By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A web shop chain was yesterday given leave to issue Judicial Review proceedings against the Grand Bahama Port Authority (GBPA), its attorney arguing: “We cannot serve two masters.”

Carlson Shurland, who represents Jarol Investment, trading as Chances Games, told Tribune Business it was vital that the Supreme Court determine who has the authority to license, regulate and collect taxes from web shop gaming in Freeport.

He said his client was currently “caught between a rock and a hard place” due to the uncertainty over whether it is the GBPA, or the Government via the Gaming Board, that is responsible for overseeing Freeport-based web shops.

Chances Games is one of at least two web shop chains who have launched separate legal challenges to the GBPA’s bid to issue gaming licences to them, and levy an associated 50-fold fee increase.

They are effectively arguing that the GBPA is trying to “usurp” the Gaming Board as the web shop industry’s regulator, and that the former has no power to issue provisional gaming licences - and charge associated fees - for their Freeport operations.

Mr Shurland said Chances Games was effectively asking the Supreme Court to determine who was the appropriate regulator and licensor for its Freeport operations, and to whom it should pay related gaming taxes.

He added that the GBPA’s attorneys had also given an undertaking that it would not attempt to shut down the web shop chain’s Freeport operations until the Judicial Review case is resolved.

The Supreme Court has set September 5-7 this year for hearing the substantive Judicial Review case, and Mr Shurland said: “In this case, we’re merely asking the court to agree that the Port Authority issuing a provisional gaming licence is in direct conflict with the Gaming Act 2014.

“This is where the Act provides that the Gaming Board is the only statutory body that can issue a gaming licence. What that means is the Port Authority, as the regulator of Freeport, they are saying we have the right to licence gaming establishments in Freeport, and the Government are saying, no you don’t have that right. We do.”

The key question raised by Chances Games’ Judicial Review is who holds regulatory authority for gaming in Freeport under the Hawksbill Creek Agreement, an issue that continues to cause tension and friction between the GBPA and central government.

This has given rise to numerous legal disputes in the past, including whether the Utilities Regulation and Competition Authority (URCA) could levy fees on Cable Bahamas’ Freeport operations. On this, and business licensing matters, the courts have ruled in favour of the GBPA and Hawksbill Creek Agreement every single time.

The issue was a key focus for the Government’s Hawksbill Creek Review Agreement Committee, which in recommending fundamental changes to Freeport’s governance said regulatory functions currently under the GBPA’s purview should be handed back to the central government in Nassau.

Mr Shurland, emphasising that his client had no objection to paying due taxes and fees, told Tribune Business: “We can’t pay both Peter and Paul. We have to pay one or the other.”

Chances Games is also railing against its proposed GBPA licence fee increases, which will rise from $3,000 to $150,000. Given that similar payments have already been made to the Gaming Board, it fears being subjected to ‘double taxation’ if the increases stand.

“We can’t serve both masters in terms of taxes and revenue generated from this industry,” Mr Shurland reiterated. “Right now, we’re caught between a rock and a hard place.”

Having gone through the tender process to legalise web shop gaming, which included the payment of due fees and back taxes, and extensive regulatory due diligence, Mr Shurland said his client had “a legitimate expectation” there would be no Port Authority “interference” with licensing once it was fully compliant with the Gaming Board.

“The problem is if the Port Authority is found to be the sole licensing authority in Freeport, then the Gaming Board ought to reimburse all those fees paid,” the attorney added, “and we go ahead and pay the Port Authority.”

However, Mr Shurland described the draconian fee increase that the GBPA wanted to levy on his client as “an abuse of power”, and “outrageous”.

He added that “the most egregious part of this whole exercise” was that the GBPA never participated in the web shop legalisation process, yet suddenly decided to levy huge licence fee increases on Freeport-based operations without any consultation or warning.

Judicial Review actions only receive the ‘go ahead’ from the Supreme Court of they deal with a matter of genuine public importance and interest, or cases where government authorities have acted illegally or abused their decision-making power.

“It is extremely important to flesh out and ventilate this issue entirely,” Mr Shurland said, “because, at the end of the day, it is a very promising industry and has a tremendous amount of potential for Bahamians.

“To have uncertainty over who is the ‘master’, the GBPA or the Government.... It’s important for the two of them to resolve this matter, and not have web shops determine where it lies.

“We all want to vent this thing fully before the court and get a decision we can live with, as opposed to this ad hoc approach to who is the regulator and has the right to license web shop gaming in Freeport.”

Mr Shurland said legislative intervention might be necessary to resolve the issue before it became “contentious” and harmed both web shop operators and the Freeport economy.

If operators were required to pay fees and taxes to both the Government and Port Authority, he warned that it would result in business closures and job losses.

Mr Shurland also expressed surprise that the Gaming Board was not legally represented at yesterday’s hearing.

Describing the regulator as “an interested party, he said its absence was “risky”, for if it was a ‘no show’ it would “have to live” with whatever decision was rendered by the Supreme Court.