Gaming Commission’s government guarantee increased to almost $10m
The Bermuda Gaming Commission will receive a guarantee of almost $10 million from the Government to allow it to borrow money to keep operating.
The $9.8 million figure in the 2023-24 Budget represents an almost 20 fold increase on the first guarantee it was given in 2018, which enabled it to borrow up to $500,000, and is more than triple the $2.7 million surety it got a year ago.
The commission, which has more than doubled in size since its inception, was meant to become self-funding through casino taxes and fees but the lack of a gambling industry has prevented that from happening.
The new guarantee comes more than seven years after the regulatory body was launched, without a single casino having opened since and a betting shop industry that no longer exists.
David Burt, the Premier and Minister of Finance, who has responsibility for the gaming industry, did not answer questions from The Royal Gazette about the reason for the increased guarantee and nor did the BGC.
A government spokeswoman said: “At this time, understandably, budget and related initiatives must be the primary focus for the Ministry of Finance. Therefore it is currently not feasible to give due consideration to these questions.
“It should be noted that progressing the critical work in casino gaming continues to be a key priority for both the Gaming Commission and the Ministry of Finance.”
Commission chief executive Charmaine Smith said: “Given our priorities, it is difficult to estimate when we may be able to provide responses.”
The RG reported in February 2019 that the commission, which came into existence in 2015 with five staff and now has 11 employees, had been told to seek funding using a government letter of guarantee.
The Bermuda Casino Gaming Commission, as it was initially called, was launched in September 2015 with a government grant of $3.76 million to cover its operating costs.
Its annual report for the period up to March 31, 2017 – which was tabled in Parliament in February 2019 – notes that it is “temporarily economically dependent upon the Government”.
Its only other income for that period was $200,000 in application fees from developers and hotel operators for “designated sites” for casinos. The applications cost $50,000 each to submit and none has resulted in a casino opening, to date.
The report shows the commission spent $2.72 million in its first 19 months, including $1.1 million on staff.
It began with five employees which had grown to seven by the close of the 2016-17 financial year.
The first executive director, Richard Schuetz, was on a salary of close to $210,000 a year, according to the annual report.
He resigned in 2017 after concluding the island's leaders lacked the “political will” to keep the industry corruption-free.
The annual report included a message written by him before his departure, in which he said staff had “worked tirelessly to ensure to ensure that the island’s first operating facility can open its doors to the local public in 2018/19 once a robust regulatory framework is set”.
Mr Schuetz added: “If fulfilled, that means we were able to start this project from the ground up and managed to get it operational in less than three years, on a budget of less than $10 million and with staff of less than ten people. That, by any estimation, is ground breaking.”
The regulator had doubled in size in terms of jobs by the start of this year.
It published a list of current employees on January 4 which appears to show 14 paid positions, including two chief financial officers. One post, that of legal assistant, was vacant.
The Gazette has now confirmed that one of the CFOs, Julie Grant, left last week and the executive administrator has also departed, leaving 11 staff.
Marvin Hanna, the commission’s director of legal, said he could not comment on the commission’s plan regarding the vacant positions.
The other jobs listed are: executive director; business operations and communications manager; research analyst; director of legal; director of regulation; licensing and compliance officer; compliance inspector; licensing inspector; technology and compliance officer; and director of problem and responsible gaming.
The commission has a board of five people, with the chairman receiving $22,000 a year, the deputy chairman $18,000, and the other commissioners $15,000.
As well as the $3.76 million grant, the commission received interest-free, repayable loans totalling $2.1 million from taxpayers between 2017 and 2018.
It said in the annual report: “Repayment will commence when the commission financially attains a balanced budget position.”
There was no response from the Bermuda Gaming Commission or the finance minister when asked if the loans had been repaid.
Previously, it received millions of dollars in grants and loans from the public purse but its annual report for September 2015 to March 2017, tabled in Parliament on February 15, 2019, said: “The Government has now advised the commission to seek commercial funding going forward.
“At the time of producing these financial statements, the commission has discussed commercial funding with a local bank, with the intent for this funding to be supported by a government letter of guarantee.”
The first letter of guarantee was issued by the Ministry of Finance on March 29, 2018, to allow the commission to borrow up to $500,000.
The annual report showed that the commission previously received a $3.76 million grant from the public purse to cover operational costs, paid out in instalments in its first two years, as well as $2.1 million in taxpayer-funded loans.
It said repayment of the interest-free loans would start when the commission “financially attains a balanced budget position”.
The BGC’s present budget position is not known because the financial statements provided to Parliament four years ago appear to have been the last made public.
The Gazette asked the commission for the annual reports for the five financial years from April 2017 to March 2022.
Marvin Hanna, BGC’s director of legal, said: “Please note that the most recent report has not been finalised as yet.”
The commission, including chairwoman Cheryl-Ann Mapp and chief executive Ms Smith, did not respond to questions about the lack of annual reports.
These were the questions sent by the Gazette to Mr Burt, which have not been answered:
• Why has the government guarantee for the BGC increased by $7.1 million in the 2023-24 Budget?
• When is the guarantee arrangement expected to end, if ever?
• Have the $2.1 million taxpayer-funded loans, given to the BGC in 2017 and 2018, been repaid yet?
• Have any further loans from the public purse been given and, if so, have they been repaid?
• Has the commission, since 2017, been complying with section 26 (1) of the Casino Gaming Act by providing the minister with a report dealing generally with its activities during the preceding financial year?
• Has the minister complied with section 26 (2) of the same Act by causing a copy of every such report to be laid before Parliament?
• If not, why have there not been any reports?
• The commission, according to a list of current employees in its public access to information statement, appears to have 14 paid positions. There are 11 staff at present. Does the commission need this level of manpower, bearing in mind that the island has no licensed gambling premises?
• What’s the annual cost for salaries at the commission?
The St Regis hotel, in St George’s, was granted the island’s first casino licence in October, but a date has yet to be announced for an opening.
The Government said last month it had held “frank and extremely useful talks” with the hotel’s owners and a representative of their proposed casino operator.
It was reported in January that a US gaming company which had been developing a casino at the Hamilton Princess & Beach Club had pulled out of the project, blaming ongoing time delays caused by the island’s gaming legislation.
The Government will provide guarantees worth a total of $1.1 billion in the coming financial year, according to the new Budget Book:
Bermuda Hospitals Board $758.2 million
Morgan’s Point/Caroline Bay $165 million
West End Development Corporation $60.3 million
Bermuda Commercial Bank – mortgage guarantee $50 million
Bermuda Housing Corporation $28.4 million
Hotel Bermuda Holdings Ltd $25 million
Bermuda Land Development Corporation $21.6 million
Bermudiana Development Company Ltd $10 million
Bermuda Gaming Commission $9.8 million
Bermuda Tourism Authority $5 million
National Sports Centre $2.6 million
Bermuda Economic Development Corporation $1.8 million
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