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Antigua: Although Some Operators Threaten to Leave, Others Form a New Trade Association

29 May 2000

While the prospect of rigorous regulation and a new tax has many operators of online gaming sites threatening to leave Antigua, others have decided to organize and negotiate as a group with the government.

Last month, they formed the Antigua Offshore Gaming Association. One of their first acts was to hire Clement Bird as the association's lawyer.

That was a political move: Bird is a cousin of Antigua's Prime Minister, Lester Bird.

The chairman of the association is Bob Eremian, who owns SOS, www.sportsoffshore.com. He said his site was licensed in 1996 as the first licensed sports book in Antigua.

In an interview with RGTonline.com, Eremian declined to say how many members have joined the new group. Some site owners are difficult to contact, he said, and others seem ready to relocate.

"There hasn't been the response we were hoping for," Eremian conceded. "Some who had thoughts about joining have had thoughts about leaving the island."

Although he is sympathetic with the operators who want to leave, Eremian has not packed up his gear.

"I have a football season coming up," he said. "I'm not leaving, although I might be next year."

Some operators will leave, Eremian said, because "they don't want to deal with the changes. They can go to St. Kitts or Costa Rica; there's no reason to deal with this type of pressure.

"If the government gets to the point where it's impossible to deal with them, I'll go somewhere else. But I would guess that it definitely will not be a problem."

Gyneth McAllister, the Director of Offshore Gaming, is leading the effort to put teeth into Antigua's gaming regulations. She is not fazed by operators' threats to leave her jurisdiction.

In a recent email interview with RGTonline.com, McAllister encouraged unhappy operators to leave. She said there are major gaming companies who will set up shop in Antigua only if serious regulatory reform is enacted.

"I have applications from some of the biggest players in the gaming world who applied due to the new legislation," McAllister said. "If it does not go through, they will go somewhere else that has the standards of transparency they need."

Eremian and other operators, however, say that Antigua needs their business. They may not pay taxes, but they and their employees spend plenty of money just living and working there.

"This country cannot afford to lose one casino," one operator, who requested anonymity, told RGTonline.com. "It needs the jobs, the money we spend. My company probably accounts for $100,000 a month (between the company itself and its employees)."

For all the rhetoric on both sides, little has changed since McAllister began talking in November about tough regulations and a 2 percent tax on gaming revenue. New legislation hasn't even been introduced in the country's Parliament, and talks between regulators and operators are intermittent.

"It's not like there's been discussions every day," Eremian said. "The government down here is a little out of sync with itself. One hand doesn't know what the other is doing."

The reforms are complicated legally by jurisdictional issues. The government plans to remove online gaming from the jurisdiction of Antigua's Free Trade Zone and place it under a new gaming authority.

But some operators complain that they came to Antigua as part of the Free Trade Zone, which included the promise of no taxes.

Eremian said the very corporate structure of the gaming sites precludes taxes. To be part of the Free Trade Zone, he said, a business has to be set up as an International Business Corp., and the government cannot tax an IBC.

"The Free Trade Zone has been licensing us for four years, and now the new group," Eremian said. "We're very confused as to what's going on, who's making the decisions."

The tax question may extend to all businesses in the country. Gary Collins, a lawyer who reports to Prime Minister Bird, said Antigua is under pressure from the U.S., Great Britain and other governments who resent the island's status as a tax haven.

Collins, speaking at the Global Interactive Gaming Summit and Expo in Montreal earlier this month, said Antigua "has been considering moving from a zero-tax jurisdiction to perhaps a low-tax jurisdiction. We have been considering perhaps enforcing a 2 percent tax on our offshore gaming operators and perhaps even extending it right across the board into the general society."

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