Tag: gaming

Donald Trump, Mike Pence Pledged To Limit Gaming, Then Helped Casinos After Campaign Donations

At first glance, gambling appears to be one of the many issues on which Donald Trump and Mike Pence differ. Trump is an East Coast casino magnate who has boasted of using his fortune to influence lawmakers. Pence is a socially conservative Midwesterner who says he has never even bought a lottery ticket. He has cast himself as an opponent of expanding gaming in a state whose campaign finance laws aim to limit casino moguls’ political power.

But a closer look shows the Republican standard-bearers have plenty in common: As casino industry cash went around Indiana’s anti-corruption laws and into groups supporting Pence’s campaigns, the GOP governor used his power to help gambling interests. While Trump has promised throughout the 2016 presidential campaign that his personal wealth would insulate his administration from donor influence, the actions of his running mate on the gaming issue challenge that pledge.

A review of campaign finance records shows that despite Indiana statutes officially banning gaming industry donations to state officials, Indiana gaming interests gave more than $2 million to groups supporting Pence since he first began running for governor. That includes gaming-linked lobbying firms and their employees donating nearly a half-million dollars directly to Pence’s campaign account.

Mike Pence, Gambling, campaign donations
Photo Credit: Darren Hauck, Getty Images News

During much of Pence’s term, he was serving in a leadership and fundraising role at the Republican Governors Association while the group raised money from Indiana gaming operators. Meanwhile, casinos hit a legislative jackpot at Indiana’s state Capitol: Pence signed tax legislation benefiting the gaming industry; and, by not vetoing the bill, he allowed for the passage of separate landmark legislation permitting riverboat operators to move casinos on shore. His administration also helped a major RGA donor from the lottery industry, GTECH. (That company has since merged with a competitor, International Game Technology.)

In an emailed statement, Pence’s 2016 campaign spokesperson, Marc Lotter, said the gaming companies in question “have a long history, dating back a decade, of supporting the Republican Governors Association because they want to see the type of strong, pro-growth leadership that has led to Indiana becoming one of the best states in the nation for business continue and expand to other states. Gov. Pence is proud to support and have received support from the RGA.”

Referring to the gaming-backed bills that became law under Pence, Lotter added: “Since taking office, Gov. Pence has held the position that gaming should not be expanded in Indiana and every executive action he has taken on legislation has been consistent with that principle.”

This look at Pence’s relationship with the gaming industry is the first in a series on how companies are circumventing longstanding anti-corruption laws designed to restrict their election spending and political influence. The trend has occurred just as court decisions deregulating the nation’s campaign finance laws have let a torrent of cash into state and local races. In many cases, the donations arrived shortly before or after governments cemented everything from road contracts to economic development subsidies to pension deals. The continued flow of cash has defanged pay-to-play laws that were supposed to make sure government decisions are based on the public’s best interest — not political favoritism.

In Indiana, that larger trend has played out in gaming policy. Pence initially pledged to oppose efforts to grow the state’s gambling industry. “I do not support an expansion of gaming in Indiana,” he said in March of 2013, just two months after becoming governor. The statement won praise from a major religious group in the state. Pence also trumpeted his congressional efforts to outlaw Internet gaming, and said, “I’ve never bought a lottery ticket.”

Our review, however, shows that since 2011, Pence received roughly $2.2 million from Indiana gaming operators and their lobbying firms. That includes about $490,000 from nine gaming-linked lobbying firms and their employees directly to Pence’s campaign; at least $360,000 more from gaming industry lobbying firms and their employees to the Indiana Republican Party; and $1.4 million from Indiana gaming interests and their lobbying firms to the RGA, which backed Pence’s gubernatorial bids.

With that money flooding into the state, the governor helped Indiana’s gaming industry just when it was facing increased competition from neighboring states.

Continue reading on the National Law Review…

ARTICLE BY MapLight
© Copyright MapLight

Bulgaria Adopts New Gambling Tax Regime

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Bulgaria has a new gambling taxation regime effective January 1, 2014, which, together with the reasonable and balanced regulations currently in place, makes the country attractive for local licensing and gambling operations based upon a low corporate tax and highly qualified and low-priced technical specialists. One and a half years after theGambling Act (“Act”) was introduced, the tax base for gambling has been changed and is now in line with good business practices: switching from a turnover base to aGross Gaming Revenue (“GGR”) base.

On December 19, 2013, amendments in the Act (“Amendments”) for liberalizing gambling regulation in Bulgaria passed successfully the second reading in the Bulgarian Parliament amidst tense disputes. The Amendments were promulgated in the National Gazette on January 3, 2014, and came into force effective January 1, 2014.

The Amendments assure that as of January 1, 2014, the taxation of any online games in Bulgaria will be based on GGR with a 20% tax rate. For games in which fees and commissions are collected (such as poker), the tax rate will be 20% of the collected fees. In addition, there is a single fee for issuing and maintenance of a five-year license in the amount of approximately EUR 50,000 (BGL 100,000). No annual fee will be required during the five years’ validity of the license.

Offline bingo and keno will be taxed at a 10% corporate tax rate.

The GGR-based taxation is not a part of the common tax system, but rather it is an administrative fee regulated entirely in the Act instead of the tax laws. Nevertheless, any operator who decides to have an establishment in Bulgaria can take advantage of a favorable and stable corporate tax – only 10%. The low corporate tax rate would apply only to operators who decide to establish a local company in Bulgaria, which might be strongly supported from other economic arguments – for example, a very well-educated and qualified labor force at insignificant costs.

The Amendments introduce a new requirement for any licensed operator not established in Bulgaria but established in any other EU/EEA country or Switzerland. Such operators must have an authorized representative in Bulgaria, but this would not constitute having a local business in the country for purposes of obtaining the 10% corporate tax rate. An operator, in all events, is required to have a local representative in Bulgaria, who should be authorized for representation before Bulgarian authorities and courts.

From a regulatory perspective, the Bulgarian gaming regime is now one of the most balanced in Europe. It does not require a local establishment and main server in Bulgaria for any foreign operator who decides to obtain a local Bulgarian license (nevertheless, a local control server in Bulgaria is required). There are no specific requirements for performing payments through a local bank or to make certain investments in the country. The operators are not required to operate a dot bg domain. Foreign operators – registered, investing, and having a main server anywhere within EU, EEA, and Switzerland – can apply for a license. Nevertheless, the restrictions the Act imposes on an applicant whose shareholder is an offshore company should be carefully considered in light of provisions of the Act relating to economic and financial relations with companies registered in preferential tax regime jurisdictions and their actual shareholders.

A significant number of online gambling operators are expected to apply for a license in Bulgaria. The first online operators have already submitted applications. They are eager to enjoy not only reasonable taxation but also liberal regulation. The Bulgarian government has further stimulated the licensing of online operators by approving amendments that allow the operator to be removed from the blacklist even before being granted a license if the online operator applies for such removal not later than March 31, 2014.

The Amendments also permit the operators to perform any other business activity apart from organized gambling, which was not the case until now.

The efforts of the Bulgarian Parliament are of major significance. Instead of concentrating on blocking measures (such as ISP and/or payment blocking), the government has focused on best practices and introduced regulations that motivate the online gambling operators to get a license and work not only in a balanced regulatory environment but also under a favorable tax regime. These changes are aimed at balancing and optimizing the new sector regulation model that was introduced back in 2012. They give the online operators promising conditions to work legally in the Bulgarian market. At the same time, the new regulations impose stricter administrative sanctions on illegal online gambling operations.

Nadya Hambach, of Velchev & Co., authored this article.

Article by:

Dickinson Wright PLLC