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The Casino Gaming Amendment Act 2016

Wednesday, November 23, 2016
Grant Gibbons

Ministerial Brief by the Minister of Economic Development, The Hon. Dr. E. Grant Gibbons, JP, MP 

Introduction and Purpose

Mr. Speaker, and Honourable Members of the House, I am pleased to introduce the Bill entitled “Bermuda Casino Gaming Commission Amendment Act 2016” on behalf of the substantive Minister of Tourism, Transport & Municipalities, Sen. the Hon. Michael Fahy JP. 

The purpose of this Bill is to amend the Casino Gaming Act 2014 to streamline the process relating to the introduction of casinos to Bermuda.

Bermuda has utilized Singapore as the primary exemplary model for our gaming industry and the 2014 Act has been adapted from the Singapore model.

Mr. Speaker, in comparison to Singapore the important facts to consider are:

  • Singapore is a fundamentally different market, with a different culture.
  • The Singapore regulatory entity employs almost 200 people, spends $24 million US dollars annually, and receives substantial assistance from the Singapore Police Force.
  • The development of their regulatory process involved hundreds of regulators, dozens of consultants, and expenditure of over $200 million during the development process which took almost 7 years.
  • The regulatory agency was spending approximately $10 million per year, and in the two years immediately prior to the opening of the first casino costs increased to $30m per year.

Mr. Speaker, the Bermuda Casino Gaming Commission (BCGC) was established in 2014 and is responsible for the regulation of casino gaming activities in Bermuda and advises the Minister generally in respect of policy relating to casino gaming.

One of the initial tasks for the Commission was to thoroughly review the 2014 Act to advise the Minister on the amendments which should be made to ensure the legislative framework met Bermuda’s needs and international best practice.

Mr. Speaker, as part of the consultation process, the Commission held various stakeholder meetings with the Commissioner of Police, the U.S. Consul General, His Excellency the Governor, the Minister of Finance, the Bermuda Tourism Authority, the National Anti-Money Laundering Committee (“or NAMLC”), the ‘big four’ local accountanting firms, the Banking sector (including foreign correspondent banks), gaming industry experts, addiction service treatment providers, and the Financial Intelligence Agency (or “FIA”).

The Commission continues to engage in stakeholder outreach and communication with the general public to keep them abreast of the Commission’s progress toward the full implementation of casino gaming in Bermuda.

The Commission also met with representatives from the Cabinet Office and the Information Commissioner’s Office regarding the Public Access to Information Act 2010 (PATI).  PATI provides access to information, held by public authorities, to members of the public, which by definition, includes the Gaming Commission.  

Mr. Speaker, as part of a strong supervisory and regulatory regime, the Commission will receive sensitive information from many sources including foreign regulatory bodies and local and international law enforcement agencies. Therefore, it is essential that this information remain confidential. If it is not protected the information will not be provided

To that end the Act will be amended to ensure that when the Commission receives confidential and sensitive information from foreign regulatory bodies in accordance with a Memorandum of Understanding (MOU) during the vetting and investigations process, that information, excluding general administrative documents, is protected from PATI disclosure.

Penalties for the unlawful release of such information will be increased and brought into line with those of the Bermuda Monetary Authority and Financial Intelligence Agency.

Mr. Speaker, to achieve the public policy goals of the Act, this Bill and the amendments before the House are designed to have  the Commission operate as follows:

  1. Offer an approach that is appropriate to the social, cultural, and economic realities of Bermuda, including a human resource policy of being staffed by a limited number of high performance individuals comprising the regulatory leadership team;
  2. Work in a collaborative fashion with other global regulatory entities to achieve efficiencies and avoid unnecessary duplication of effort and to utilize third-parties for forensic accounting; criminal & civil suitability investigations; compliance auditing assistance; and for technological standards and testing; and,
  3. Implement a mandated Operator Compliance Committee approach whereby the operator shares the regulatory burden in Bermuda, with the Commission staff performing audits to ensure compliance. The Operator Compliance Committee is required to report all compliance failures to the Commission staff.
  4. These Compliance Committees will perform an important role in interfacing with the Commission and will ultimately be responsible for ensuring compliance with the robust regulatory regime envisaged by the Commission. They will be subject to the direction of the Commission, and will take on such tasks as may be specified under the Act, accompanying regulations and any other enactment. These Compliance Committees will help the Commission adopt an appropriate balance between its role as the responsible regulator and a risk-based approach to regulation allowing the Commission to concentrate its resources on some of the more complex matters related to casino gaming.
  5. Utilize an evidence-based best practice approach in developing a program to provide protections for the vulnerable, which includes under age persons, problem and pathological gamblers. The commission will work in concert with existing local treatment providers. The Government  and the Commission remain committed to addressing problem gaming and protecting the vulnerable and their family.

