Fallout in Antigua?

17 August 2001
Antigua & Barbuda is reeling from another blow to its most promising industry. With the implementation of a 3 percent tax on net win, some of the country's I-gaming operators are reportedly heading for less expensive climes.

The movement comes on the heels of Nevada passing enabling legislation for Internet casinos as well as the release of Britain's Gambling Review Report, which recommends the adoption of regulated Internet gambling.

The gaming sector isn't the only industry affected by the new policy. "The government did introduce a 3 percent tax, but it not specific to gaming," explained Nelson Simon, the director for Antigua's Directorate of Offshore Gaming. "It is on the entire offshore sector, of which gaming is a part."

He added, "For gaming, the tax was originally to be on the gross handle, but this was adjusted to be 3 percent on the net win."

Some allowances have been made for costs gaming sites bear, including a deduction for chargebacks and a portion of software license fees.

IGN was unable to determine how many operators are leaving because of the tax, however, several industry reps have acknowledged that the exodus will have a significant impact on the business in Antigua. "Yes, the operators are all threatening to leave," Chartwell Technology's Steve Latham acknowledged. One Chartwell licensee, blackjack.com, has already moved out of Antigua because of the tax.

A spokesman for Monte Carlo.com told IGN, "We are setting up shop in Curacao at present. It (the tax) went into effect in April and is being applied retrospectively, which is bad news."

One of the biggest blows for the Antiguan I-gaming industry could be the relocation of big name companies such as William Hill.

"At this point in time, we are still in discussion with U.K. Customs and Excise regarding all issues of repatriation and have not made any firm location decisions," William Hill CEO David Harding said.

Note: William Hill and other U.K. firms are also looking into relocating closer to home following both the change in tax structure and the likelihood that Internet casinos will be allowed to operate there. Although the British government hasn't yet come forth with a plan to regulate virtual casinos, there are some locations much closer to home, such as the Isle of Man and Alderney, that are either accepting license applications or getting ready to do so.

CryptoLogic COO David Outhwaite told IGN, "We've seen three major operators prepare to leave." He wouldn't name which operators these were, although William Hill is a Crypto licensee.

"I can understand the rationale (for the tax), but not the implementation," Outhwaite added. Antigua's tourist trade has faltered since the island suffered enormous damages from hurricanes the last couple years, he pointed out, so there's little income to fund the government. He added, "I sense they need money badly."

After tourism, Antigua's next biggest source of income is I-gaming, with some 80 or 90 operators calling the island home.

Outhwaite also pointed to how the government's needs are drifting from reality. First, he questioned how the regulations and taxation will be enforced. Further, he explained that, by raising license fees and charging a 3 percent tax, Antigua is trying to set up as a tier-one jurisdiction--something that many would repudiate.

Simon explained how the tax will be collected. "The tax is not collected by the Directorate of Gaming, but by the Inland Revenue Department, and is paid every quarter as of the signing of the new gaming regulations, which was done on May 22," he said.

Outhwaite also believes that concerns over whether Antigua is adequately preventing money laundering as well as what's perceived as a lack of regulatory enforcement have alarmed some operators.

Another sore point for many operators is the infrastructure in Antigua. "The telecoms are terrible," Outhwaite commented. As a result, he said, some companies are looking for better connections elsewhere.

For now, Simon has reserved comment on how the tax will affect the I-gaming sector, but he admits that all is not well. "The issue of taxation is not an easy one," he said. "Is everyone happy about it? Definitely not." acknowledge that the exodus will have a significant impact on the business in Antigua. "Yes, the operators are all threatening to leave," Chartwell Technology's Steve Latham acknowledged. One Chartwell licensee, blackjack.com, has already moved out of Antigua because of the tax.

A spokesman for Monte Carlo.com told IGN, "We are setting up shop in Curacao at present. It (the tax) went into effect in April and is being applied retrospectively, which is bad news."

One of the biggest blows for the Antiguan I-gaming industry could be the relocation of big name companies such as William Hill.

"At this point in time, we are still in discussion with U.K. Customs and Excise regarding all issues of repatriation and have not made any firm location decisions," William Hill CEO David Harding said.

Note, William Hill and other U.K. firms are also looking into relocating closer to home following both the change in tax structure and the likelihood that Internet casinos will be allowed to operate there. Although the British government hasn't yet come forth with a plan to regulate virtual casinos, there are some locations much closer to home, such as the Isle of Man and Alderney, that are either accepting license applications or getting ready to do so.)

CryptoLlogic COO David Outhwaite told IGN, "We've seen three major operators prepare to leave." He wouldn't name which operators these were, although William Hill is a Crypto licensee.

"I can understand the rationale (for the tax), but not the implementation," Outhwaite added. Since Antigua's tourist trade has faltered since the island suffered enormous damages from hurricanes the last couple years, he pointed out, there's little income to fund the government. He added, "I sense they need money badly."

Behind tourism, Antigua's next biggest source of income is I-gaming, with some 80 or 90 operators calling the island home.

Outhwaite also pointed to how the government's needs are drifting from reality. First, he questioned how the regulations and taxation will be enforced. Further, he explained that, by raising license fees and charging a 3 percent tax, Antigua is trying to set up as a tier-one jurisdiction--something that many would repudiate.

Simon explained how the tax will be collected. "The tax is not collected by the Directorate of Gaming, but by the Inland Revenue Department, and is paid every quarter as of the signing of the new gaming regulations, which was done on May 22," he said.

Outhwaite also believes that concerns over whether Antigua is adequately preventing money laundering as well as what's perceived as a lack of regulatory enforcement have alarmed some operators.

Another sore point for many operators is the infrastructure in Antigua. "The telecoms are terrible," Outhwaite commented. As a result, he said, some companies are looking for better connections elsewhere.

For now, Simon has reserved comment on how the tax will affect the I-gaming sector, but he admits that all is not well. "The issue of taxation is not an easy one," he said. "Is everyone happy about it? Definitely not."




Vicky Nolan joined the IGN staff in October 1999. She's best known for inventing fire, the wheel and swiss cheese. She can be reached at vicky@igamingnews.com.