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UPSHOT OF VLT LAW: NO DIVI EXPANSION FOR NOW

Aug. 1, 2001 – Bernie Burkholder is profoundly unsettled by the video gambling legislation approved by the Senate majority. "This video lottery terminal issue just really rocked our faith in the stability of the V.I. government," he said Wednesday.
"I am shell shocked that this piece of legislation was passed, and the manner in which it was passed in the middle of the night, buried under the covers," Burkholder said. "Judge [Eileen] Petersen, the Casino Control Commission, and the governor have been so reputable to deal with. The Casino Control Act is very well thought out. It is the watchdog for the gaming commission, and that is why the V.I. is recognized as the legitimate destination it is. You can't have instability in this business."
Burkholder's opinion matters. He is an executive officer of Treasure Bay Corp. and its subsidiary, Treasure Bay VI Corp., which leases St. Croix's Divi Carina Bay Resort and Casino property from its owner, Grapetree Shores Inc., and operates the casino and resort. Treasure Bay has put expansion plans for the property on hold at least until the VLT issue is resolved.
"I have been dealing with the issue of VLT's for seven or eight years," he said. "I believe they are bad in any form and in any jurisdiction, and I believe they are bad for the Virgin Islands."
Burkholder had not been unaware of legislation that Sen. Vargrave Richards introduced Wednesday in the Legislature. The bill requires that a "binding referendum" be held before the body can approve any more gaming licenses.
Richards said his move is "aimed to ensure that current and future investors have a margin of security in knowing that their investment will be protected and upheld."
Such a measure would "go a long way toward restoring investors' confidence," Burkholder said.
Based in Biloxi, Miss., Burkholder has been president for two terms of the Gulf Coast Gaming Operators Association, which represents 11 casinos, and president for one term of the Mississippi Gaming Association, representing 32 casinos.
"We have dealt with the negative aspects of VLT's right alongside Louisiana with its problems, and all the turmoil South Carolina went through before they outlawed them," he said. "We work very closely with the American Gaming Association in Washington, D.C."
The big problem, Burkholder said, is that VLT's are unregulated. He said they encourage underage gambling and gambling addiction, and "there is no way you can adequately regulate them … They are indistinguishable from slot machines, except one spits out coins, and the other spits out tickets."
Experience has shown, he said, that lottery terminals contribute to destroying neighborhoods, because the owner of, say, a nice restaurant and bar will suddenly lose interest in maintaining his previous standard of service — because his profits from the VLT's are so much greater. And the establishment will deteriorate as a direct result.
Burkholder said the territory has built a credible reputation as a legitimate gambling destination over the last two years, but "the VLT's will destroy that credibility. It really sends the wrong message to the world investment community, not just casino businesses."
Speaking for Treasure Bay, he added: "If we were faced with this two years ago, if we knew this was out there, no way would we have come to St. Croix. We thought we had a stable business climate to invest in. These clandestine, late-night deals say ' Whoa! I'm not going there!'" His reference was to the Legislature's late-night passage on July 19 of the VLT enabling legislation as one of many amendments to the mammoth supplemental appropriations bill.
Emphasizing that he does not want to be perceived as holding a ransom over the people of St. Croix, he said, "Eighty percent of the people we deal with are people we have a very fundamental understanding with that they will do the right thing."
He said VLT's will provide no benefits for the territory — no new hotel rooms, no infrastructure. "And if they build these 'entertainment centers' — they call them 'entertainment centers,' I call them casinos', they are in direct competition with the hotel casinos."
Divi, he said, has made the commitment "that we are here to stay, not only for us but for other hotel and casino investors, as well, but we were reasonably assured we would have a level playing field. Now a special-interest group and a minority of senators have destroyed that understanding."
"When the VLT issue first came up a couple months ago, we downsized our expansion plans, and took them off the table," he said. "Then, we put them back on the table, and this comes up again. I talked to our contractor today, Best Construction, and I had to tell them we're off at the moment, although I'd like to say we're on."
Burkholder readily acknowledged that his industry "has its problems," but he added, "We have regulatory oversight, and we are trained to recognize and deal with compulsive gambling. We have checks and balances, and we have security guards 24 hours a day checking underage gamblers. We have problems we are willing to address; the video lottery operators ignore them."
Richards said in a release Wednesday that he remains "vehemently opposed to the VLT's." He said his bill is a move "to curtail the haphazard manner in which business is conducted in the territory. The 'on again, off again' approach to approving legislation or soliciting investments only serves to debilitate the economy and to alienate current and potential investment opportunities."
Attorney General Iver Stridiron said Wednesday the Legislature can fashion a referendum so that the public will expressed becomes legally binding. He said he didn't know whether the Organic Act addresses binding referendums and would "have to look it up."
Last November's referendum on whether the size of the Senate should be reduced has been a bone of contention in the 24th Legislature. The Senate leadership and Stridiron have said that the referendum — in which the vast majority of voters favored a smaller body — was not binding.
Burkholder said action can be taken to build the territory's credibility back up. "We would like to go forward and build the improvements we have planned," he said. "But the reality of it is my confidence is shaken in the system and leadership, and it needs to be restored."
He said the Senate includes "people of integrity like Richards and Emmett Hansen. I believe they are as appalled as we are."
Treasure Bay's position for now is that "we won't move ahead — even if the governor vetoes the legislation and it is not overridden by the Senate — until we are able to sit down with leaders in the Senate and have assurance that the VLT issue is behind us," Burkholder said. "Right now the Senate needs to take an extra step forward to protect its credibility of the investment community."
He said he really hopes it does: "We would like to move ahead. We like St. Croix."

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