Online gambling operators in the Bahamas are slamming the government’s plans to boost their tax rate to as high as 50%.
Last week, the Free National Movement government of Harold Minnnis, who was elected Prime Minister last year, introduced its new 2018-19 budget plan, which includes dramatic hikes in the taxes paid by local ‘web shop’ operators, who offer online casino and lottery games from computer terminals in retail venues.
Web shops, which were authorized under the former Progressive Liberal Party (PLP) government in 2014, currently pay either 11% tax on their gaming revenue or 25% of earnings, whichever is greater, plus an additional 2% cut of revenue to help fund social causes.
The new budget calls for a variable tax rate, starting at 20% on revenue up to BSD20m (US$20m), rising to 25% on revenue up to $40m and incrementally thereafter, while any operator lucky enough to generate revenue over $100m will face a 50% tax rate.
The web shops’ end users weren’t spared, as they will face a new 5% tax on customer deposits. The government isn’t advocating a similar customer tax at Bahamian casinos, which are accessible only by international tourists.
Alfred Sears, an attorney representing the Bahamas Gaming Operators Association (BGOA), responded with a letter to Finance Minister Peter Turnquest asking for a “meaningful consultation” between operators and the government. Failing that, Sears warned that operators would be “compelled to seek the intervention of the Supreme Court to protect their rights.”
Sears claimed that operators at the top end of the taxation scale would be paying over 90% of their revenue to the government via a combination of various forms of taxation and licensing fees. Sears called the proposal “unconstitutional, discriminatory, punitive, irrational and unfair.”
Gershan Major, who was appointed CEO of the BGOA in February, issued a statement suggesting that the government appeared to be “racially” targeting the web shop operators, given that “the same level of scrutiny and examination was not done to other industries that are not predominantly black owned.”
Major added that it was one thing to worry about waking up to discover that the government has doubled your taxes, but quite another if it happened “because you do not belong to a certain political or social class, or that you have the wrong color of skin.”
The Bahamas currently has seven licensed gaming house operators – A Sure Win, Chances, FML, Island Luck, Paradise, Percy and UG – that oversee a network of 263 web shops employing nearly 3,000 people. These operations generated combined revenue of $196m in 2017.
FML Group CEO Craig Flowers told local radio that the proposed tax hikes were a “death warrant” for the industry, and warned that wholesale shop closures would result in the industry returning to its previous underground roots, and thus the government would earn nothing.