Sun, Jan 22, 2006 - Page 17 News List

Another roll of the dice

Taiwan has been contemplating allowing gambling on its outlying islands, but could miss the boat if it does not act soon

By Gavin Phipps  /  STAFF REPORTER

Setting the standards

Fast forward to last week and the Gaming Bill, which is now an integral part of the Outlying Islands Development Act, was once again put forward for discussion. The Non-Partisan Solidarity Union (NPSU) revoked the bill at the last minute, however, due to the ruling party's decision to cease cooperation with the NPSU over the issue. The next reading of the bill is expected to take place sometime during the next legislative session, which begins in late February.

"We obviously can't set a time frame, but hopefully the government will take a logical and rational approach," said Woolf, who, over the past three years has discussed the issue with numerous lawmakers and politicians. "I hope they'll move forward in a positive way and have knowledge and understanding of the process [in order] to make informed decisions."

The deliberations in the Legislative Yuan might be at a standstill, but according to a lawyer who is currently representing a locally-based consortium, this might not be such a bad thing. Outstanding issues surrounding tax and a law that is vetted by industry professionals are matters of concern for future casino operators in Taiwan.

"There are many examples of well-intentioned laws that have been passed but the end result is that no industry can develop," said a lawyer for a legal firm currently lobbying for the legalization of gambling. The lawyer asked not to be named.

"One example is the Duty Free Shopping bill for Penghu, which didn't have any regulatory regime able to implement the idea. In order for Taiwan to compete effectively it needs a strong body of laws that ensures that investors, regulators and consumers are protected."

The need to ensure that any casino in Taiwan adheres to international standards is vital. Prior to amendments in Macau's gaming law no big-name Nevada gaming groups would invest in the territory. Such a situation in Taiwan could spell disaster for gaming, as in order to attract investment standardized international regulatory regimes need to be in place.

The other sticky issued is tax. According to Hines, the most recent proposal saw lawmakers and lobbyists toying with a figure in the range of 40 percent. This is, according to Woolf, far too high. The current tax rate in Nevada stands at 7 percent; the Philippines' stands at 30 percent and Australia has recently lowered it tax on winnings to 10 percent for non-Australian nationals.

"If the tax is too low then the casinos will have to rely on high-end gamers, but if it's too high then it will have to depend on grind players," said Woolf. "While I certainly wouldn't want to discount the grind players, the ideal tax bracket would be somewhere in the region of 10 percent to 15 percent."

Tax generated through gambling on the offshore islands will, in accordance with the Outlying Islands Development Act, be pumped back into the economies of Kinmen, Matsu and Penghu. And, if one uses the US as a guideline, one job in a casino creates 13 other jobs in support industries like catering and laundry services.

With so many international casino chains -- who aren't known for their patience -- waiting to pour capital into Taiwan, a decision on the issue would be better made sooner rather than later.

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