The Bahamas consist of two islands with population concentrations (Nassau on New Providence Island and Freeport on Grand Bahamas Island) and many smaller islands, the closest ones lying about fifty miles off the Atlantic coast of Florida. The country was under the political control of Great Britain until 1973. Tourism has been the dominant product of the islands for most of the past century. The islands’ resorts now employ over 40 percent of the workforce. Casino properties dominate the tourist offerings.
Prior to the 1960s, there was very little gambling in the Bahamas. The Penal Code in colonial statutes declared all gambling to be illegal. In the 1920s, however, the small Bahamian Club opened in Nassau on New Providence Island, having been given an exemption by the governor. Another small casino won an exemption to operate on the tiny island of Cat Key. Efforts to establish major casino facilities had been advanced by Sir Stafford Sands as early as 1945. Sands was a private attorney seeking opportunity, but he was also the minister of finance and tourism for the island colony. The timing was not right, but Sands did not go away.
Sands was still a critical player in island politics in the early 1960s when the Castro revolution in Cuba caused many gaming interests there to look in the direction of the Bahamas. Meyer Lansky was purported to have visited Sands in 1960 with a $2 million offer for the right to have casinos. The offer may have been rebuffed, but soon Sands, in a “partnership” with two Americans—Wallace Groves (a convicted stock swindler) and Louis Chesler (a major Florida land developer and compulsive gambler)—pushed a proposal for a casino in Freeport through the Executive Council. The Monte Carlo Club at the Lucayan Beach Hotel began operations in 1964. A second casino in Freeport—El Casino—opened in 1966. Lansky had a direct interest in the property, as several of his associates in Cuba took management roles. These included brothers Dino and Eddie Cellini, who also shared management in a Lansky-controlled London casino and in a casino dealers’ school that furnished employees for casinos in England as well as the Bahamas. Initially, all casino employees had to be nonresidents, a rule that has since changed. From the beginning, no local resident has been allowed to be a player at any of the casinos in the Bahamas. A local resident is fined $500 if caught playing.
Sands was also instrumental in pulling together the principals who negotiated to establish a casino near Nassau. These included James Crosby and Jack Davis of the Mary Carter Paint Company, Wallace Groves, and Huntington Hartford, a millionaire with grandiose dreams for development of Paradise Island, which was very near Nassau. A silent partner in the organization was Lynden Pindling, whose political party had won control of the government in the parliamentary elections of 1967. It was the first time in the history of the island that the Black party had won an election. The effort to gain a license for a new property included the purchase of the license that had been held by the Bahamian Club. In 1968, the Mary Carter partnership was reorganized as Resorts International, and they opened the Paradise Island Resort and Casino. The company had to actually move the Bahamian casino building onto their grounds to gain its license. Today the old casino facility is the restaurant within the new casino structure. Resorts International also took over the management of the El Casino in 1978. In 1983, the license for the El Casino was sold to the London-based casino company (Lonhro) that built the Princess Casino in Freeport.
A second casino in Nassau was licensed on Cable Beach in 1978. It operated as the Playboy Casino until 1983. Then the license was transferred to Carnival Cruise Lines, who opened the Crystal Casino; subsequently it has become a Marriot property. In the 1990s, the Paradise Island Resort was sold to Sun International and renamed the Atlantis. Also, the Gentings Casino company of Malaysia purchased the Lucayan Beach Resort. A fifth casino license has been given to the Club Med, which operates the Columbus Isle Casino on San Salvador Island, the location where Columbus first set foot on land in the Western Hemisphere in 1492.
Earlier patterns of organized crime involvement in Bahamas casinos have essentially been eliminated through a process of effective regulation. Moreover, the operators’ connections to other jurisdictions where they must face vigorous checks for licensing preclude connections with organized crime. The Bahamas have one of the most interesting taxation systems for casino gaming—a reverse progressive tax system. The island nation wishes to use casinos to promote tourism. Because the political leaders realize that it is expensive to market gaming to high rollers and persons who will spend considerable vacation dollars in the islands, the goal is to attract players who will stay in the hotels and take full advantage of the beaches and other tourist amenities. Larger properties have a better chance to market to these players. Also, it costs more to bring in such players than it does to advertise to low-roller day trippers who take boats from the Florida coast. Hence, the reverse-progressive tax system. Casinos pay a 25 percent tax on gaming revenues up to $10 million per year. As the earnings go up, the tax rate goes down. For earnings between $10 million and $16 million, the tax is only 20 percent. It is reduced to 10 percent for earnings between $16 million and $20 million. Annual earnings above this amount are taxed at a rate of only 5 percent. Casinos pay other fees as well.
|
|