3/5/2010 3:15:00 PM Green Paper on Gaming presented to House
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Premier Dr. Ewart Brown
Green Paper on Gaming in Bermuda presented to the House of Assembly by Premier Dr. Ewart Brown Friday, March 5, 2010
Download the full Green Paper from the Government portal at www.gov.bm.
Foreword by Premier Dr. Ewart Brown
Like any proud people, Bermudians have strong opinions on most subjects. As our faces differ so do our views on gaming generally and gaming for Bermuda in particular.
Recognising the divergence of views on the subject and the absence of comprehensive, localized study on it, the Government tasked overseas consultants and a local panel with the considerable duty to analyze Bermuda's potential for gaming.
Public meetings, written submissions and detailed research yielded the two reports that form part of this Green Paper. To further equip the Bermudian public with the tools to make informed decisions, the Speech from the Throne of 2009 undertook to pursue a full debate of "the vexed issue of gaming for Bermuda".
The shout at the Crown and Anchor table when all bets are placed and the speculation is ended is "up she comes!".
So it is with the release of this Green Paper. Bermudians no longer have to speculate about many of the issues that surround gaming. The dispassionate research provided by this Green Paper will permit us as a community to engage in a full and frank debate.
The synergies between the introduction of gaming and the renewal of Bermuda's tourism are inevitable. Similarly, the safety net required to ensure that those affected by the indiscipline in gaming must be addressed. This Green Paper contemplates these and other matters.
The Government recognizes that disparate pieces of legislation presently regulate the gaming that exists in Bermuda. Accordingly, as a matter of sound legislative practice, it is intended to amalgamate the regulation of all gaming in Bermuda into one Act of the Legislature.
I am grateful to the professionals who conducted the Innovation Group Study and to the Task Force on Gaming, chaired by Mr. Wendell M. Hollis with Mr. Edward Trippe, Mr. Norman Mastalir, Ms. Deena Harvey and Mr. Marc Daniels. I must also extend my thanks to the Bermuda Hotel Association who partnered with the Government of Bermuda to engage the Innovation Group.
Bermuda is at a pivotal stage in its 400 year old story. How we approach the task before us on this issue of gaming will determine our economic future and our positioning in the increasingly competitive tourism marketplace.
I look forward to hearing the views of the Bermudian people on this Green Paper and the specific questions that emerge from this comprehensive research.
Executive Summary
In 2008 Cabinet approved the conduct of a feasibility study on various aspects of legalized gaming in Bermuda. That study was conducted by the Innovation Group. Recognising the importance of gaming to tourism, the Bermuda Hotel Association partnered with the Government of Bermuda in the engagement of the Innovation Group.
The Innovation Group's scope of work was segregated into five (5) general tasks:
(i) A gaming market assessment
(ii) Gaming legislation study and tax considerations
(iii) A lottery assessment
(iv) An overview of internet wagering, and
(v) Economic/social impact considerations
On 4th February 2009, the Premier, Dr. the Hon. Ewart F. Brown JP MP appointed a Task Force on Gaming whose terms of reference were to:
(i) Work closely with the Innovation Group in the conduct of their study
(ii) Arrange and host public meetings on the issue of gaming in Bermuda to receive views from the Bermudian people, and
(iii) To receive the report of the Innovation Group and after consideration of it to make recommendations to Cabinet.
In June 2009 the Innovation Group submitted its report to the Task Force on Gaming. On 20th July 2009 the Task Force on Gaming submitted their recommendations to the Premier. Cabinet further considered both reports and their recommendations and resolved to proceed with a Green Paper to be introduced into the Legislature in the 2009/10 Session.
On 6th November 2009 in the Speech from the Throne delivered by His Excellency the Governor, the Government confirmed that a Green Paper on Gaming For Bermuda would be introduced.
