Why ‘fully in place’ casino at St Regis never opened
A co-owner of the St Regis in St George’s has spoken publicly for the first time about why a casino has not opened at the luxury resort.
Laura Purroy, a representative of Hotelco Bermuda Holding Ltd, told The Royal Gazette that the refusal of local banks to handle the proceeds of gaming ultimately led to a decision to pull the plug after several million dollars had been invested and a casino was “fully in place”.
She said the hotel, which was also dissatisfied with the regulatory regime on the island, did not pay its $600,000 licence issue fee to the Bermuda Gaming Commission once it became clear the project could not proceed.
The refusal to pay is recorded in minutes of the commission’s board meetings which were recently released to the Gazette under public access to information.
“With great regret we had to let lapse the casino licence,” Ms Purroy said. “It made no sense to keep throwing additional money into an enterprise that had already cost Hotelco so many millions of dollars and had no positive outlook in sight.”
The resort opened in May 2021, with plans to introduce the first casino for both the island and the St Regis brand. Soon after, it hosted a Casino Gaming Academy for those interested in working in the industry.
Ms Purroy said by mid-2022 the physical infrastructure and furniture and fixtures for the casino were “fully in place, and the gaming equipment was acquired as well, all this with an investment of several millions of dollars”.
The casino licence was granted to Hotelco, the owner and developer of the St Regis Bermuda Resort, in October 2022.
Ms Purroy said: “On numerous occasions during 2021 and 2022, Hotelco shared with the Bermuda Gaming Commission and the Government concerns about the regulatory framework and the banking of the casino operation.
“Regarding the regulatory aspects, we respectfully insisted on the need to undertake a comprehensive review of the regulatory framework, which, in our opinion, was overly prescriptive and complex, resulting in an operation too cumbersome and burdensome for a small-size, amenity-style casino like the one intended at our resort.”
The commission was “very receptive” to the concerns and open to making changes, she said, “however, the time frame for these changes to happen was pretty long”.
Ms Purroy said: “Although we could have reached some interim solution in regulatory matters, the key stumbling block was having a local bank on board, willing and ready to bank the proceeds of the casino operation.
“After our local banking partner informed us at the end of 2022 that they would rather not bank casino operations in Bermuda for reasons we could understand, we approached other local banks, without getting a positive answer.
“Economies of scale and risk-reward unbalances were the main considerations.”
Ms Purroy described the whole matter as “deeply disappointing” for Hotelco, since the casino was a “key component of the St Regis development and had also played a prominent role in the decision to invest in Bermuda.
“Nevertheless, we still hope that Bermuda will one day be able to create the conditions for the casino business.”
The new Pati disclosure from the Bermuda Gaming Commission reveals discussions about another casino which was planned but failed to materialise — at the Hamilton Princess & Beach Club.
It was reported in January last year that the US gaming company developing it had pulled out of the project because of delays for which the existing legislative framework was blamed.
The minutes from a January 2023 meeting of the BGC board state: “Hamilton Princess Casino Ltd representatives informed the commission that they will not be looking for a replacement operator until 2024-25.
“HPCL representatives have requested a refund of monies not used from the suitability investigation deposit of $250,000 previously received by the commission.
“HPCL advised the commission once the issue of banking the proceeds of casino gaming in Bermuda is resolved, they anticipate a casino on property in the near future.
“The operators perceive the governance structure of the regulatory framework as being the issue.”
Minutes from an earlier meeting, in April 2022, record that the Hamilton Princess sent a letter asking for a “waiver of the whole of the pending provisional licence issue fee …” owing to exceptional circumstances.
“After much deliberation” the “board agreed to follow the protocol on the precedent similar request from St Regis and to forward Hamilton Princess Casino Ltd’s proposal to the [finance] minister.”
A Hamilton Princess spokeswoman said last week: “The hotel is no longer pursuing a casino. We issued a media statement regarding this in January 2023 and we have no further update to our statement.”
