutional reform - pt. 12... ...I therefore recommend that Article 23 of the constitution be amended to include a specific guarantee for freedom of the press ...in order to better protect the community’s interest in integrity in public administration ...through robust scrutiny by an independent press

...the current operation of the gaming industry in The Bahamas leaves much to be desired ...and in some ways contravenes international laws

Gaming Industry Breaking Int’l Laws

By Ianthia Smith
The Bahama Journal



As it stands now the gaming industry in the country poses many problems for the country, both nationally and in the international arena, which is why Prime Minister Perry Christie says the country must come to a decision soon as to how it will proceed with this issue.

Prime Minister Christie said the options for his government are simple: either shut down local web cafés or make them legal.

He added that that decision would soon have to be made as the current operation of the gaming industry in The Bahamas leaves much to be desired and in some ways contravenes international laws.

“The web shop operators are unable to secure bank accounts for their businesses as they do not satisfy the relevant anti-money laundering rules,” he explained. “There are concerns regarding the way in which the cash generated from the business is legitimised.”

“The web shops are used to facilitate the transmission of funds between individual resident on different Islands in direct contravention of the relevant banking and anti-money laundering rules.”

The prime minister said continued operation of the web shops in the manner outlined leaves The Bahamas exposed to international scrutiny and sanctions for failure to implement anti-money laundering rules.

He added that this position is not acceptable and needs to be addressed without further delay – an issue Mr. Christie said has been ignored for too long.

The prime minister added that this is why his administration plans to put in place what he is calling grandfathering provisions that will ensure that operators run a well regulated business which provides appropriate player protection and complies with anti-money laundering and anti-terrorism laws.

“The grandfathering provisions will, however, provide no guarantee that a licence will be awarded,” he said.

“Rather, existing operators will have to prove that they have conducted their gaming operations with integrity and fairness towards consumers, and, moreover, that they have the financial capacity and organisational structure to meet the high regulatory standards that will be demanded of them.”

He said the licences for web shop operators would be conducted in a similar manner to the licenses issued by the Gaming Board for land based casinos, this would include the appointment of an independent board, rigorous investigation of operators and their employees and input from external regulatory consultants from outside of The Bahamas who will make a recommendation to the Gaming Board on the suitability of each applicant.

The taxation regime and level of charges for licenses for the web shops, the prime minister added would be a combination of a flat rate tax licence fees and a cash bond.

The referendum will now be held on January 28 next year.

The legal framework to make that happen will be debated next week.

16 November, 2012

Jones Bahamas

Caribbean Blog International

...disappointed by the Government's decision not to legalise gambling for Bahamians

'Good has come' from $6m Numbers Houses
By CHESTER ROBARDS
Business Reporter
crobards@tribunemedia.net:


Numbers Houses employ up to 3,000 Bahamians directly with an annual payroll of $6 million, and make $1.2 million in per annum charitable donations, a senior executive told Tribune Business yesterday, adding that the sector could become an $80-$100 million industry if legalised.

Making his case for legalising local gambling or playing numbers, Dicrius Ramsey, general manager of Island Luck, said numbers houses have come to employ directly 3,000 individuals - and indirectly 2,000 - a workforce just 3,000 less than the Bahamas' largest private sector employer, Atlantis.

And with government funding slashed to many community organisations, the Numbers Houses have taken over the role and inject as much as $100,000 per month into those organizations.

Mr Ramsey said, though, that many organisations are reluctant to receive their money publicly, as they are afraid of what some in the community might say about the origin of the funds.

"Some people take it on top of the table, some people take it under the table," he said.

Island Luck recently donated to Doris Johnson High School some $9,000 worth of new computers - the first in the school's history, according to Mr Ramsey. He has also personally made $5,000 donations to the Bilney Lane Children's Home and to the Unity Home.

Mr Ramsey argued that the Government has missed out on a substantial revenue source by choosing to not legalise gambling for Bahamians. Yet he added that shutting down the industry would mean a spike in unemployment and severe a revenue stream for countless entities.

He said the four leading numbers houses spend up to $50,000 per month on cable TV bills, $90,000 on electricity costs, and $75,000 on National Insurance Board (NIB) contributions, while creating indirect employment for the upkeep of their establishments.

