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Vicky Nolan

Trouble in Paradise

26 March 2000

The Antigua Directorate of Offshore Gaming Thursday held its second policy related meeting of the week with online gaming and sportsbook licensees. According to a few attendees, numerous disgusted operators walked out, while only a handful stayed to hear the whole agenda.

Thursday's meeting was scheduled to discuss four main issues, starting with an explanation of the proposed Kyl bill in Congress. (One operator said it was just an attempt on the Directorate's part to butter them up before striking the real blow.)

Next up was the proposed implementation of the Internal Control System (ICS). Here's where it gets interesting. Some attendees left the meeting before the second item was broached. According to Director of Offshore Gaming Gyneth McAllister (who didn't attend the meeting), representatives for 132 licensees stuck around for the full load. Bingo Hour's Baron Menzel, who attended the entire meeting, estimated there were about 30-40 who stuck around, representing about 15 different licenses.

At any rate, the meeting turned into an explanation of the ICS implementation and included discussion about privacy issues and proposed offshore gaming industry standards.

The subject matter engendered many harsh feelings, according to most of the operators that IGN contacted. McAllister, however, indicated that once those in attendance heard the information explaining the Directorate's intentions, they were much more amenable to proposed changes.

Technical Testing Systems (TST) CEO John Carnello said that several operators, after the meeting's conclusion, told him that the implementation didn't sound like it would be too intrusive after all. (TST will perform the software testing for the Antiguan government as part of the ICS implementation.)

Carnello explained that the proposed system is "a set of standards that brings Antigua online gaming standards with the land-based casinos." These standards, he added, would give Internet gaming higher integrity level than found in land-based casinos.

Implementation of the ICS is a pretty sticky point with most operators, since it allows the Antiguan government access to detailed information about each transaction, including access to each operator's database of clients. Not so, Carnello said, explaining that the system would not record customers' names. Instead, operators would adjust their software so that questionable transactions, such as potential money laundering transactions, would be highlighted. The central server wouldn't know who the customer was, but the necessary information would be obtained from the operators' logs.

The second bone of contention is a proposed 2 percent taxation on gross win. Even though casino operators would receive credit for paying software royalty fees and credit card processing fees, the tax would kill many telephone sportsbook operators. The credits wouldn't benefit them because they rarely pay royalty fees, according to Menzel, and since they operate on slim margins, the taxation would sound the death knell for most.

During an interview today, McAllister stressed that the ICS implementation would allow Antigua to set the standard for the world when it comes to online gaming licensing.

"What's important now," McAllister said, "is that the world, our licensees and the e-commerce industry are aware that we have found a formula to create an environment which protects both the player and the licensee from being used as a money laundering facility unwittingly. And we can also protect the player in the event that one [the operator] has changed the software once it has been scrutinized on a specific date."

The proposals are mainly a result of OECD (Organization for Economic Co-operation and Development) pressure, as well as concerns that Antigua has an unfair advantage by offering a tax-free home for many businesses, McAllister explained.

Additionally, operators were encouraged to collectively express their concerns about the ICS implementation and taxation issues directly to Asot Williams, Antiguan chief of staff. Several operators have already met, and are now sending out an invitation to all Antiguan operators to discuss the situation.

The Directorate believes that the proposals made this week to regulate Antiguan online gaming operators would help cement credible credentials for the Net betting business. Not all operators, however, feel they need such help.

Many operators are complaining that businesses typically do not have to provide the government such broad access to their operations. They're also concerned because they've spent a lot of time and money to attract customers and acquire databases and worry that giving the Antiguan government access would be detrimental to their business. In addition, they're worried that they'll lose customers who don't want their names readily available for any government's access.

Emphasizing the value of the online gaming industry in many countries, other licensing jurisdictions are already calling upon Antiguan operators, reminding the operators that many jurisdictions don't charge taxes and snoop into their databases.

Supplemental Material:

  • Proposed Internet Gaming Technical Standards and Guidelines
  • Letter from Operators to the Directorate
  • Trouble in Paradise is republished from
    Vicky Nolan
    Vicky Nolan