Gaming Lounges Hit by High Credit Card Charges
Banks charge punitive fee for use of credit cards in gaming establishments
Chairperson of the Jamaica Gaming Association (JGA) and vice-president of Regulatory & Contract Compliance at Supreme Ventures, Tashia Hutton, has described as “a retrograde step” the practice by banks to charge clients a punitive fee for using their credit cards in gaming establishments.
She says members of the gaming industry and their oversight body have been working assiduously to fulfil the requirements of the Proceeds of Crime Act and other regulations which reduce risk.
According to Hutton, the association wants a joint approach involving itself, the Bankers Association, the State and regulatory agencies “to work together in developing and deploying a suitable model which will ensure the sustainability of the formal gaming sector”.
She noted: “The introduction of a responsible gaming code of conduct has raised the awareness of the integrity of the formal sector, and through active collaborative efforts with the BGLC and Rise Life Management we have been implementing these standards which will ensure the sustainability of the industry for responsible gaming.
“However, of late some customers have raised concerns [that they are] being charged a ‘near cash fee’ as high as eight per cent when using their credit cards in gaming establishments.
“This the Association views as discriminatory and a retrograde step, given our efforts to establish an industry which is not only transparent, but inclusive.”
To date, two members of the industry have also lost banking services as a result of derisking/debanking which has become a response to the perceived risk of money laundering in the gaming sector, Hutton noted.
She indicates that actions taken in relation to the sector should be informed by the fact that the gaming industry has always been a highly regulated sector since the enactment of the Betting Gaming and Lotteries Act which was established in 1975, and the adoption of Nevada Gaming Standards which saw comprehensive multi-jurisdictional fit and proper assessments being done on operators seeking to enter the industry and the gaming machines entering the market.
Additionally, more stringent measures have come into being with the onset of the Proceeds of Crime/Money Laundering Prevention Regulations and the Terrorism Prevention Act.
In 2013 gaming lounges were classified as designated non-financial institutions.
In light of this classification, gaming lounge operators must comply with the guidelines of the Proceeds of Crime Act (POCA), which means that operators have a responsibility to ensure that policies are in place to mitigate the risk of potential money-laundering activities.
Hutton said the association, which consists of the seven major players in the gaming industry, has been actively working with both the Betting Gaming & Lotteries Commission (BGLC) and the Financial Investigations Division (FID) “to ensure the smooth and practical implementation of the Minimum Standards” which were drafted by The Commission in 2016 .
Those minimum standards include: the appointment of a nominated officer, Know your Customer (KYC) identification and verification procedures, risk assessment, employee diligence and training, which have now been adopted.
Hutton notes that the cost of compliance is significant, as some of the larger players have spent in excess of $40 million to deploy the requisite technology to monitor their environment.
“These costs will of course vary, based on the size of the gaming operations.”
The association, she said, is seeking to guide industry members to survive the challenges presented by debanking and related actions by upholding these minimum standards to preserve the viability of the industry and all its stakeholders: gamers, regulators, and the government.
“With the implementation of any new standard which may arise as a result of debanking ,” she noted, “the ability of operators to effectively manage changes to business processes in response to these additional requirements must be considered, as must the ability for regulators to make structural adjustments to effectively monitor and guide industry players.”
The JGA is also seeking to develop strong lobby efforts “to ensure that we receive the necessary support and partnership that will facilitate growth of the industry,” she said.
Hutton added that the Jamaica Gaming Association is working to ensure that “there is a collaborative approach to regulatory changes, thus minimising any adverse effect that these could have on their operations.”
The gaming sector now contributes an average of over $400 million in taxes annually, Hutton noted.