Mr Ramsey said the four large number houses pay collectively more than $100,000 in rent for their locations, and carry a $500,000 per month payroll.

"You are talking about half a million in payroll alone and 3,000 people employed," he said. "We want serious consideration to call it a local gaming industry, and we are looking for some regulations to be put in place, so it is recognised as a viable entity. I don't know who outside of government has a half-million payroll monthly."

And Mr Ramsey's figures do not take into account the many smaller number houses that dot the islands.

He said those in the industry were disappointed by the Government's decision not to legalise gambling for Bahamians. He called the law that prohibits the practice archaic, and compared the choice to spend disposable income on gambling to the choice to spend money on the purchase of alcoholic beverages.

He argued that gambling does not contribute to the decay of the Bahamas' moral and social fabric, but that alcohol consumption does.

"Nobody can say that the gaming industry is wreaking havoc on the moral and social fabric," said Mr Ramsey. "Our position is that the local gaming industry... who does it really offend?

"We want people to understand this is a business and it is growing, and we want it to be here for a long time with a seal of approval."

Arguments have arisen from both sides of the fence, with some claiming legalised gambling would 'breed poverty', while others claim the extra tax revenues could be the answer to the Government's high debt.

"Good has come from these web shops," said Mr Ramsey. "They are contributing to the cultural development, and as profits continue to exist, I am quite sure the local community will see a lot more giving back because everyone will give back once it is profitable."

July 06, 2010

tribune242

Bahamas Blog International

James Smith: Ex- finance minister warns Government about allowing Bahamians to gamble in foreign-owned casinos

Ex-minister warns over gambling
By NEIL HARTNELL
Tribune Business Editor:



A former finance minister yesterday cautioned the Government about allowing Bahamians to gamble in foreign-owned casinos, warning that it could lead to increased foreign currency outflows and actually reduce net revenues collected as taxes by the Government.

While the Ingraham administration's plans to reform this nation's gaming regulations are currently not thought to include Bahamians being allowed to gamble in the casinos at Atlantis and Cable Beach, the ex-finance minister in the former PLP administration, James Smith, said the implications of any such decision needed to be considered carefully because they were likely to negatively impact the nation's foreign exchange reserves.

Mr Smith explained that under the current system, with only foreigners allowed to gamble in Bahamas-based casinos, the Government gained its revenues in foreign currency, while the foreign reserves benefited whenever the Central Bank purchased US dollar proceeds from gaming activity from the commercial banks during the course of its daily operations.

But if Bahamians were allowed to gamble in the foreign-owned casinos, their Bahamian dollars would need to be converted into foreign currency whenever their owners wanted to repatriate profits/revenues outside this nation.

Such conversion, Mr Smith said, would cause a drain on foreign currency reserves that might not be offset by gambling by the foreign patrons of Bahamian casinos, leading to a net outflow of foreign exchange. "The earnings from the casinos are always foreign exchange," Mr Smith told Tribune Business, "so we are not only assured of revenues to the Treasury, but revenues for the foreign reserves when the Central Bank buys from the banks."

If Bahamians were allowed to gamble in casinos, their gaming losses would need to be "offset against foreign currency earnings".

"Therefore, in assessing this, you have to marry it with these other concerns, and look at the foreign currency impact and whether it contributes to the growth of GDP, or the reverse," Mr Smith said.

"You have to buy foreign currency to go out, and who mitigates losses by the locals, which would otherwise be capital inflows. You could end up with a zero contribution, or a negative one."

Explaining that the Government could end up with less revenue than anticipated, as well as increased foreign currency outflows, if it made such a decision, Mr Smith described this as the "unexpected returns" and "unintended effects" if Bahamians were allowed to gamble in the foreign-owned casinos.

And with many US states altering their lotteries because they were not obtaining the returns anticipated, Mr Smith added: "Gambling does not create added value; it merely creates the transfer of wealth from one group to another."

With Bahamians seemingly having "a high propensity to gamble", Mr Smith also warned that legalising the sector and permitting casino gambling for locals could also result in a loss of import and customs duties.

"We might end up getting less revenue because consumption has gone down, and the gaming industry does not require imports, because its equipment is already here," he added."

April 14, 2010

tribune242

Bahamas Blog International