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Rein in illegal gaming

Wednesday, November 22, 2017

Over the last few months, a lot has been written about the impact of the new taxation regime on the gaming houses in Trinidad and Tobago. Essentially, the argument being put forward by those opposed to the tax is that it will cause a significant loss of employment within the sector itself. The irony of these arguments is that little regard has been placed on the impact of these gaming outlets on employment in other sectors in general and the horse-racing community in particular.

While some argue that the slowdown in the local economy has been the main cause of the decline of the horse racing industry, there is considerable evidence to suggest that this is not entirely the case. While there is no denying that the sector has a number of self-inflicted wounds, it has also been dealt some deadly blows by the rise of illegal gaming activities in T&T.

Horse racing at Santa Rosa Park with bets placed at the track or its dwindling (Off Track Betting) OTB outlets is the only avenue through which the government can be assured that they compute accurately and have due for collection all of the taxes due to the state.

The horse-racing industry, through the many service providers be them the trainers, grooms, feed handlers, jockeys, direct employees of the track and various regulatory bodies employ at least as much as the various gaming locations and considerably more than most of the illegal gaming outlets.

If one accepts the numbers quoted by the Minister of Finance Colm Imbert, who should be in a position to know, the turnover on betting in the gaming sector is three or four times greater than the turnover on betting placed through the Arima Race Track (ARC) and its OTB outlets. The ability of these gaming outlets to operate on the fringe or other side of legality also enable it to out-perform the local racing industry when it comes to payouts and facilities provided.

These outlets are also not subject to the restrictions imposed on the horse-racing industry when it comes to days or times of operations. And we need to understand that gaming operations are not just the private member clubs and/or casinos, gaming outlets include any shop or grocery with an electronic gaming machine. The very same machines that the Minister of Finance have now brought within the tax net.

The local horse-racing industry cannot compete with this unfair competition. The betting pools cannot compete with this unfair competition and as such, it is no surprise to see gaming machines popping up at some of those establishments as well.

While the tax on the machines/tables represent an attempt to generate some revenue for the State, it is really a plaster over the problem. There is no country in the world that allows gaming to take place in such an unfettered manner, wherein anyone who wants to install and electronic gaming machine or roulette table or some other betting medium can do so with impunity. The costs to a country of such is just too great and it is more than the tax revenue forgone.

There is loss of employment in other gaming sectors, there is loss of productivity generally due to time spent, there is increased random crime as criminals target these outlets for robbery given the knowledge of the amount of cash generated by these activities, there is moral decay and family issues occasioned by the wastage of money.

In T&T, our gaming outlets also undermine the stability and smooth operating of the foreign exchange market. The foreign exchange market!

One does not need to be omnipresent to know that many of the gaming outlets in this country, legal and illegal, are major purchasers of any USD that someone would like to dispose of and they are willing and able to offer rates higher than those available through the authorised channels.

Unless they are prevented from doing so, the gaming sector will undermine any exchange rate for the TTD because they MUST get the foreign exchange, either to repatriate to their foreign owners or for their own purposes.

Official channels are not as readily accessible by this sector, so they have created their own channel, which has made the black market even darker. Taxation of the sector does little to restrain this activity.

The only effective solution is for the proper authorities to clamp down on the number of gaming outlets in this country. With an unemployment rate of less than five per cent and numerous retailers advertising for workers, any workers displaced would not remain displaced for long if they are willing to work.

This clamp down—to be achieved through closure of illegal operations—will redirect betting to official and regulated channels, reduce the pressure on the foreign exchange, reduce some of the random robberies and improve overall productivity in the society. #reininillegalgaming

Time to get tough, not only talk tough!


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