Monday, October 26, 2020

Casino operators protest new gambling regulations

In terms of the new Gambling Regulations if, in the wee hours of the morning, a gambler wishes to be prevented from engaging in some gambling activity, s/he may register as an excluded person by submitting a notice of intention. The latter shall contain certified copies of the applicant’s national identity card (Omang) or passport, if the applicant is a non-citizen. Conversely, the Gambling Association of Botswana (GAB) says that this is impractical: “Who can certify at three in the morning?”

The answer would be police officers and introduces another dimension that the casino operators are complaining of ÔÇô cost. That gambler would have to go to a police station at own cost. The operators complain about the fees that they themselves will have to pay in the process of complying with the regulations. “As currently framed, the Gambling Regulations are not investment and business friendly because they impose financially crippling fees and levies that undoubtedly impede business profitability and growth, its contribution to job creation, economic prosperity and return on investment,” reads a letter written by the Gaylard Kombani, GAB’s Chief Executive Officer to the Acting CEO of Business Botswana, Dichaba Molobe.

In buttressing the point about the business- and investment-unfriendliness of the new fees, GAB says that its members are now required way more than companies that prospect for minerals do. In terms of the Mines and Minerals Act, a prospecting licence costs P5 per square kilometre, a minimum of P500 for industrial minerals and P1000 for all other minerals; a retention licence costs P5000 per square kilometre for the first year and increases annually by P5000 per square kilometre for the second and subsequent years; and, a mining licence costs P100 per square kilometre. From P1500 a year, casino operators now have to pay a licensing fee of P100 000 a year. The argument that GAB makes is that licensing fees are “arguably cheaper than casino licence fees when taking into consideration that a casino operates under the roof of a building whilst mining activities are carried out on large tracts of land for licence fees that range from P5 per square kilometre to P5000 per square kilometre.”  

To solidify its case, GAB quotes fees paid by other businesses. While casinos have to pay an application fee of P250 000, as well as P100 000 each as annual, renewal and transfer fees, a driller pays only P100 as application fee, P1000 as licence fee, P250 as annual fee, P1000 as renewal fee and P100 as transfer fee. A motor dealer pays P100 as application fee, P1000 as licence fee, P375 as annual fee, P1500 as renewal fee and P100 as transfer fee. A plant hire service pays P100 as application fee, P500 as licence fee, P125 as annual fee, P500 as renewal fee and P100 as transfer fee.

A petrol filling station pays P100 as application fee, P500 as licence fee, P125 as annual fee, P500 as renewal fee and P100 as transfer fee. Such comparisons are made over five pages for various businesses that use trade, liquor, industrial and tourism regulations. GAB argues that the net effect of the “unreasonably” high fees it has been burdened with will undermine the commercial viability of casino businesses and the growth of the casino gaming industry without taking into account the small size of Botswana’s casino gaming industry; threaten the sustainability of existing jobs of casino employees and make it difficult for the casino businesses to create new ones for other Batswana job seekers; and, discourage new investment and reinvestment flows into the casino industry. In addition to the fees they have to pay, casino operators will have to contribute 5 percent of their monthly gross gambling revenue to the Responsible Gambling Programme as well as pay a casino levy at the rate of 10 percent of the monthly gross gambling revenue. GAB asserts that over time this will make it extremely difficult for Botswana’s biggest casinos, Grand Palm and Avani Gaborone Sun, to sustain their commercial viability. The regulations issue from the Gambling Act of 2012 and rough mathematics suggests that the Gambling Authority had four years to not only work on the regulations but consult the operators as well through GAB. However, according to Kombani’s letter to Molobe, “there has not been any consultations whatsoever with GAB which is a representative body of nine casino operators in Botswana out of 10.”

At least according to GAB, that marked a dramatic departure from a 40-year old tradition through which “the gaming industry has successfully worked in partnership with government and the Casino Control Board to develop Botswana’s gaming industry from one casino in 1972 to date.” Such departure also “compromises the predictability of government policy and regulatory frameworks as well as Botswana’s investment climate and consequently erodes investor confidence.”

Kombani’s letter says that GAB only got to learn about the regulations when they had been finalised without the Association ever having made an input.   Who Kombani is is an important dimension of this story. The cynical would be inclined to dismiss him as a hired gun but his job description at GAB notwithstanding, Kombani worked in the civil service for decades and was Deputy Permanent Secretary in the Ministry of Trade and Industry when he retired. He currently serves on the Competition Commission as a member. With such background, when he talks about government policy, regulatory frameworks and the investment climate, Kombani would be doing so from an informed position.

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