Javier Silvania, the finance minister for Curaçao, said he has "no issue" with the island's planned gambling reform driving operators away because those who do not live up to the new standards will not be missed.
Speaking with iGB, Silvania provided background information on Curaçao's plans to fundamentally alter its gambling laws.
The Curaçao Gambling Authority (CGA), a body that will oversee licensing and enforcement, will be one of the modifications.
The CGA will replace the current arrangement, in which four private companies hold government-issued master licenses and grant operators sublicenses with little to no government oversight.
The master licence system, according to Silvania, was "not an ideal situation" and there had been a number of "shortcomings and challenges" under the current system.
He said that "the new bill ensures the monitoring is under the control of the government. It is important for the government to know who has licences, because at this point it is not always clear who holds one."
The process, according to Mario Galea, a former chief executive of the Malta Gaming Authority who served as a consultant on it, was designed to create a more "responsible" framework.
Galea also pointed out that, under the existing regulations, the government did not even know how many license holders there were, estimating that there were between 500 and 900 of them, with thousands of different "skins" being offered overall.
In contrast to the previous system, which offered little scrutiny, the new licenses will come with stricter rules regarding things like money laundering, fairness, and having a local presence on the island.
The number of operators may change after the initial 12-month transitional licence period, even though current operators will initially be grandfathered into the new system. According to Silvania, the island would not suffer significantly if operators who found the new system unworkable left because most of them were currently of little benefit to the government.
"I have no issue at all with companies leaving Curaçao because at the current time Curaçao is not making much money from them. It’s the master licensees that are making the most money; the government is hardly making any. If companies want to relocate that’s fine," he said.
Businesses with unfair terms or insufficient anti-money laundering safeguards were specifically mentioned by Silvania as ones that would not be missed.
"The companies we want to remain are bona fide ones that comply with the rules, as we have to comply with the rules to prevent money laundering. If companies award a prize, that must ultimately be paid out – that’s the sort of company we want in Curaçao."
While some business owners might leave, Galea continued, others who had shunned the island because of its "connotations" might now decide it makes sense to establish a base there.
However, Galea pointed out that existing rules could be easily enforced by the CGA with authority such as license revocations, whereas the current system masked responsibility. This would be even more significant than new money laundering regulations, he said.
"The AML regulations are there already, but in essence up until now it has been the responsibility of others, which created a bit of a pass-the-buck situation. Now, there’s going to be an actual authority. You have to report, " he said.
"If you put up a speed camera, people are going to see it, but if you don’t receive a ticket, it doesn’t make any sense to have the speed camera. This has enforcement behind it, and that’s what’s going to change things."
The reforms also occur at a time when international organizations are paying closer attention to how point-of-supply jurisdictions are conducting their anti-money laundering policies and procedures. Malta was under "increased monitorng" when it was placed on the Financial Action Task Force's (FATF) "grey list" last year. Last month, the nation was ultimately taken off the list, but Gibraltar was simultaneously added.
Galea pointed out that the CGA's ability to effectively enforce current rules through the use of tools like license revocations would be even more significant than new money laundering regulations. He claimed that at the moment it was unclear who had the authority to revoke licenses.
Licensees are required to have at least three employees in "key positions" working in Curaçao in order to demonstrate their local presence. This requirement, according to Silvania, is "essential" to him, and he declared that he would not budge in response to suggestions that they be relaxed.
"What is important for the government is for companies to establish themselves in Curaçao, even if it is not raising a lot of taxes. The point is when companies have substance in Curaçao it will benefit the economy," according to Silvania.
"What I don’t want is for companies to be established in Curaçao on paper, but add zero point zero to our funds," he said.
In the end, Galea claimed that the introduction of a real license issued by a government agency would give the market a sense of legitimacy and certainty, which he claimed should increase the value of businesses.
"The biggest change is that, just from the fact you have a licence in Curaçao, the value of your business will go up. Right now the value of businesses in Curaçao is a very small multiple of their EBITDA, but once you have a proper licence in a proper jurisdiction, that’s going to change," he said.
Given that Curaçao is a member of the Netherlands, the Dutch government had a say in the reforms. Some of this pressure was focused on how to deal with companies that operated on the island but catered to Dutch consumers.
Galea disagreed with the notion that targeting the Dutch market was a common practice in Curaçao, pointing out that the most well-known companies forced to leave the Dutch market last year were all based in Malta.
Although Galea noted that when the Curaçao government started to develop plans to implement a new system, it found that reform was advantageous to the island itself, the Dutch government tied Covid aid for the island to requirements to reform the sector.
According to Galea, "he Dutch government said, ‘We’ll give you money if you do something about gaming’ and the Curaçao government said ‘Fine, we’ll do something. But they actually realised that if they do something, they’ll make more money even without the Dutch support."
By fLEXI tEAM