Spreading economic benefits and income redistribution
BY PELAGIE MBABAZI
What comes to your mind when ‘gambling’ is mentioned? To some, it’s a ring of the rich that offloads the excess cash as they expect to make an excess. To others it’s a bell of game of the idle. And to some, to those that have reaped from its circuits, it’s an investment worth every penny with fewer inputs that fetch big returns.
Philippe Brizoua, the CEO of the Rwanda Gaming Corporation (RGC) takes us through the journey of how the corporation opened shop in Rwanda, how they have hyped the operations and what the future of the industry holds for the gaming enthusiasts.
Lotto Rwanda was founded in July 2005 under a Public-Private Partnership between the Rwanda Government and Rwanda Private Sector holding 40% and 60%respectivel of the share capital. It was rebranded Rwanda Gaming Corporation (RGC) Ltd in January 2010 as a strategic decision to strengthen the leading role of the company.
The share capital amounting to Rwf300 million increased to 1.05 billion over a resolution of the Extraordinary General Assembly of September 2012, which is another milestone of Rwanda Gaming Corporation restructuring plan.
The organization has a vision of creating and maintaining a world-class and responsible gaming experience aimed at contributing to the country’s ongoing economic & social strategic programs. RGC is therefore expected to be answering many welfare questions of it members.
Since the end of 2008, the company is experiencing a Build, Operate & Transfer (BOT) business financing model that includes licensing, investment which addresses the transfer of equipment and competence issues, learning of processes, platforms and programs involved. The financing model is initiated for the launching of the Rwanda’s gaming industry to a higher scale.
In Rwanda where betting is carried out, there are a number of sporting products from which the enthusiasts can choose from.
At CASINO Kigali you will find; American Roulette, Black Jack, Poker, Slot Machines and other ancillary attractions like Bingo, sporting events in the Greatest place and atmosphere for relaxation, entertainment and fun.
PREMIER BETTING offers betting on International and National (in project) Sport events and Virtual Horseracing through fixed locations and wireless points of sale.
RWANDA NATIONAL LOTTERY provides instant scratch-off tickets, Lotto Number games (in preparation) and Video Lottery Terminal (in project). The instant scratch-off tickets and Lotto number games are under digitization to be offered also on alternative channels like mobile phone networks.
ELECTRONIC GAMING MACHINE which is currently running around 400 slot machines from various brands in a network of gaming centers, will soon enter in reorganization to improve the layout of the premises, the mix of attractions and further developments nationwide starting from the regional cities.
JOINING THE MARKET
For those interested in joining the market, Brizoua gives a word of counsel to get prepared for what happens out there.
“To enter the green field market of Rwanda and overcome the various known and unknown challenges that we face, I found it careful to spread any risks through different gaming operations, investments over the four gaming sectors in the market segments with each run separately.”
This then explains why the RGC diversified in;
CASINO Kigali operated by CASINO GAMES RWANDA Ltd, National Lottery operated by PAN-A Rwanda Ltd, Sport Betting operated by PREMIER BETTING Ltd, Slot Machines operated by NEW AFRICA GAMING Ltd
These operators are subsidiaries of international gaming companies with head office located in countries of reference in regards of the individual gaming industry.
When in 2008, the gaming activities were introduced they were not taxed directly by the Rwanda Revenue Authority (RRA), but were required to pay Value Added Tax, which, according to both RRA officials and gaming operators, was a cumbersome process.
After legalizing gaming in Rwanda and putting in place law imposing taxes on them, there is a lot it will help to streamline.
The law is bringing Rwanda’s gaming sector at the edge of the evolution in the gaming industry and filling the gap from a ban or restricted gaming activities to the new age of gaming industry.
Regulatory Law No 58/2011 of 26/03/2012 establishing gaming activities in Rwanda shall be soon be accompanied with its implementation regulatory decrees aiming to consolidate the growth of the sector by setting up world standards of best practices.
The regulatory laws provide for; the licensing requirements lists, the integrity of the gaming sector, the protection of consumers, young and vulnerable people, introduce robust controls; secure the operators’ investment and the development of the sector.
