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Antigua Plans 'Radically New Regulatory Approach'

Antigua may finally be getting serious about regulating Internet casinos and sports books. Monday afternoon, the organizers of the World Internet Gaming Summit, which will be held in Miami March 15-16, announced that Gary Collins, a consultant to Prime Minister Lester Bird of Antigua, will unveil at the Summit "a radically new regulatory approach to be initiated in Antigua."

The new regulations were drafted by Joseph Kelly, professor of business law at State University of New York College at Buffalo, and Frank Catania, a former New Jersey gaming regulator and president of Catania Consulting Group.

Kelly told RGT Online today that he and Catania have been working since December on the new rules.

"We've been working like crazy to draft regulations that would ensure insofar as possible the suitability of operators and the integrity of the games," Kelly said, "and make sure that you can keep out the bad elements."

The background investigations of new gaming site licensees will be "extremely long and thorough," Kelly said. Anyone who owns 5 percent or more of the shares in a gaming company will have to go through the government's due diligence procedures.

"We've combined features of regulations in New Jersey, Great Britain, Kahnawake and other places," he said. "We tried to make sure that everything about you was revealed on the application forms."

Antigua, which licenses more online gaming and wagering sites that any country in the world, has long talked about rigorous regulation. Gyneth McAllister, who resigned as the country's director of offshore gaming in June, spoke as long ago as January 1998 about "keeping bad guys out and making sure players get paid."

Last March, she unveiled plans for a drastic revision of Antigua's regulatory scheme. Operators of gaming sites protested, threatening to leave for other venues. McAllister said she received death threats. When she resigned, she complained of lack of support from both the industry and her government.

Collins continued to say that Antigua needed to thoroughly investigate the backgrounds of operators, and make sure that gaming sites weren't used for money laundering. But new regulations were never enacted.

Avoiding New Taxes and the 'Black Box'

This time around, the proposed regulations avoid two areas that were particularly objectionable to the operators last spring – new taxes and the "black box."

Kelly said the regulations that he and Catania drafted contain nothing about taxes. "Taxes were never discussed," Kelly said. "That's a policy decision."

The black box is an audit server that checks the digital signatures on the operating programs of a Web site's server. McAllister and her consultants had wanted to attach a black box to each gaming site's server, with a connection to a central computer in the government's offices.

The black box would have enabled regulators to determine if a site's programs had been changed after they were approved. The box would have also enabled regulators to track financial transactions, both for tax purposes and for signs of possible money laundering.

Operators were furious about the black box idea, arguing that it would invade their privacy and possibly cause technical problems.

Kelly said the new regulations do not include a black box, "but every transaction will be susceptible of being recorded somewhere. Authorities will have a record, should they so want, but no attempt will be made to get into all the files of each operator."

Kelly did not explain the details of how the transactions would be recorded, but "in the opinion of the techie types, it's not a black box," he said.

The new rules are "really serious" about money laundering, Kelly said: "In the application for renewal of a license, one of the questions is: 'What steps have you taken to report suspicious activities and prevent money laundering?' "

The Antiguan Parliament will have to approve enabling legislation for the regulations, Kelly said.

Asked if the government is really prepared to strengthen its regulatory scheme, Kelly answered with a rhetorical question of his own: "Why would the government go through all the energy and expense of bringing us over and having us do all this work if they didn't plan on doing something?"

"The crucial thing here is who will be staffing the (regulatory) authority? The answer is, I don't know. It's up to the government," Kelly said.

He said that Nelson Simon, Antigua's current director of offshore gaming, has a strong technical background.

Additional information on the World Internet Gaming Summit can be found at www.srinstitute.com/cr191.

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