By KHRISNA RUSSELL

Tribune Chief Reporter

krussell@tribunemedia.net

ECONOMIC Affairs Minister Michael Halkitis said the government will do away with a patron tax on lottery winnings, although the levy was never implemented on gaming houses.

The previous Minnis administration had announced in 2018 that on July 1 of that year the industry’s patrons would foot a five percent tax on deposits and winnings. However, it faced repeated delays because of a number of issues among them, especially web shop operators and patrons challenging the implementation in court.

 “That patron tax as far as I know had not come into effect and so we decided that we will do away with it,” Mr Halkitis told reporters before heading to a Cabinet meeting yesterday.

 “As you know it had been the source of legal action as well as a lot of debate, so we decided we’ll just do away with it.

 “The gaming industry, if you look at it in terms of their taxation not only versus casinos but versus other businesses, is very, very heavily taxed and so we believe that it’s just better to do away with it.”

 Yesterday, FML Group of Companies owner Craig Flowers praised the move as a “good thing” to ensure the industry could grow.

 Mr Flowers said a conversation needed to be had between the government and operators with a view to coming up with new ways to earn revenue from gaming houses.

 Mr Flowers for years maintained that a patron tax would be detrimental to his operations as it was more than 75 percent lottery based and about 25 percent focused on slots.

 Other gaming houses, in contrast, are about 75 percent focused on slots and 25 percent lottery focused.

 In addition, he believed there should have been continued discussions with operators with a mutual decision on the way forward. However, he said while there were meetings, he opted not to attend because he did not like the direction those talks took.

 “I excluded myself from several of those meetings because I personally did not like the tone and the direction it was heading in,” Mr Flowers said in an interview yesterday. “So, to hear today that the present government chooses to not entertain the patron’s tax was a good thing because I don’t think that it intended to promote or to elevate or to encourage the industry to develop or to grow.

  “It was designed to retard the industry and certainly to go to the player after they would have won to ask them to pay on their winnings and also tax when the players lose it was taxing the patrons twice.

 “The government is taking large volumes of our revenue now from what the patrons would have lost whatever the losses are from the patrons, we the operators receive that. We pay a tax on those revenue which is the NGR – the net generated revenue – we pay a tax to government on the patrons losing funds and then to turn around and say I am going back to the patrons again a second time to collect a second tax when they win will be a detriment the industry, but they couldn’t see it.

 “They made the argument that ‘well you pay winning taxes on the Florida lottery and the other large lottery industry’ but the patrons are not taxed twice in that case. The patrons buy a dollar ticket, the patrons leave with a dollar ticket. Now when they do win, yes there is a tax but that is an income tax that is being applied.”

 He continued: “It just didn’t add up that it made good sense. It was to me a dagger in the industry to either retard it to slow it down or to restrict it and I did not feel comfortable having a conversation even though I knew it was a losing argument for me, but they were the points which I raised at several meetings attended during the time of the introduction of this.

 “I felt strongly that it was pointed against my company particularly because we were the forerunners of the lottery base and not so much the slots. Our company was more than 75 percent lottery and 25 percent slots when other companies were more than 75 percent slots and 25 percent lottery and when you are going to apply a tax that tax is then being applied only to the lottery base so I thought it seemed to be pointed more toward me or FML than anyone else.

 “So, for those reasons I opposed and I made that clear during the time. But today to hear that the present government sees fit not to tax the patrons twice is a good thing. It’s a good thing for the industry. I think it will certainly benefit the industry in that context.

 “The industry will now continue with its ability to grow and to expand. I think that all companies will feel elated to hear that the minister has said this.”

 Moving forward, Mr Flowers wants the new government to have dialogue with the operators to discuss unexplored ways to raise funds from web shops.

 “There are lots of ways that can be discussed with us that can work in harmony for the government to generate more revenue and I think that is what this whole thing is about. It’s not about the patrons or the operators.

 “It’s about how the government can generate more revenue from the industry itself by virtue of raising more funds for government from the industry and that I think should be the conversation to be had,” Mr Flowers said yesterday.

 The tax was supposed to place a five percent levy paid by patrons on winnings up to $1,000, and 7.5 percent on anything greater than $1,000. It was projected to generate between $10m-$15m annually in extra revenue for the Public Treasury.