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The gaming industry… Making it relevant

By Vernon Khelawan Thursday, August 29 2013

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FINANCE Minister Larry Howai recently threw into the public domain an issue that has continually haunted successive governments in Trinidad and Tobago, when he told a press briefing, “There was always a major dilemma to be resolved on the issue of gambling: Should gambling be regulated with emphasis on tourism, on enhancing public revenue, on protecting the consumer or player, on protecting the vulnerable, including children and problem gamblers and preventing crime including money laundering, or should it be banned?”

The gaming industry has been for many years a source of deep grief for the various administrations, but it seems that the present administration is determined to change this situation. No legislation dealing with the gaming industry has been attempted since 1955 — almost 60 years ago.

In his first serious pronouncement on the matter, Howai said, “For many years, government has been seeking to put in place a regulatory framework to address the social concerns arising out of the proliferation of private members clubs providing casino-style games to club members.”

He put a time line of 12 to 18 months to have draft legislation ready for governing the local gaming industry and explained that “notwithstanding the many legitimate issues of public policy concerns which are attached to gambling in all forms, there has been a growth in unlicensed and unregulated gaming.”

The new legislation would see the establishment of a Gaming Commission under the remit of the Ministry of Finance and the Economy and “would be the supervisory authority for all financial institutions and listed businesses.

“The new regulatory environment,” added Howai, “would provide for a modern and effective system of gaming through legislation which would protect consumers, would protect the vulnerable, including minors and problem gamblers and would keep criminal and subversive elements from infiltrating the industry.”

And in an unusual, but nonetheless supportive reaction, the Association of Members Clubs agreed there ”is a strong requirement for oversight of gambling activities” and has further expressed the view that the “continuation of the status quo leaves unaddressed, a number of social problems, including fraud, money laundering, under-aged gambling, criminal activities and unscrupulous operators.”

The association felt that regulation would, on balance, benefit the society with a reduction in social concerns, maintain employment of some 7000 persons with an associated weekly wage bill of $6.7 million as well as providing increased tax revenue. In 2012 excise taxes alone amounted to $28 million.

Howai went further to point out that gambling was not like any other commercial operation and warned “It has the potential to lead to crime as well as devastating consequences for a small minority of customers, including minors and problem and compulsive gamblers.”

He said he had already looked at the public policy considerations related to gambling and gaming generally and had figured the primary goal going forward “is to ensure that clearly stated public policy objectives are attained to the maximum extent possible through effective compliance and regulation, as well as to ensure public confidence through effective operations and regulations.”

In a blunt and precise summary, Minister Howai said, “All casino operations conducted by self-styled private members clubs and all gaming machine operations, excluding the amusement prize categories, wherever located in recreational clubs, in pubs, in arcades and in shopping malls are illegal activities under the current legislative framework prevailing in Trinidad and Tobago.”

Also driving this urgency to institute greater control over the gaming industry is the threat of being blacklisted by The Financial Action Task Force (FATF) which has 40 regulations of international compliance standards and practices.

Minister Howai referenced this when he listed just three of those standards, which relate specifically to money laundering and casinos:

• Casinos should be licensed;

• Competent authorities should take the necessary legal or regulatory measures to prevent criminals or their associates from holding or being the beneficial owner of a significant or controlling interest, holding a management function in. or being an operator of a casino; and

• Competent authorities should ensure that casinos are effectively supervised for compliance with requirements to combat money laundering and terrorist financing.

Howai said that while these standards have to be set and maintained, “The government would seek to balance the public interest relating to the need for market supervision for the gaming industry, as well as the public interest relating to the need for addressing the moral and social concerns relating to gaming and gambling, in particular problem and compulsive gamblers.”

The minister then listed four principles which should be incorporated in the new legislation:

• a) regulatory and legal structures should be established and be politically stable, thereby creating a respected and stable gaming industry;

• b) an appropriate balance is required to be struck as to the extent to which gaming should be present in the society;

• c) the economic benefits generated must be directed in a purposeful and socially acceptable manner; and

• d) the unintended negative social consequence from gaming should be mitigated in so far as it is possible.

But Howai insisted that no regulation would simply be trust on the population and added that the precise form of regulation would be subject to extensive national debate and so he supported the “design and implementation over a reasonable period of a well-conceptualised and delivered communication programme to alert and inform the national community as to the public policy agenda for regulating the gaming and gambling industry.”

The proposed regulatory system would set out the types and classes of gaming to be permitted, the nature of the games allowed and the location of such games and gaming machines together with other criteria.

The minister has already proposed a regulatory model which would need to be refined and a Cabinet appointed Working Group (WG) has been established with technical and legal advisory services provided by an internationally-recognised consultant who, working in conjunction with the WG would be mandated to prepare draft legislation appropriate to the small scale of casino and gaming market in Trinidad and Tobago.

Howai admits that “gambling is emerging as a substantial industry in Trinidad and Tobago and with regulation, including a stable tax and business environment, good IT infrastructure and global networks, would continue to create employment opportunities and good quality jobs. Such a development would be consistent with the public policy agenda for creating jobs with high skill levels,” he added.

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