Introduction - an overview of the two Reports
1. The Innovation Group's Report found, recommended and invited the Task Force on Gaming to note the following:
(i) a lottery is unlikely to meaningfully enhance tourism,
(ii) hosting internet wagering is unlikely to stimulate tourism,
(iii) maximizing capital investment and resultantly the quality of any gaming product is especially important; and
(iv) the social impact issues and considerations.
2. The Task Force on Gaming received the Report of the Innovation Group and taking into account that Report and the submissions received as well as its own work, recommended the following to Cabinet:
(i) that some form of casino gaming be permitted,
(ii) that a suitable site in the City of Hamilton is recommended for a casino,
(iii) that all gaming permitted in Bermuda be incorporated under one omnibus piece of legislation,
(iv) that the casino be privately owned and operated,
(v) that there be no restriction on Bermudian participation,
(vi) that casino opening hours would mirror existing nightclub liquor licensing laws,
(vii) that a 10% gross revenue tax be levied on a casino,
(viii) the prescribed application of any revenue received, and
(ix) that an advanced social service safety net be adapted to address the negative effects of the introduction of gaming.
The respective methodologies by which the two Reports were compiled and the detailed analysis and findings now follow in full.
As a note to readers, the two Reports are considerable volumes and as such the Executive Summaries of each are attached in print. Accompanying this Green Paper is a CD on which members of the public will find the two reports. Additionally, they are available on the Government portal at www.gov.bm.
INTRODUCTION
The Innovation Group was engaged by the Government of Bermuda and the Bermuda Hotel Association, to provide consulting services with regard to the potential implementation of gaming in Bermuda. Specifically, we have been charged with recommending a gaming platform for the country that balances the tourism development goals of government with the array of potential economic benefits and reciprocal impacts associated with different implementation scenarios.
Bermuda presently has an extremely advanced and sophisticated economy but has virtually no legalized gambling. While tourism has historically been the leading industry in the country, it has declined over the last 30 years based upon a variety of factors including significant increased competition for leisure travelers from other competing markets.
The implementation of casino gaming in a country that currently does not have legalized gaming must be evaluated from several different perspectives as there are a number of alternatives and approaches that can be considered. The overall objectives of the government will play a role in determining which format and to what extent gaming is permitted. In the case of Bermuda, rejuvenating tourism is the primary reason that the government has decided to evaluate the topic of legalized gaming.
There are a multitude of questions and issues that potentially arise when considering how Bermuda might move forward with some form of legalized gaming. These topics range not only from what form of gambling is best suited for the country and would have the biggest net positive impact on tourism development, but they also include topics such as the locations for gaming, the number of licenses that should be permitted, and the regulatory and tax framework that should be established. In addition, Bermuda needs to consider the potential social and economic impacts that the introduction of gaming could potentially have.
To answer these and other questions and provide the Bermuda Government and the Bermuda Hotel Association with a blueprint for moving forward, The Innovation Group completed a series of quantitative and qualitative analyses. In completing our study we utilized case studies from other jurisdictions and our own proprietary research and financial models as well as data from third party sources.
Scope of Work
The Innovation Group's Scope of Work was segregated into five (5) general Tasks as summarized below:
Task I: Gaming Market Assessment
Under this task, The Innovation Group quantified the gaming revenue potential for Bermuda utilizing models that we have developed for other jurisdictions. In this task we identified and developed six alternative scenarios for casino style gaming. These alternatives were based upon various assumptions regarding locations, number of potential licenses and other factors. In addition, we examined the potential for small slot clubs where a small number of gaming machines would be allowed in various locations.
The Innovation Group examined the potential revenue impacts of legalized gaming assuming that both local Bermudians as well as tourists of legalized age (+21) would be allowed to participate.
Task II: Gaming Legislation Study & Tax Considerations
Under this task, The Innovation Group evaluated various cases studies from other jurisdictions in an effort to arrive at recommendations with regard to the best potential legal format for gaming in Bermuda to meet the government's ultimate objectives.
Included in this task are a discussion of the pros and cons of various approaches to the distribution of gaming locations and the number of licenses, as well as the type of regulatory environment that might best suit Bermuda if gaming were enacted.
