LEVELING THE PLAYING FIELD – PART 2

SPORTS: DANCING BRAVE COLUMN FOR WEDNESDAY 16^TH JANUARY, 2013

By Andre E Baptiste

 

      -----------      LEVELING THE PLAYING FIELD – PART 2------------

 

In  respect of the collection of the 10% taxes, whereas in most other territories the tax is based on either gross profit or turnover, in Trinidad it is collected at the point of sale (that is, deducted from the pool from inception).  This approach reduces the total amount in circulation and has an inverse multiplier effect both on the earnings of the Club and ironically on the total tax collected.  When one considers that the Club also deducts 14% from the handle to cover its own expenses, that translates into 24% coming out of each dollar bet by a punter at the Club as compared with say 9% at the Betting Shop (if we look at it from the perspective of the punter).  The latter must be able to offer more in return.  The math is obvious. 

Secondly, we have the situation with the various licenses that the Club must pay compared to the Bookmaker.  Whereas English racing is broadcast in Trinidad under license, the same is not true for American racing (equally if not more popular).  The Club must pay a fee to the US tracks to be allowed to commingle bets (necessary in order to broadcast/accept wagering) of 6% plus due to the exchange rate, the minimum US$1 bet costs around TT$7.  The bookmakers do not have to pay anything.  Strictly speaking they can simply “pirate” a signal through HRTV or TVG and accept bets.  I have not be able to ascertain whether that action breaches any Intellectual Property laws (here or abroad)  but even if it doesn’t, this free access to US broadcasts is not an option for the Club.  In addition, the cost of a bet is just the TT$1 (plus tax). 

Hopefully, this matter is really not breaching any laws since the government could again be accused of complicity by knowingly collecting taxes on these bets.  Thirdly, virtually every bookmaker in this country is now accepting general sports betting (football, soccer, cricket, weather, you name it) with the same 10% tax applied.  If the Club wanted to offer sports betting, it would be required to pay a flat $100,000 license per year for each location (including OTBs) which translates into a flat $700,000 per year before the first bet is placed.  Each of these shows how uneven the playing field is between the Club and the Bookmakers.  As such, while it is true that the Bookmakers pay around $17 million in tax per annum and the Club pays around $12 million but receives $15 million from the BLB, the “subsidy” of $3 million should hardly be begrudged.

One of the challenges that will confront this country as we go forward in this new world environment will be the legality of the practices that this country is engaging in.  We have already seen where the cable companies are being forced to pay the proper licenses for their broadcast or risk losing access to various services.  This, in turn has caused the cable companies to increase their charges to the final consumer.  That is the way of the world.  The same thing is inevitable in horse racing.  This country’s challenges with the FATF and the AML/KYC gurus around the world are going to force the government to eventually clamp down on the private members’ club and any illegal activity at the bookmakers and the Arima Race Club.  None will be spared.  The crackdown can only meaningfully begin if the proper legislation and regulatory environment is established.  Knowing our proclivity to dilly-dally, no doubt we will only do what is necessary when our backs are up against the wall but I will still outline what we need to be looking at.

It must start with governance.  At present, although the BLB is responsible for tax collection from the bookmakers, their license is granted by the Courts and can only be suspended/removed through the Courts.  In most other jurisdictions, bookmakers get their license from a gaming commission.  These licenses are only granted after substantial due diligence checks are completed (for AML/KYC purposes) and appropriate safeguards established (such as surety bonds) to protect punters in the event of financial failure of a bookmaker.  While Trinidad law makes provision for a Gaming Authority, this is, for all practical purposes, a defunct body. 

If this country is to get serious (as it will have to) to satisfy the demands of the FATF, a proper Gaming Authority with the powers to suspend licenses will have to be established.  Casinos, private members’ clubs, bookmakers and other gambling establishments are on the international (and local) high risk lists and extreme caution is required when dealing with such entities. 

The BLB has been in existence for almost twenty three years and in all of that time, there has been very little effective policing of the sport due to the inadequacies of the supporting law.  Slowly but surely, the days of leniency will draw to a close. At that time, everyone will no doubt be left scrambling.

Who will be “brave” enough to address all of this in the coming months.

:: AB