Reform to the country’s gambling laws could have a major impact on future stability and revenue growth, according to a top rating agency.
Ed Al-Hussainy, assistant vice president and analyst at Moody’s, said domestic gambling legislation pales in comparison to casino regulations. While domestic gambling might have social implications, from a fiscal point of view, updated gambling laws for tourists will have a far bigger role to play in The Bahamas’ economic fortune.
He told Guardian Business from New York that these regulations have the ability to provide a “big revenue boost” to a government strapped for cash.
“The bigger picture is casino regulations. I think as they get closer to Baha Mar coming online, that is going to become a much more pressing issue,” he explained. “The regulations must be updated, or the country limits its potential.”
George Markantonis, president and managing director at Kerzner International (Bahamas), has remained out-spoken on the need for reform.
He revealed to Guardian Business last week that the mega resort is ready to pull the trigger on a $10 million casino expansion once these regulations are approved.
Robert ‘Sandy’ Sands, senior vice president of administration and external affairs at Baha Mar, has been particularly vocal on the issue in the lead up to the project’s December 2014 opening.
“What it really comes down to is making the destination sustainable in terms of being competitive as a gaming destination. Bahamian tourism will benefit as a result of that,” he said on Friday. “And because of that, you’re in a position to grow tourism numbers. There is a multiplier and trickle down effect on the economy.”
Proposed amendments to the gaming laws, which currently stretch back to the 1960s, include allowances so gambling can take place anywhere on the resort campus. Mobile gaming has become quite trendy in other gambling destinations. Sports and Internet gaming has also grown in popularity, both of which would bolster overall revenues, according to resort executives.
In fact, based on other jurisdictions, Sands estimated a possible tripling or even quadrupling of government revenue from these changes.
Al-Hussainy agreed that the government would likely see higher tax revenues from such amendments.
Most important in his mind, however, is the overall competitiveness of The Bahamas among other tourism destinations.
“I think the bulk of revenue will come from attracting more people, in particular high-end tourism. That is the big draw,” Al-Hussainy said. “At the end of the day, the amount of tourism for The Bahamas is shrinking. The competition for that slice is increasing rapidly. The fact they are trying to remain competitive is very positive.”
The ratings agency told Guardian Business that stakeholders must ensure that gaming doesn’t become an “enclave” that fails to connect to other areas of the economy.
He felt the government should also revisit the concessions and tax structures at existing and future resorts, implying that this sector could be producing more revenue for government.
On the surface, he said the ongoing debate and referendum on number houses “doesn’t seem important” from a credit worthiness perspective.
“But the broader gaming agenda is quite important,” he said.
By Jeffrey Todd
Guardian Business Editor