We identified the four primary benefits to be derived from the installation of legalized gaming in any jurisdiction, as follows:
The Innovation Group's analysis under this task examined the tax rate structure of current gaming markets in selected U.S jurisdictions as well as the Caribbean and Latin America.
The analysis highlighted the negative consequences associated with an unstable tax environment or an exorbitantly high tax rate as experienced by certain gaming jurisdictions. The analysis also examined the impact of tax rates on capital investment and the ability of gaming operators to acquire capital at an economically viable rate.
Task III: Lottery Assessment
In this task, The Innovation Group examined the potential for a Bermudian Lottery as a means to stimulate tourism and tourism infrastructure development. While a lottery in some fashion generally does not act as an influence in inducing overall visitation to a destination, it can be a mechanism to generate tax dollars which can be utilized to further promote tourism. Hence, introducing a lottery to Bermuda was examined as part of the overall introduction of gaming to the country.
To develop the demand for lottery products in Bermuda, The Innovation Group utilized several different approaches and models. Each approach was based on gaming trends in comparable locations, adjusted to reflect variations in economic and social conditions, accessibility, and the distribution of gaming opportunities.
Task IV: Overview of Internet Wagering
An additional task as part of The Innovation Group's engagement was the evaluation of Internet Wagering as a prospective form of gaming for Bermuda. This form of gambling has become one of the fastest growing components of the gaming industry. Some jurisdictions such as The Isle of Man and Costa Rica have become havens for the support of internet wagering activities.
Governmental response to this rising market sector has varied. In the USA the emphasis has been on prohibition of internet gambling either based or played in the US. In Europe, on the other hand, the emphasis has been on a policy that allows limited, highly regulated (and often state controlled) gaming that is directed either at a country's own citizens or other legal jurisdictions. And in Australia, the Internet gaming market is much more liberalized, where companies can freely apply for licenses from the authorities in a number of states and territories, and participation is not limited to Australian citizens.
Developing and operating such a business in Bermuda was evaluated as a an option for the government However, issues such as controlling the process, the competitive nature of the industry and determining whether there are ultimate economic benefits and positive impacts on the tourism industry associated with the introduction of this type of wagering was part of our evaluation.
Task V: Economic /Social Impact Considerations
While the overall primary objective of The Innovation Group's study was to evaluate the potential implementation of gaming in Bermuda and how it could enhance the tourism industry, a complete evaluation of situation must include an examination of the various economic and social implications of introducing gaming.
In this task we identified the potential direct and indirect impacts on local economic activity, employment, and on revenues and expenditures. In addition, we estimated the potential social impacts assuming casino style gaming was introduced under various alternatives. The social impact analysis included an evaluation of items such as public safety, crime, community services and behavioral aspects.
Download the full Green Paper from the Government portal at www.gov.bm.
Posted: Saturday, March 06, 2010
Comment by:
letariatpro
Anyone else wonder why Brown is trying to push this through so hard and force a takeover of the city of Hamilton? I am sure it is for a humanitarian and altruistic cause.
Posted: Friday, March 05, 2010
Comment by:
Robert Bryce
Apart from the stupidity of even considering such Legislation, look at 2 ii and iv above. ii states "a suitable site in the City of Hamilton is recommended for a casino" and iv states "the casino be privately owned and operated". If that isn't a red flag as to who the owners are likely to be then what is? More of the unethical but not illegal?
Posted: Friday, March 05, 2010
Comment by:
ParadiseLost
Can someone please tell me why prostitution is illegal and why it should not be legalized? Can someone please tell me why drug use is not legal and why it should not be legalized? Then can that same someone tell me if your reasons do not sound exactly the same as those who oppose this evil vice called gambling? And if you are for gambling then please dichotomise your argument from prostitution and drug use. Brown and the rest of you are disgraceful. Goodbye Bermuda. You lived till 400 it was good while it lasted.
