There are three separate bodies regulating gambling in the U.S. Virgin Islands with nonsensical jurisdictions. One of them is completely opaque about its operations. The other two cover nearly identical subjects. This is ridiculous, wasteful, duplicative, inefficient and an invitation to corruption.
The Legislature should consolidate all three into one professional body. Tidiness guru Marie Kondo would surely agree.
Right now, the V.I. Lottery Commission regulates the V.I. Lottery and slot-machine-type gambling, called “video lottery terminals” on St. Thomas and St. John, which generates about $4.5 million for various government programs each year, and subsidizes the strangely money-losing V.I. Lottery by a similar amount.
The Casino Control Commission oversees St. Croix’s one casino: Divi Carina Bay Casino and slot machine parlors at the Caravelle Hotel, the St. Croix horse track and soon the St. Thomas horse track. The activities it regulates generate about $2 million for the government in a good year.
On and off track horse race betting was historically overseen by the V.I. St. Croix Horse Racing Commission and St. Thomas/St. John Horse Racing Commission, recently consolidated into a single commission. Slot machines and casino gambling regulated by the Casino Control Commission gets some public oversight during annual budget hearings. Lottery and VLT slot machine gambling get a little bit of public oversight in separate budget hearings.
Whatever tax revenue horse race gambling may contribute is not visible in any public V.I. government budget documents and those commissions have not historically given budget testimony to the Senate. The two district commissions’s meetings have not been public. For years, they had no quorums. Money was taken at the betting window at the Randall “Doc” James track on St. Croix. But what happened to that money is not in the public record.
None of the three spark joy.
Don’t spend tax dollars to support gambling
At a recent news conference, Jay Watson of the Horse Racing Commission said the commission wants public funding for staffing and to hire judges, chief stewards, and other roles.
“The commission should be the authority on anything to do with horse racing and we’re requesting assistance from the Legislature,” Watson said.
Rather than appropriate more funding from the public till to help a not entirely public third entity collect one portion of V.I. gambling dollars, it would make more sense to have trained personnel who are already on the government payroll at either the Lottery Commission or the Casino Control Commission.
Regulation has been lacking historically
The Lottery Commission and Casino Control Commission have both had scandal. The Horse Racing Commission has seen no oversight or scrutiny that might generate scandal.
A 2007 U.S. Department of the Interior audit report said federal officials were “troubled to find that the Lottery has virtually no control over lottery operations, a condition that raises serious concerns about whether your government is receiving all the VLT-related revenues and taxes to which it is entitled” and that “unrealized revenues may be in the millions,” but they cannot know for sure because the lottery “failed to obtain and maintain the financial documents necessary to make such a determination.”
Apparently little had changed by 2016. A review for V.I. Lottery by the Bert Smith & Co. accounting firm in 2016 said in part that Lottery does not have any procedures in place for auditing or reviewing the contractor’s accounting records.
The Casino Control Commission is still in the midst of a scandal involving poor record keeping and oversight of its own spending. And it is behind in paying its basic bills, like rent on its offices.
V.I. laws governing slot machine gambling seem to conflict with reality on the ground
For years, Southland Gaming, the company operating “VLTs” on St. Thomas, insisted there was a big distinction between their machines that let users put in money, watch flashing lights and see if they win or lose money, and “slot machines” that let users put in money, watch flashing lights and see if they win or lose money. Maintaining that fiction was critical to the company because slot machines are casino gambling, which was illegal on St. Thomas. That played a role in a lawsuit by the V.I. government over Southland’s contract to put gambling machines in St. Thomas bars.
But when the Legislature changed V.I. law to allow slot machines at the horse track on St. Thomas, suddenly the company flip-flopped:
“A slot machine and VLT are virtually the same machines, certified by the same labs against the same standards,” Southland Gaming Vice President Shaine Gaspard testified during hearings on expanding racetrack slot machines in the fall of 2016.
Looking at the Casino Control Act, it appears V.I. law makes no distinction between a “lottery” machine and a slot machine. The act defines the types of games controlled by the act as “(a)ny banking or percentage game located within the casino or simulcasting facility played with cards, dice or any electronic, electrical, or mechanical device or machine for money, property, or any representative of value.”
When the Legislature adopted the contract with Southland Gaming for video lottery slot machines, it put a couple lines in the Casino Control Act exempting “video lottery” from the act without actually defining them in law or explaining how they differ from all other slot machines. And as Southland Gaming now argues there is no meaningful difference.
Consolidate oversight now
Reforming the law and consolidating all gambling oversight under a single entity would bring coherence and transparency to gambling regulation and probably save some money. Clarifying what the law actually allows so the text of the law conforms to the actual practices in the territory can only be good. It may not save the large sums needed to help close the deficit but it would be a small move in a progressive direction.
Over the past decade, senators have periodically discussed consolidating lottery and casino gaming but have not moved legislation to do so. The time is ripe.
Senate President Kenneth Gittens has shown an interest in the past in consolidating and reforming V.I. government and consolidating redundant bureaucracies. It was his legislation that unified the two boards of elections into a single board. Sadly, the unified board’s first move was to create internal district committees, basically neutering the reform and preserving the V.I. tradition of litigious chaos in its elections. But Gittens made the move. If he has the heart and drive to reform V.I. gambling oversight too, that would spark joy.