Investors in the gaming industry around the world are frequently seen as being licensed to print money. However, a recent case in Bermuda highlights the problems caused when a business is faced with changing laws, and the difficulties entailed in seeking any type of state recompense.

The Attorney General of Bermuda had a writ filed against him late last year by a company operating a members-only club with gaming machines. According to lawyers, the machines were brought into the country, the import duties paid and they were operated with the full knowledge and permission of the government from August 1999. Four months later, in December 1999, the Prohibition of Importation of Gaming Equipment Act 1999 came into effect.

The 2001 Prohibition of Gaming Machines Act banned gaming machines in Bermuda from July last year, and lawyers acting for Alexis Entertainment argued that the constitutional rights of Neil Inchcup, the owner of Plush club and bars operating machines across the island, had been infringed. It was claimed that not only had the gaming machines been rendered worthless by the ban but also that the goodwill of the business had been lost.

The case against the Attorney General was dismissed last Friday on the grounds that Mr Inchcup’s business goodwill had not been acquired by anybody – the Constitution only provides for compensation when possession of property, including goodwill, has been taken. On the subject of the machines, the judge ruled that Mr Inchcup still retained them and had not been deprived of anything. Alexis Entertainment is considering an appeal, which could be based on the Government legislation having been applied retroactively to the detriment of the company’s business. (E.07.25.05)

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