Feb. 3, 2004 – The chair of the Casino Control Commission, Eileen Petersen, went public Tuesday with a matter she has been addressing behind the scenes for the last month: word from U.S. Attorney David Nissman that he has been approached by the U.S. Justice Department's Criminal Division concerning the issue of Internet gambling in the Virgin Islands.
In a letter dated Jan. 2, Petersen said in a release, Nissman stated that the Justice Department maintains that "the acceptance of wagers by gambling businesses located in the Virgin Islands" from individuals either outside or inside the territory "would violate federal law."
And, Petersen's release continued, "this would also apply to gambling wagers from individuals located within the Virgin Islands that are routed in transmissions outside of the Virgin Islands."
She said Nissman indicated that his office "will have a duty to investigate Internet gaming activity [in the territory] and to initiate prosecutive action, if warranted."
Petersen, a retired Territorial Court judge, said the Casino Control Commission does not agree with the Justice Department's position. It does agree, she said, "with the position taken by the 5th Circuit Court of Appeal that Internet casino-style gaming does not violate the Federal Wire Act when there is no sports betting involved."
The 24th Legislature passed the V.I. Internet Gaming and Gambling Act in 2001. Since that time, Petersen said, the commission "has closely monitored congressional activities that could negatively impact" the V.I. legislation.
In November 2002, the Casino Control Commission adopted Internet gaming rules and regulations to make it possible for companies to host gambling Web sites from St. Croix. (See "Rules adopted for V.I. Internet gambling".)
The commission granted a Master Service Provider license to USVI Host Inc. last September, but Petersen said on Tuesday that it has yet to receive license applications from any Internet game operators. USVI Host is a company formed by St. Thomas businessmen Nick Pourzal and Tom Colameco and a partner, Robert Schick. (See "V.I. firm OK'd to host online gaming operations".)
Colameco in September described online gaming as a $4 billion industry that is legal in 60 countries. However, the United States is not one of them. And the Virgin Islands stands poised to become the first U.S. jurisdiction to challenge the Justice Department's legal opinion that such gambling violates the Wire Act.
Petersen said she sent copies of Nissman's letter to all members of the 25th Legislature "to advise them of the issues raised by the U.S. Department of Justice."
She also stated in the release that there's little the commission can do about the matter because "no funds were appropriated this year for regulation. The license fee structure enacted by the Legislature is totally inadequate to support the regulatory and technical demands of this international gaming industry."
The commission "has always known that Internet gaming would be a massive undertaking with national and international implications," Petersen continued, "but unless there is a commitment to provide financial and human resources, strong support from the Legislature and the administration, and a realistic fee structure, it is unlikely that Internet gaming can become a reality in the Virgin Islands."
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