After 12 years of marking time in legal limbo, the United States Virgin Islands Attorney General Vincent Frazer approved the Virgin Islands Internet Gaming and Internet Gambling Act.

Even with the news of potential new business and more jobs for the Territory, some senators are now seeking to amend the 2001 law which created the plan for interstate gambling in the U.S. Virgin Islands. The senators who are planning to amend the law say it is full of conflicts of interest and the Department of Justice gives preferential treatment to two companies named in the legislation as master service providers.

This multi-billion dollar a year industry has been foreclosed from the Territory, when corporate taxes or taxes on winnings would add millions to the government’s coffers. Over 1,700 offshore websites facilitate more than $4 billion in bets annually around the world, and estimates are that $30 million could potentially go to the General Fund in the Territory. 

Frazer’s cautionary approval recalled the history of the United States Justice Department’s vacillation over the legality of online games of chance, such as poker and blackjack, and the challenges presented through the courts by states trying to defend their gaming legislation. The Justice Department held for many years that internet gaming was a violation of the Interstate Wire Act of 1961(18 U.S.C. 1084).  To that end, in 2006, the “Unlawful Internet Gambling and Enforcement Act”(31 U.S.C. 5361-5366) outlawed this activity. However, five years later, the Justice Department did an about face by issuing an opinion that the Wire Act only applied to online sports betting, which is illegal. 
 
As an example, in Antigua and Barbuda, which was a world leader in online gaming in the mid-1990s, the Internet gaming industry deteriorated from $2.4 billion in revenue and occupying 59% of the world market share in 2001 to just $948 million in 2007 and only 7% market share. This decline was attributed to the U.S. government’s refusal to recognize the legality of offshore processing of payments. Antigua and Barbuda has yet to recover its profitability, according to a report in Forbes magazine. 
 
The Casino Control Commission Acting Chairwoman Violet Ann Golden applauded Frazer’s opinion as a major move toward the Territory realizing millions of dollars in revenue from the taxation and regulation of Internet gaming. According to a recent article in the Virgin Islands Daily News, the Government of the Virgin Islands’ General Fund would receive money from an off-the-top tax of 1.5 to 2% to master service providers and a 10% tax on individual winnings, plus whatever taxes the Territory chose to place on income earned from territorial betters. For instance, New Jersey’s tax revenues from in-state games amount to roughly $30 million annually, Golden said. Although the Virgin Islands’ profits are expected to be less, she said it would make a significant economic impact. 
 
In contrast, Senator Nereida Rivera-O’Reilly said she believes the companies listed as master service providers in the Act should not have been appointed without some type of more open selection process. The two companies named as the exclusive right holders stand to make millions. Rivera-O’Reilly plans to introduce an amendment would open up the opportunity to a competitive bid process for anyone who passes the vetting of the Casino Control Commission. This procedure would further support and protect the integrity of local legislation and the economic benefits from Internet gaming, she said. 
 
U.S. Virgin Islands attorney Tom Bolt of the law firm of BoltNagi was responsible for much of the law’s language when first proposed in 2001. He believes that it is a solid piece of legislation, "This Act will serve as a lightening rod to attract companies and dollars to the U.S. Virgin Islands.   I look forward to seeing businesses relocate to our Territory and more employment for our people.”
 
Tom Bolt welcomes your questions about this gaming law and about incorporating your business in the United States Virgin Islands. The law firm BoltNagi PC works with businesses in creation, mergers, sales, and other operational matters.  BoltNagi PC, one of the largest firms in the United States Virgin Islands, has attorneys with the skills and business experience to assist your company—whether you are in retail, import/export, financial services, or any other industry. Contact Tom and the attorneys at BoltNagi PC today to discuss your business concerns in the United States Virgin Islands.