Levy, SVL taking BGLC to court over lottery licence
Deputy chairman of Supreme Ventures Ltd (SVL), Ian Kent Levy has filed an application in the Supreme Court seeking a stay of proceedings, or alternatively, an injunction to prevent the Betting, Gaming and Lotteries Commission (BGLC) from going ahead with plans to grant another gaming licence without doing a survey of market needs.
In papers filed on Friday, April 3, Levy, a founding director who is being represented by law firm Henlin Gibson Henlin, contends that the respondent BGLC was making plans to issue a licence to a new entrant in the gaming business without conducting a study to determine, among other things, whether or not the Jamaican marketplace can accommodate another such company.
Levy pointed out in the affidavit 20 years ago, when Supreme Ventures Ltd was granted a licence to operate, it was instructed that new applicants to the market could not offer the same game types as the existing licencees.
“This was applied to SVL 20 years ago when it applied and was granted a licence and was directed by the BGLC that it could not offer the same game types as the Jamaica Lottery Company [JLC],” Levy stated in the affidavit.
The JLC was later bought by SVL.
Levy claims that Mahoe Gaming Ltd, which has applied for a gaming licence, would be offering the same games as SVL. Mahoe Gaming involves some of Jamaica’s prominent business personalities, among them PB Scott, William Mahfood, Mark Myers, and Lise-Ann Harris.
The court action followed a conversation aired on Nationwide News last Thursday in which chairman of the BGLC, Clovis Metcalfe said that he was unable to say if a decision would be made by the board to grant a licence at its meeting held the day after.
The Jamaica Observer understands that the board of the BGLC met on Friday, but the matter was discussed and deferred.
Levy argues that there is a lack of transparency and fairness in the process. “The applicant’s risks and legitimate interests will likely be increased and further eroded if another licence is issued without due process, fairness or acting in accordance with its policies and statutory functions.
“The applicant invested significantly in complying with the conditions of its licence, which included the conducting of extensive research to establish its products [that] would produce growth in the lottery segment and not cannibalise the existing space. There is no such study, and this was confirmed by the Executive Director Vitus Evans in a letter dated 28th February, 2020. This study is critical to the survival of the applicant if a new licence is to be issued to Mahoe Gaming, or any other new licencee.
“The applicant has also written to the respondent and the minister of finance by letters dated 6th November, 2019, and 4th December 2019, expressing concern and the impact on their business if no study is conducted,” Levy noted in the affidavit.
He predicted that the harm in having two lottery companies would be “irreparable and irremedable”, and suggested in the application that SVL, as a major stakeholder, should have been consulted.
He also urged that consideration be given to the following matters that he said were raised before with the BGLC:
(a) during the period that both SVL and JLC were operating, there was a marked reduction in the gross gaming revenue (GGR)
resulting in both companies losing revenue and the Government of Jamaica (GOJ) losing taxes. This is because with two operators both recorded net losses, with consequential loss to the GOJs tax revenue. This will continue until one of the licensees incurs
unsustainable losses and withdraws from the industry, as was the case with JLC.
(b) Between 2005 to October 2019 SVL paid to the GOJ and its agencies $57.315 billion in taxes, fees, licence payments and
social causes (thereby fulfilling its corporate social responsibility).
(c) In 2018, SVL paid $6.833 billion in taxes, fees et cetera to the GOJ and its agencies.
(d) Year to date in 2019, SVL has paid approximately $6.308 billion in taxes, fees etcetera. This is approximately 70 per cent of the
GGR. This sum will be substantially reduced if the cannibalisation of the market is permitted;
(e) Over the last two years SVL injected a further $2.2 billion into the insolvent operations of Caymanas Park. The source of these
funds is from its lottery operations. The continuing heavy capital investments into Caymanas Park will be jeopardised if the cannibalisation of the lottery sector is allowed by the GOJ.
(f) SVL is a publicly listed company currently owned by thousands of Jamaican shareholders. The JSE is the mechanism by which potential investors may, if they wish, invest in the lottery sector.
The financial degradation of SVL does not enure to the benefit of anyone, least of all the GOJ.
(g) A review of the Caribbean lottery market indicates that only one lottery provider in each jurisdiction exists. Jamaica has experimented with two lottery providers in the past and, as explained above, one of them suffered such unsustainable losses that it had to withdraw from the industry. The other survived by acquiring the insolvent licensee.
Levy said that the BGLC was asked to issue “an immediate moratorium” on all new lottery licences, pending a comprehensive, data-driven review and analysis of the current lottery licensing policy of the GOJ. There has been no response to this request from the minister of finance and/ or the applicant.
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