Sept. 24, 2003 – "Win $500 on bingo!" and "Play roulette, video poker in the comfort of your own home!" are slogans that may soon pop up on your computer screen from Web sites created in the Virgin Islands.
The company that lobbied the Legislature to pass a law legalizing Internet gambling in the territory has passed a major hurdle in getting its operation up and running on St. Croix.
USVI Host Inc., a company formed by St. Thomas businessmen Nick Pourzal and Tom Colameco and their partner Robert Schick, received approval on Tuesday to begin a Web hosting facility for Internet gambling in the territory. With Pourzal and Colameco present, the Casino Control Commission unanimously approved the license after a six-month background investigation into the company, formerly called VI Technological Initiative, LLP.
"The company is now licensed and eligible to provide a server and host facilities for operators that want to provide Internet gaming," commission executive director Shawna Richards said on Wednesday. USVI Host as "master franchiser" will now begin soliciting online gambling operators to come into the territory. These operators also will have to pass background checks, she said.
Every license applicant is investigated by the V.I. Justice Department's Gaming Enforcement Division "to determine their character, financial integrity, and financial resources," Richards said. After reviewing their tax and financial records, the government conducts a criminal investigation of the principals, she said.
Pourzal and Colameco, longtime associates at Frenchman's Reef Beach Resort and partners in the former Club Z nightclub on St. Thomas, passed the check, as did Schick, who did not attend Tuesday's meeting.
USVI Host, based on St. Croix, will not actually operate any online gambling sites; it will provide a secure Internet server and Web-hosting facility for site operators. The company must post a surety bond of $100,000 with the V.I. government. The operators will have to pay the government a nonrefundable application fee of $4,000 that's good for two years and a licensing fee of $2,000.
Only after background clearance and payment of fees will the operators be able to set up Web sites aimed at enticing gamblers to place their bets with charge cards on such games as Keno, blackjack and poker.
The first challenge?
At Tuesday's meeting, Colameco said online gambling is a $4 billion business that is legal in more than 60 jurisdictions. However, the United States is not one of them.
In fact, the V.I. government would be the first U.S. jurisdiction to challenge the federal Justice Department's legal opinion that online gambling violates the Interstate Wire Act. Two bills before Congress would codify that interpretation of the law by prohibiting the use of charge cards for online gambling. (See "Congress could thwart V.I. online gaming plans".)
Imelda Dizon, who was attending her last meeting as a member of the Casino Control Commission, said Pourzal had told the commission that a bill pending in Congress would exempt the Virgin Islands from any law banning Internet gambling.
"I haven't seen the bill, but he said the territory would be exempt from any U.S. law," Dizon said. However, a thorough search of congressional legislation found no such bill, and Richards said she was unaware of any such legislation.
In monitoring mode
Delegate Donna M. Christensen has not introduced any such bill. "We have not sponsored any legislation to exempt the Virgin Islands," her aide Brian Modeste said, "although we've been asked by the V.I. government in the past." He added: "We will continue to monitor the issue."
"Monitoring" the issue seems to be the commission's approach, as well, with members acknowledging that they may be running counter to the wishes of the federal government, at least those of the U.S. Justice Department.
"We're closely monitoring what's happening on the federal level," Richards said. "There are different schools of thought over the legality of Internet gaming, so we are proceeding cautiously."
In 2001, Sen. Almando "Rocky" Liburd and then-Sen. Vargrave Richards sponsored the bill making Internet gambling legal in the territory. Both said such a move would provide economic relief to the territory, and Richards said it would put the Virgin Islands "on the cutting edge of Internet gaming." With enactment of the bill, the Legislature directed the Casino Control Commission to develop rules and procedures for the operation of Internet gaming in the territory.
Critics attacked the bill as being special-interest legislation for the master franchisers, who lobbied senators to pass the law. The measure exempts the master franchisers from V.I. taxes but requires them to provide free Internet access to the territory's public schools.
Asked what the Casino Control Commission will do if Congress should ban online gambling in the U.S. and its territories, Richards responded: "We will cross that bridge when we come to it."
Dizon said she voted for granting the license reluctantly. "I personally feel we should put a moratorium on it until it is definitively found to be legal in the United States," she said. "Right now, it's a cloudy issue."
In an interview last month, Eileen Petersen, the commission chair, said the matter might wind up in federal court. "I'm of the firm opinion that the federal government would not hesitate to make an example of the V.I. government over this issue," she said.
Some of the rules approved by the commission governing Internet gambling may be difficult to enforce. One forbids anyone under the age of 21 from gambling online. But no one can ensure that a minor will not use a parent's charge card to go on a gaming spree in cyberspace. Another forbids individuals from gambling on the V.I.-hosted sites if they live in places where Internet gambling is illegal — which at this point includes anywhere in the United States.
Although the state of Nevada has passed legislation to that of the Virgin Islands, the state has not taken steps to implement it because of the uncertainly over what Congress will do, Petersen noted.
"Most people that play these games are Americans," Dizon said. "VI Host assured us there is identification software out there from Australia and Africa that would be critical to ensuring the rules are adhered to. But this whole thing is very difficult to regulate. I think it can be regulated, but the question is: At what cost?"
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