The $600,000 casino licence issue fee owed by Hotelco came under discussion at a meeting of the BGC in February last year.
According to the minutes released under Pati, commissioners were reminded at the session by board chair Cheryl-Ann Mapp that the hotel wanted “legislative reform”.
She referred to an e-mail from a hotel representative “wherein he indicated the decision not to pay the licence issue fee until certain matters regarding statutory reform were settled”.
The minutes indicate that BGC chief executive Charmaine Smith spoke to Major Marc Telemaque, the Cabinet Secretary, about the matter and he “sought an understanding of the commission’s options”. Ms Smith advised him the “commission executive were prepared and would present all legal options …”
However, the minutes then refer to advice provided to the board in a written report, believed to be from the quango’s legal director, who explained there was no need to take action: the licence was simply deemed in law to have lapsed because of non-payment of the fee. Ms Smith confirmed that position in a statement to the Gazette yesterday.
The discussion came amid a crisis in the commission’s finances [see side panel]. The minutes for the previous month state that commissioners were told the “$600,000 expected from Hotelco would improve the cashflow of the commission …”
The BGC previously released the meeting minutes to The Royal Gazette under public access to information with heavy redactions, but was ordered to disclose more of the records by the Information Commissioner.
Ms Smith said in her statement last night: “Meetings with the St Regis representatives regarding the steps for opening occurred regularly. Opening is a decision to be made by the prospective operator.”
She added: “The gaming legislation was amended in 2023 [the additional provisions became operative on March 31, 2023] and included a discretionary power for the commission intended to bring additional flexibility to the application of the framework, as well as a clarification that the minister responsible for gaming was the Minister of Finance.
“The commission is not aware of any developments in relation to the banks.”
The Gazette approached David Burt, the Premier and finance minister, who is responsible for the commission.
A government spokeswoman responded: "The [Bermuda] Gaming Commission has worked with the Government to seek other options to invest gaming proceeds since Butterfield Bank withdrew its support to bank the proceeds of gaming. The Government has been assured that this was a local bank decision and has nothing to do with correspondent banking, and has been assured that Bermuda’s regulatory regime is sound.
“While banking challenges have caused delays to the introduction of casinos, the Ministry of Finance and the gaming commission continue to seek a resolution to this issue. Last week in the House of Assembly, the Banks And Deposit Companies (Restricted Banks) Amendment Order 2024 was tabled, which expands the scope of restricted banks to casinos licensed in Bermuda.”
She added: “The operations of the commission have been streamlined considerably, which has resulted in redundancies. The commission’s remit involves more than casinos and the commission has been charged with a mandate to examine and explore other revenue sources, while still preparing for the eventual introduction of casinos to Bermuda.”
The Bermuda Gaming Commission did not have enough money to pay its staff in March last year, according to newly released records.
Minutes from a February 2023 meeting of its board note that chairwoman Cheryl-Ann Mapp “queried whether or not the commission’s bills/expenses could be paid in full between now and the end” of the 2022-23 fiscal year.
She was told “no” by the finance director.
The minutes state: “In referencing the cashflow statement and the column referencing the February 2023 remaining balance of approximately $227,000, he [the finance director] advised that payroll for February and other expenses could be met, but that there is insufficient cash to meet all expected March expenses; in fact, insufficient to meet March 2023 payroll.”
BGC chief executive Charmaine Smith said last night: “The staff payroll has never been missed, nor paid late.”
The commission, which has recently downsized and reduced its workforce, has cost taxpayers more than $16 million since it was launched in 2015. It still owes the Government several million dollars for interest-free loans it was given.
As reported this year, its financial statements showed external borrowing, from Butterfield Bank, jumped from $4.3 million to $8.2 million between December 2021 and May 2022.
In June 2023, the outstanding bank loan was settled in full, with the Government paying $9,675,000 and the commission $33,138.
•To read the Bermuda Gaming Commission meeting minutes, see Related Media
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