Southland Gaming of the Virgin Islands is challenging government claims that the company owes millions in back taxes and video lottery terminal revenues, and said in a court motion that neither issue is "the subject of an actual controversy."
The government filed suit against Southland last month, capping a longstanding dispute over what officials have called a "flawed contract" between the two entities. At a Senate meeting in April, Deputy Solicitor General Paul Paquin says the 2003 contract with Southland — the company in charge of VLT operations in the territory — says what percentage of VLT revenues goes to the company, but does not say what percentage is remitted to the government.
Former Lottery head Lenyse Shomo has also said that there’s no way to know what the company is collecting since the central hub of VLT operations is located within Southland Gaming. The lawsuit further alleges that Southland has been paying its retailers before paying the government its fair share of net VLT revenues. That 22 percent is supposed to come out of Southland’s share of net gaming proceeds, and not the government’s, according to the government’s original complaint.
Also in dispute is a master licensing agreement that exempts Southland from paying gross receipts taxes. Southland officials denied most of the government’s claims at a Senate hearing late last month, saying they were "surprised" that the lawsuit was filed. Southland was in discussions with the Bureau of Internal Revenue over the gross receipts tax issue, according to Southland principal Robert Huckabee III, who added during the June meeting that Southland also does not owe the government $20 million.
Southland filed a motion to dismiss the government’s suit this week, saying that both points are moot.
"There is no case or controversy regarding the gross receipts tax issue because the Internal Revenue Bureau … has not notified Southland that it owes any gross receipts taxes, has not assessed Southland with any delinquent taxes and has not authorized any collection action," the motion states. "There is no case or controversy regarding the contract issue because the Lottery has already reversed a prior disagreement with Southland regarding the allocation of net game revenue. Since then, both parties have performed under their contract without any objection or notification of breach."
The government’s complaint also "interferes with and usurps" the authority of both the IRB and the Lottery, according to the motion. Furthermore, the Superior Court lacks jurisdiction over the matter, the motion says.