Further, the regulation laws define the technical, physical and financial operating conditions and requirements; including the profiling of the people involved in the operations. They also guide the integration and interactions of the gaming sector with the existing correlated national institutions and members of the business community.
Gaming Tax law; Law No 29/2012 of 10/09/2012 establishing Tax on Gaming Activities in Rwanda shows clearly the two types of taxation of which on one hand a direct tax “Gaming Special Tax” of a flat rate of 13% is collected on the operators’ gross margin and on the other hand a tax on Players’ collected on the winnings after deduction of a threshold amounting to Rwf30,000 aiming to harmonize and simplify the tax treatment on the new sector.
A lucky player is required to pay 15% of his net winning. To simplify, a winning is defined as the profit of the player and taxable after deduction of Rwf 30,000. Rwf 30,000 is the minimum free of tax wages in Rwanda. The model was adopted as a compromise between the tax policy authority and legislators raising the principle of income tax equity constraints and the gaming sector technical complexity, commercial viability and operations efficiency considerations.
“We are starting with this scheme and monitoring the feedback from the players, operators and tax administration on its implementation to improve any significant weaknesses in the systems,” observes Brizoua.
The gaming law not only benefits players and operators, but also benefits the government and communities. Rwanda ultimately becomes the biggest winner in redistributing the national wealth, creating employment opportunities and other multiplier effects over the economy.
To the players – integrity of the gaming or lottery scheme rules and operation mode to assure the transparency of the odds since any games offered in the market must be registered, certified and authorized/reported by/to the regulatory authority.
The laws will help preventing from potential addiction effects through the responsible gaming programs as an integral part of the day to day operations.
A player Winnings - The law also guarantees the minimum payout rates of prizes to players by setting and certifying the payout rates; that will not be modified without justification and authorization of the regulatory authority. We would encourage and assist the player winning of life changing prizes on how they could use wisely the new resources.
Gaming operators – run and develop the operations in the suitable legal environment providing a clear vision for the future. As a consequence, the gaming operators should only increase their investment and expand the activity both in quality, quantity and geographically. Already, the total projected investment at the beginning of $25million is currently over $35million over the coming 3 to 5 years. Then having laws helps combating illegal gaming and other underground activities increase to the security for the licensed operators.
Government - The tax reform shall result in higher investment opportunities, higher turnover, and increased incentive for the players, and efficient tax collection. Furthermore, the multiplier effect of revenue generated over the gaming industry will create addition source of revenue for the country. The other advantage is that money remains in the country as opposed to being spent in neighboring countries having CASINOs.
Companies – being legalized the gaming sector should fully be integrated and accepted in the national business community with no restriction to develop correlated business opportunities. Around the world, the gaming industry attracts investors because it has steady income and could be run more profitably.
Up to $10.5million (35+ Million projected) has been invested to bring innovative, affordable, high frequency and world class solutions:
24th November 2008 – CASINO KIGALI
15th March 2009 – One Stop Gaming facilities to offer Electronic Gaming machine
21st December 2011 – National Lottery
23rd June 2012 – Sport Betting
From Nov 2008 to 30 September 2012, the emerging industry recorded a cumulative gross sales of Rwf37 billion ($61 Million), Payout of Rwf30.3 billion ($S50.5 million).
The Gross gaming revenue of Rwf6.3 billion ($US10.5 million) collected by the operators has been re-injected into Rwanda’s economy to sustain the losses of the start up operations while waiting for the gaming laws.
Over 350 new jobs created and generated approximately Rwf820million of Corporate Taxes (PAYE and NSSF).
Few contributions towards the community and national good causes for an amount of about Rwf140 million.
Multiplier effects from gaming revenue turnover spending over the business community creating additional revenues for the country.
With the emergence and recent setting up of the AGACIRO FUND, we are brainstorming within the gaming sector on how based on its growth and fundraising potential, we could best integrate the concept in the ongoing operation strategies.
Very good response surprisingly! We realized that Rwandans are looking for Mix and innovative Entertainment centers, Fun and Rewarding in their day to day life. The Gaming sector is providing for these human fundamental needs and furthermore offering the unique opportunity for any one playing responsibly to win cash money paid back instantly. We also promote solidarity by the fact that people could put their bets together and share the outcome of the games.