July 26, 2001 – Even if Gov. Charles W. Turnbull vetoes legislation passed by the Senate last week allowing video lottery terminals in the territory, the damage is already done with the international gaming community, according to Eileen Petersen, the Casino Control Commission chair.
One investor's representative agreed. One senator didn't.
"Just watch," Petersen said. "In a couple days the international press will pick up on this, and then where will we be? I had high hopes for us."
And, she added, "Who would invest in Internet gambling when our gambling legislation is so unstable?"
"Nonsense," said Sen. David Jones, a long-standing advocate of the video lottery — or "interactive lottery," as he calls it. "If you have big money coming in here, why would you depend on 50,000 people on St. Croix to justify your investments? We can't fill the one thousand rooms that we have."
But Petersen said, "It's about our reputation being put on the line. Major investors won't invest in a community that changes gaming legislation every other month. Passing legislation in the middle of the night is totally improper. It destroys what we have worked so hard to create. It creates a feeling of instability, and that is one thing the gaming industry cannot have."
She continued, "The hotel investors didn't trust us at first. And now, when we have done all the right things and have an excellent reputation, they [the senators] do this just when we are getting the heavyweights."
Jones maintains that VLTs would enhance the V.I. lottery, and that the Lottery Commission should control the games. "It's really low-stakes gaming," he said. "The computers would be hooked up directly to the lottery, and it will be an investment of new employees. It's a different environment, and it's not in direct competition with the casinos."
In fact, he said, "It won't affect them."
However, one heavyweight that is threatening to pull out of the territory after investing heavily in a resort projected ultimately to provide 5,000 jobs is Robin Bay LLC, doing business as Seven Hills Beach Resort and Casino, according to the firm's attorney, Jeffery Moorhead.
"Yesterday was the worst day of my professional life," Moorhead said. "My client called me at 4 a.m. and asked what was going on, and I didn't know about the legislation, myself."
Moorhead said the investors are very upset. "What's disconcerting and very discouraging is to encourage investors with the lure of a casino license, and then allow unregulated video lottery terminals," he said. "You can't encourage multi-million-dollar investors and change the rules midstream."
Moorhead said his client has decided to wait 10 days to see if the governor vetoes the legislation. The resort recently filed its casino application. Application fees are $200,000 for the first two-year license and $175,000 for the one after that.
"They have entered an option to purchase 612 acres a mile west of Divi and put up a 1,500-room hotel, along with several hundred timeshares, shops and a golf course," Moorhead said. "It's a first-class destination resort."
He said the investors want to open a hospitality school with a Johnson and Wales University culinary division to train local residents.
Completion of the new resort would coincide with that of the new Henry E. Rohlsen Airport runway, and marketing would target the South American and European markets.
"What really makes me upset is this is all so underhanded," Moorhead said. "The video lotteries wouldn't provide one hotel room. You'd have kids running down to the gas station spending money they don't have on the VLTs."
Petersen said she hadn't heard anything about the resort's decision but said "they might have been so hurt; that would be their initial reaction."
Moorhead said, "They are investors. They are looking at the bottom line." He is putting his money on a veto by the governor.
Casinos and video lotteries cannot coexist, Petersen maintains. Casinos won't tolerate the video competition, which Sen. Vargrave Richards said Wednesday is considered the "crack cocaine of gambling" by the gaming community.
"I have taken the position that the Legislature doesn't really want hotel growth on St. Croix," Petersen fumed Thursday. "We need an overview of what is happening. The senators don't understand gaming. I have invited them to the office. They don't know the rules and regulations. If they would come by the office and see what it's about, they wouldn't act this way. They don't know the sleepless nights, the sweat and tears of putting things in place, dealing with people all over the world — and getting Wall Street on your side."
Jones said the VLTs would bring an excess of $25 million a year in revenues, and the V.I. Lottery would received $12 million of that. "And the lottery is broke now," he added.
Petersen also took issue with the bill's intent to have the VLTs managed by the Lottery Commission. That body, she said, doesn't have "the checks and balances. We have gaming enforcement checking all the machines used in the casinos here. How many people will be selling these machines? Do they hire a contractor, and the same one who sells it, monitors it?"
She concluded, "This is it for me. I'm that discouraged. This is the signal the Legislature is sending for us to get out. I don't understand it."
With regard to the territory's sole existing casino, the Divi Carina Bay, Petersen said she "wouldn't be surprised if they just said, 'to hell with it.'" Attempts to reach Divi management by telephone Thursday were unsuccessful.
Jones disagrees with Petersen on just about everything except that the territory's economy could use some money. "It's a smokescreen," he said. "How can four or five casinos survive in the V.I.?"
He said the Divi casino isn't making money and its hotel has only a 50 percent occupancy rate. "Even if casinos were built, the V.I. government would have to wait two and a half years to realize direct revenues in terms of taxes," he said.
Jones charged that Petersen "continues to demonize video lottery, and I have serious concerns with that." She "is supposed to regulate the casinos, and she has become an advocate for them," he said. "If she can't regulate it under her commission, she will go to any means to discredit what is being regulated."
He added, "I have a responsibility to look at this in fiscal terms. The casino gaming program will not be compromised in any way."
Richards issued a release Wednesday announcing the passage of the controversial measure as part of the massively amended supplemental appropriations bill. "The long and the short of it," he said Thursday, "is we made a commitment to pass the casino bill and give casinos a certain amount of time to develop hotels and recoup their investments with no other competition. To force this legislation is to undermine the very commitment this government made."
