Nov. 26, 2002 — The Casino Control Commission adopted Internet gaming rules and regulations on Monday that will make it possible for companies to host gambling Web sites from St. Croix — a move that could earn the territory millions of dollars and put the island on the map as one of the first jurisdictions in the United States to allow online waging.
The act paving the way for betting on the Internet, passed by the Legislature in August 2001, included a stipulation that the commission have those rules in place within a year.
But the commission chair, Eileen Petersen, said she was concerned about the legislation from the beginning. She said few senators showed any interest in a conference the commission held at the first buzz about Internet gaming, almost two years ago, when it brought some of the nation's top consultants in that arena to St. Croix.
"How can we expect them to write a good law when they didn't show interest in [the conference]?" Petersen said. "We were snubbed by 13 out of 15 senators." She said only Sen. Adelbert Bryan was present for the whole presentation, while Sen. Alicia "Chucky" Hansen sent a representative. Later, Petersen added that Sens. Lorraine Berry and Almando "Rocky" Liburd made brief appearances.
Petersen said she also is concerned that the Virgin Islands does not have its own expert adviser on Internet gaming. The regulations adopted here will likely serve as a model for other jurisdictions, she said.
The legality of Internet gaming is a national issue. The Bush administration released a letter upholding a Clinton administration opinion that Internet casino gambling is illegal under existing federal law.
However, Petersen said that Attorney General Iver Stridiron issued an opinion finding online gambling legal as long as bets are placed in areas where gambling is lawful and provided that participants are of legal age. "The attorney general asked that we be cautiously aware of the fertile ground for fraud and abuse by those with gambling problems," Petersen said.
V.I. Solicitor General Frederick Handleman has said the ambiguity of federal laws on Internet gambling could place the Virgin Islands in a position to be "grandfathered in" if it legalized online gaming and the U.S. government later declared such gambling illegal.
In the past, much of the debate about the legality of Internet gambling hinged on the Wire Act of 1960, which prohibits the use of "a wire communication facility for the transmission in interstate or foreign commerce of bets or wagers or information assisting in the placing of bets or wagers on any sporting event or contest."
Petersen noted that the 5th Circuit Court of Appeals recently ruled that online gambling does not violate the Wire Act where no sports bets are involved. "This further strengthens the position by the Legislature that we should proceed," she said.
But commission member Imelda Dizon repeated her concerns expressed earlier that Internet gaming has not been determined legal under federal or other applicable laws. "I am extremely uncomfortable with the working rules and regulations," she said, "but our hands are tied. The commission has made efforts to protect the government and community, but there are limits to what we can do."
Dizon said there are insufficient assurances that the government will benefit as much as the private franchisers if online gambling comes to the territory. One provision of the gaming bill calls for companies to hook up public schools to the Internet through a 0.5 percent gross revenue surcharge. According to some revenue projections, she said, that would work out to $2.50 per student for every $1 million earned.
Internet gambling sites, including sports wagering, casino, bingo and lottery sites, are projected to attract $6 billion in bets next year, up from $4.1 billion this year and $3 billion last year, according to recently revised figures from the industry research firm Christiansen Capital Advisers. Between 50 percent and 65 percent of that total amount, or $2.1 billion to $2.7 billion, is wagered from the United States.
In other business, Petersen said the commission has issued a warning about local politicians' involvement in efforts by investors to obtain casino licenses.
"Perhaps we should meet with leaders to see if we can answer some of their concerns so they don't feel they have to independently deal with licensees," she said. She added that licensees risk losing their status if the practice continues.
"I directed that comment to kind of educate our incoming senators," Petersen said after the meeting. She said the commission frowns on lawmakers giving an impression to investors of being able to influence the agency's decision on whether to grant a casino license. "We don't need any appearance of undue influence," she said.
Besides Divi Carina Bay, which is the only casino in operation on St. Croix, two others that are under development, Golden Gaming and Robin Bay, hold licenses. Both are slated to begin operations within the next year.
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