Vulnerable individuals, and those with an addiction to gaming, are already present in Bermuda. They are able to feed their habit by way of illegal gambling and the loosely regulated gambling already on Island. At present there are no protections and no assistance whatsoever available to those individuals. It is a primary objective of the Commission to ensure that prior to the opening of any casino, the Problem Gaming Council has been established, casino operators and their employees are fully trained in responsible gaming, and treatment providers are available for those in need.

The Bill will also provide for the creation of the post of Director of Problem Gaming in order to provide the Commission with the appropriate resources and technical expertise to combat problem Gaming.

Mr. Speaker, it is important to note that the existing provisions of the Act relating to Exclusion Orders do not properly distinguish between self-exclusion and compulsory exclusion orders, in relation to the sanctions which result from a breach.

A compulsorily excluded person is most likely going to be a known criminal or a cheat, whereas the self-excluded person suffers from an illness such as problem of pathological gambling.  This omission in the 2014 Act will be rectified in the Bill to ensure that those with gambling problems are appropriately managed.

Mr. Speaker, the intent of the Casino Gaming Act 2014 was to enhance investment and employment in Bermuda through the introduction of up to three (3) Integrated Resort Casinos. In order to ensure the orderly introduction and operation of these facilities, the Commission must satisfy the following five goals in the execution of its duties:

  1. The owners, vendors, managers, employees, and sources of finance should be free from any inappropriate past or present associations and behaviours, and uphold high ethical standards;
  2. The casinos should possess sound operational and financial controls;
  3. The games offered should be fair, honest, and operate with a high level of security and integrity;
  4. All fees, taxes, and related payments, should be appropriately accounted for and paid; and
  5. Controls should be in place to protect the vulnerable and their families.

Mr. Speaker, to secure a casino license, there is a ‘Three-Stage Application Process’ which is being introduced by the Bill, consisting of -

  1. the Designated Site stage,
  2. the Provisional Licence stage; and
  3. the final stage of the awarding of a casino licence once the suitability of the operator has been established.   

The Bill provides that once a site has been designated, the Commission then considers the proposal for viability at the Provisional Stage through the RFP.  

The conditions which may be imposed or attached to any provisional licence would be requirements relating to the hiring of Bermudians, the size of the investment in the casino facilities, requirements with respect to Anti-Money Laundering controls and for the mitigation of security and traffic issues. A potential requirement could for the operator to establish a viable casino Gambling Program

The Final Stage and a casino licence are only approved once the  vetting and suitability of the operator have been established. Where issues arise during the suitability stage, the applicant can take the necessary steps to resolve those issues.

Mr. Speaker, it is important to note that a Provisional Licence will not permit gaming as it is not a licence to operate a casino. As a part of the “Three-Stage Application Process” the Provisional License will confirm that, subject to suitability, the applicant is eligible for a full casino licence. A Provisional License is intended to provide an qualified level of comfort to an applicant to begin construction of an Integrated Resort and casino while simultaneously undergoing the rigorous “suitability” tests together with the other formalities of the application process.

Mr. Speaker, the Commission may grant a maximum of three (3) provisional licences. Those licenses are in addition to the ‘Provisional Licence’ which is being granted, in the public interest, in the Bill itself to “the Developer” as defined in section 2 of the St. George’s Resort Act 2015. Such a provisional licence is to be granted by the legislation in the public interest, and this is indicative of Government’s commitment to resort development and ensuring job creation in the East End in particular.

The development of this resort hotel in St Georges is essential for the economic revitalization of the Town of St George and Bermuda’s Tourism Industry, so a decision was made by Government, that a Provisional Licence should be granted to the St. Georges Resort Developers.

This Provisional Licence simply means that they can begin constructing the resort, which includes a purpose built casino. It means ‘shovels in the ground’ and employment in our construction industry. For the avoidance of doubt the St George Resort provisional licence will be subject to the standard conditions as other licencees, such as the percentage of Bermudians to be hired, training and AML requirements.

