88.6 F
Cruz Bay
Saturday, July 20, 2024


Sept. 3, 2003 – Gambling on the Internet may soon be effectively outlawed in the United States and its territories, but that hasn't stopped the Virgin Islands from going ahead with plans to establish and regulate the controversial industry.
Last month, a U.S. Senate committee passed a bill to ban the use of charge cards for Internet gaming. Such online wagering is the cause of growing debt-collection problems for banks and other credit companies.
Some gamblers are even suing their charge card companies for processing their gaming transactions. In August, a California couple who lost $100,000 gambling online filed a lawsuit against several companies and banks that had issued them cards, claiming the businesses should not have processed the wagers.
Some charge card firms are taking their own steps to thwart such transactions. American Express and Discover prohibit their cardholders from using the cards to gamble online. But federal lawmakers want to go a step further and block all electronic fund transfers for online gambling.
The bill before the Senate, called the Unlawful Internet Gambling Funding Prohibition Act, would ban the use of charge cards and fund transfers for Internet gambling. One of its sponsors, Sen. John Kyl (R-Ariz.), says that online gaming has turned some beginning gamblers into addicts, forcing bankruptcies and even suicides.
Similar legislation overwhelmingly passed the House in June. If the legislation becomes law, operators of Web sites accepting such forms of wagering could face up to five years in prison.
It's not just concern over gambling addiction and debt collection problems that have led Congress to consider action against Internet gambling. Some authorities say that online gaming is a growing means of laundering money. According to Money Laundering Alert, an online newsletter for bankers and law-enforcement officials, Internet gambling "is an excellent method of laundering because transactions are conducted principally through credit or debit cards. The site operators are mostly unregulated offshore firms, which opens the door to laundering and other criminal mischief."
In 1999, a federal court in Cleveland indicted two alleged Mafia members in Ohio on charges of trying to set up an illegal online sports bookmaking operation on St. Kitts.
U.S. Rep. Spencer Bacchus (R-Ala.), a sponsor of the House bill, calls Internet gambling "organized crime." "I'm not crusading against gambling," Bacchus says. "This is a crusade against crime, and the way to stop it is to cut off the money."
Internet gambling has exploded in popularity in a decade, despite an opinion by the U.S. Justice Department that the practice violates the U.S. Wire Act. One industry estimate is that online gaming sites — including sports betting, virtual casinos, bingo and lottery sites — have drawn more than $4 billion a year in wagers ($1 billion without the sports betting).
About 1,800 e-gaming Web sites have cropped up since the early 90s, and most operate offshore, out of the reach of U.S. regulators but to the benefit of the island governments that get a portion of the revenue.
Some V.I. lawmakers wanted the territory to get in on that action, and in 2001 Sen. Almando "Rocky" Liburd and then-Sen. Vargrave Richards sponsored the Internet Gaming Bill, which designated two companies as "master franchisers" to fund and build a data center on St. Croix where Internet gaming firms would house their Web site operations.
The master franchises went to V.I. Technological Initiative LLP, owned by St. Thomas businessmen Nick Pourzal and Tom Colameco, and St. Croix Gaming LLP, headed by St. Croix businessman Paul Arnold and by Bernie Burkholder, a director of Grapetree Shores Inc., which owns the Divi Carina Bay Resort, and chief executive of the parent company of Treasure Bay V.I. Corp., which leases the Divi casino.
The 24th Legislature passed the bill, and Gov. Charles W. Turnbull signed it into law in July 2001. Last November, the Casino Control Commission adopted rules governing Internet gaming. The commission now is conducting a background check of the two companies.
The V.I. law would permit gamblers to place bets by setting up an account on a Web site and paying by charge card, check, wire transfer or money order. But that would be illegal under the bill before Congress, and no effort has been made by the Virgin Islands to have the territory grandfathered in if the federal bill becomes law.
"We don't know how it would affect us at this time," Eileen Petersen, Casino Control Commission chair, said. "Our duty is to make a determination whether or not the bill would adhere to all applicable laws, and that includes both Virgin Islands and federal law."
Petersen said it remains to be seen whether the master franchisers could come up with a method of payment other than charge cards and wire transfers, but she added that the prospects are unlikely.
"We should proceed very cautiously in this," Petersen said. "The climate in the United States is very anti-Internet gaming; so, in a sense, we are going against the tide."
The commission is scheduled to take up the issue of Internet gambling at its Sept. 23 meeting on St. Croix.

Back Talk

Share your reaction to this news with other Source readers. Please include headline, your name, and the city and state/country or island where you reside.

Publisher's note : Like the St. Croix Source now? Find out how you can love us twice as much — and show your support for the islands' free and independent news voice … click here.

Print Friendly, PDF & Email
Keeping our community informed is our top priority.
If you have a news tip to share, please call or text us at 340-228-8784.

Support local + independent journalism in the U.S. Virgin Islands

Unlike many news organizations, we haven't put up a paywall – we want to keep our journalism as accessible as we can. Our independent journalism costs time, money and hard work to keep you informed, but we do it because we believe that it matters. We know that informed communities are empowered ones. If you appreciate our reporting and want to help make our future more secure, please consider donating.