[The Major]

(Antigua Offshore Gaming Association, St. Johns, Antigua)

NEW INTERNET GAMING REGULATIONS AND 3% TAX ON NET WINNINGS INTRODUCED IN ANTIGUA

The AOGA, an association representing the interests of the Internet Gaming industry in Antigua, has endorsed Regulations Concerning Interactive Gaming and Interactive Wagering established by the Government of Antigua and Barbuda on 22nd May.

In April, the Government had also introduced a 3% tax on net winnings. However, before applying the tax, the Government offered the Industry an opportunity to discuss its structure and implementation. Over two days of discussions in an atmosphere of cordiality and cooperation, the AOGA and the Government reached an understanding that was mutually satisfactory.

The government priorities, clearly stated by Sir Ronald Sanders, the Antigua and Barbuda High Commissioner in the United Kingdom and the country’s lead negotiator at the OECD and International Financial Task force, were to implement regulations that met the highest international standards against money laundering, and to ensure that jurisdiction promoted fair and responsible gaming practices. The industry fully supported those priorities and the AOGA is satisfied that, with these regulations in place, Antigua will extend its lead as the premier jurisdiction for high-quality Internet gaming providers.


HIGHLIGHTS OF REGULATIONS:

The new Interactive Gaming Regulations require operators within the jurisdiction to:
· Know the player and ensure that monetary transactions are monitored in accordance with global standards on money laundering
· Provide for timely payouts to customers
· Implement control systems to provide for secure audit trails
· Provide arbitration methods for dispute resolution
· Guarantee the suitability of each company’s owners and operators for the Gaming Industry


HIGHLIGHTS OF 3% AND DEDUCTIONS:

A 3% Tax on the Net Win of each company will be implemented, retroactive to April 27th, 2001. Net Win is defined as the amount wagered by customers, minus winnings by customers. This tax will be payable quarterly, and is levied in addition to the existing ‘annual licensing fee’ of $75,000 for Online Casinos and $50,000 for Sports Books. Licensees will be allowed to deduct software-licensing costs of up to 40% from the Net Win in each quarter. Additionally, Licensees will be allowed to deduct the Charge-Backs (customer billings which have not been honored by the customer) from the Net Win.

This tax will provide Antigua with a way to profit directly from the growth of the top-quality Gaming Operators on the island, and to increase its tax base with the growing prosperity of local providers. This equitable taxation structure creates the foundation for a long-lasting Partnership between Antigua and the Gaming Industry.

The Government of Antigua and Barbuda has made a commitment to maintain the licensing and tax structure for a fixed period of time in order to provide the Industry with the predictability it requires to further invest in its growth on Antigua. This commitment is key to the success of the partnership between Industry and Government.


HIGHLIGHTS ON OTHER ISSUES:

The Government accepted the Industry’s proposition that in the short- and long-term, Antigua will need to make certain improvements to the local infrastructure, as well as continued improvements in the cost-effectiveness of telecommunications, in order for the providers to remain competitive. The Government agreed to work with the Industry to resolve the following issues:

· Improvements to the responsiveness of the local telecommunications provider by the establishment of a response team dedicated to the Gaming Industry

· Continued focus on cost-effectiveness of telecommunications services


CONCLUSIONS:

The AOGA feels that Antigua now has a solid regulatory framework that will foster the continued growth of the Industry and safeguard the jurisdiction from money laundering and other financial crime.

The Industry, through the AOGA, will continue to pursue the improvements in terms of infrastructure and cost-effectiveness of services which are required if the Gaming Industry on Antigua is to enjoy long-term prosperity and growth. The Government is pledged to work with the Association to attain this goal.


Appendix

QUOTES:

· Regulations mark a milestone in evolution of Internet Gaming industry and position Antigua as a leading jurisdiction for I-Gaming in an increasing competive market, with as many as 50 other jurisdictions around the globe having some form of licensing for Internet Gaming.

· The negotiations forged the beginning of an open and constructive working relationship between industry and government.


· We are pleased that there is now a direct correlation between the success of our businesses and the revenues accruing to the government. If we do well, Antigua will do well.