It does not mean or guarantee that a full casino licence will automatically follow and the Bill stipulates that this ‘public interest’ provisional licence is subject to all of the Commission’s regulatory processes, including the ‘suitability’ test and other investigations prior to the granting or refusal of a casino licence.

Mr. Speaker, the casino licencing process cannot begin until this Amendment Bill is passed, a number of subsequent application and licencing Regulations are enacted, and the RFP process is opened and closed. Consequently, a decision had to be made sooner rather than later with respect to the St. Georges Development.

Mr. Speaker, while there are a number of amendments in this Bill, they are necessary for the Commission to achieve their stated aims and objectives.

However, I wish to make special mention of three key amendments which are new and intended to provide a significant competitive edge for Bermuda’s casinos –

eGaming- eGaming is the ability to game on a mobile device such as a tablet which is accessed via a local area network or through the intranet provided by the hotel operator. Its availability can be limited to patrons of the integrated resort. It can also be limited geographically and when the device leaves an eGaming area it will automatically shut off. 

To be clear, e-Gaming is NOT internet gaming.  It is in fact, IN-TRA-NET gaming and with the technology now available it can be ‘ring-fenced’ or ‘geo-fenced’ by area. For example, Intranet gaming would allow a guest to participate in gaming whilst at an adult pool area where no minors will have access or by floor levels where the hotel can have ‘adult only’ floors. eGaming is in practice identical to gaming on a physical machine in the casino. The only difference being that the machine is small and light enough to be ‘mobile’.

At present internet gaming is not unlawful in Bermuda provided that the Company is a foreign based company. Therefore, a patron of the casino can access gaming websites whilst sat at a pool or at the bar on the casino premises. Under the current scenario all funds leave Bermuda and are received by a foreign entity and not a casino operator. No tax is paid in Bermuda nor are there anti-money laundering or any other types of protections in place.

Bermuda’s Resort model of gaming has a very limited revenue window where guests who have a great deal to do during the day such as golf, beaching and shopping will go to dinner at night and after dinner between the hours of 10 pm to 1 am spend time in the ‘brick and mortar’ casino.

Therefore, eGaming is ideal for casino operators operating in the ‘integrated resort’ model, as it permits gaming to continue while other amenities are being utilized, provided that such the amenities are within an area that has been designated.

eGaming does not require the use of external telecommunications and it is actually better regulated than the games within the physical casino because there is a digital record of every transaction. It is a significant attraction for operators and patrons alike.

Betting - As previously stated, foreign-based betting websites are accessible in Bermuda. It is therefore possible for a patron of a casino to place bets without leaving the casino premises. However, the casino operator is currently not permitted to offer betting without complying with the provisions of the betting legislation and obtaining a betting licence.

Betting on actual and fantasy events is rapidly expanding in terms of popularity and revenue, and during major sporting and other events is likely to be a big draw for tourists, particularly those from the U.S. East Coast where sports betting is unavailable. The inclusion of betting is therefore necessary and is likely to result in a significant increase in revenue.

Anti-Corruption and Bribery - Due to the potential high sums and high cash turnover, the gaming industry is a prime target for corruption. It is therefore imperative that the relationship between individuals charged with functions relating to gaming and the casino industry be as transparent as possible.

The Bill provides a ‘cooling off’ period where Commissioners, Commission staff and some government employees and Government Officials working in the area of gaming, (including sitting MP’s) will be prohibited from taking employment or other positions that provide the opportunity for, or give the appearance of, corruption and bribery. These “relevant officials” will be subject to certain restrictions, such as holding an interest in a casino or providing goods and services to a casino, during the time they hold office and for a certain period after they cease to hold office.

Such a provision, or a Post Separation Employment provision, is in the public interest and is considered best practice in other jurisdictions such as the United Kingdom Australia, Canada, Pennsylvania, New Jersey, Nevada and California relating to Ministerial conduct.

Mr. Speaker as a consequence of the many benefits outlined, the Government is supportive of the Bermuda Casino Gaming Commission and the amendments to the Casino Gaming Act 2014. We look forward to working with the Commission as they implement a well regulated casino gaming ecosystem.

Thank you Mr. Speaker, I now invite my Honourable Colleagues to participate.   

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