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Bummer in Bermuda

Bermuda has officially become the “third world” of gaming regulation. When a regulatory body is required to answer to any politician or political party, the possibility of corruption becomes a probability.

Bummer in Bermuda

Every jurisdiction blazes its own path to gaming legalization. As a participant and observer of the process in New Jersey in the late 1970s, I can confirm that it was long and painful (but not nearly as long as the jurisdictions these days).

Painful seems to be the common characteristic. Whether it’s the legislative process or the regulatory setup, the issues are complex and require thoughtful reflection. Most jurisdictions stumble through both stages, and try to sign on the best consultants, hire talented and experienced staff, and understand the best practices that have been established in the long history now of gaming legalization.

New Jersey was painful because it didn’t have any guidelines to follow, except for Nevada—a pretty good model but one that the stubborn New Jersey officials dismissed. That still happens. While there are multiple “gold” standards for regulations, officials in new jurisdictions are likely to decide that they are so unique that no previous process applies to them.

That’s what happened in Bermuda. Tourists were choosing to travel to other island resorts with casinos and bypass Bermuda. Whether it be the Bahamas, Puerto Rico or one of the dozens of lush Caribbean islands that offer casinos, it took Bermuda years to make the connection.

But when they finally did, it was with a degree of rationality. Bermuda was never going to be the next Singapore or even the next Bahamas. The visitor base was small and would grow only incrementally with the addition of gaming. But it still made sense, a bill was crafted and passed, and Bermuda was on the road to legalization.

The regulatory process seemed to be well done, also. The Bermuda Casino Gaming Commission was independent and transparent. Allen Dunch, a respected attorney on the island with knowledge of Bermudian law and how the system worked, was named chairman. Dunch brought in Richard Schuetz, an experienced casino executive and regulator with vast integrity. Schuetz knew which regulations were needed and which were not in a small industry, as Bermuda gaming would become.

But problems surfaced almost immediately. Several politicians, including Minister of Tourism Shawn Crockwell, met with a Florida company, Banyan Gaming, that was allied with a Bermuda company, MM&I. A deal was made to require casinos to use the Banyan Gaming cashless system—and that system only—for its slot machines. Now, let’s put aside the fact that politicians should not be making such deals, and focus on the fact that some Banyan gaming principals were required to surrender their gaming licenses in several U.S. jurisdictions for operational irregularities.

But Banyan and MM&I would not go away, even after Dunch pointed out that they needed to be licensed just to begin talking about a systems deal, and that deal would also have to be approved by the commission.

Dunch immediately came under fire from current Tourism Minister Jamahl Simmons, who demanded his resignation. When Dunch pointed out that Simmons didn’t have the power to fire him, Simmons put together a bill that would give him that power, as well as power over the entire commission’s decision-making process.

Dunch resigned immediately in protest, followed by two other commissioners. (Schuetz had resigned in July, saying he had lost confidence in the ability of the government and the legal system to offer well-regulated casino gaming on the island.)

Despite Dunch’s resignation, Simmons was able to pass the bill, which now becomes law because Simmons is in the majority. He got his way. The bill reads:

“The minister may at any time revoke the appointment of a member who is unable or unwilling to perform his duties as a member or in such other circumstances where the member’s conduct may amount to misconduct or breach of best regulatory practice, or is likely to bring the commission or the government into disrepute.”

As a result of this bill and the oversight of the legislature, Bermuda has officially become the “third world” of gaming regulation. When a regulatory body is required to answer to any politician or political party, the possibility of corruption becomes a probability.

More concerning for Bermuda will be the unwanted attention the government will now receive from international regulators in the financial field. The hard-fought reputation Bermuda had established in that field is now damaged, probably irreparably. And the chance that any reputable gaming company will now do business in Bermuda? Going, going, gone.

Roger Gros is publisher of Global Gaming Business, the industry's leading gaming trade publication, and all its related publications. Prior to joining Global Gaming Business, Gros was president of Inlet Communications, an independent consulting firm. He was vice president of Casino Journal Publishing Group from 1984-2000, and held virtually every editorial title during his tenure. Gros was editor of Casino Journal, the National Gaming Summary and the Atlantic City Insider, and was the founding editor of Casino Player magazine. He was a co-founder of the American Gaming Summit and the Southern Gaming Summit conferences and trade shows. He is the author of the best-selling book, How to Win at Casino Gambling (Carlton Books, 1995), now in its fourth edition. Gros was named "Businessman of the Year" for 1998 by the Greater Atlantic City Chamber of Commerce, and received the Lifetime Achievement Award from the American Gaming Association in 2012.

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