Governor Albert Bryan Jr. has submitted another revised horse racing agreement to the 36th Legislature, introducing additional restrictions on video lottery operations, mandatory construction inspections and a minimum $15 million appraised investment value for the rebuilt St. Croix racetrack as he seeks legislative approval of a proposed $27 million private investment in the territory's horse racing industry.
The latest submission, transmitted Wednesday to Senate President Milton Potter, includes a substitute to Bill No. 36-0313 and renegotiated agreements with Southland Gaming of the Virgin Islands (SGVI). It follows months of negotiations and legislative disagreements that have prevented the agreement from advancing, leaving the Randall “Doc” James Racetrack on St. Croix closed more than nine years after Hurricanes Irma and Maria devastated the facility in September 2017.
Under the proposal, SGVI would invest approximately $27 million of its own funds to reconstruct the St. Croix racetrack, make additional improvements to the Clinton E. Phipps Racetrack on St. Thomas, develop additional gaming facilities on St. Thomas and promote racing events at both tracks.
Among the latest revisions is a requirement that the completed Randall “Doc” James Racetrack have a minimum appraised investment value of $15 million. The agreement would also require periodic government inspections during construction, adding oversight measures intended to ensure the facility is built according to the approved plans.
The revised agreements also address one of the most contentious issues raised by lawmakers: the extent of Southland's exclusive rights to operate electronic gaming devices.
According to Government House, the new version contains revised exclusivity language under the Video Lottery Services Agreement and clearer restrictions governing video lottery terminals at the St. Croix racetrack.
The substitute legislation also restores provisions that the administration said were omitted from the version currently before lawmakers, including statutory authorization for video lottery operations at the St. Croix facility, clarification of enforcement responsibilities for the respective horse racing commissions and amendments reconciling existing casino laws with the proposed agreements.
The latest changes follow an October 14 meeting involving Governor Bryan, Senate President Potter, Senate Committee on Budget, Appropriations and Finance Chairman Novelle Francis Jr. and other lawmakers to address unresolved concerns surrounding the agreement.
“Over the last several months, we have met with all of the stakeholders, listened carefully to their concerns and incorporated all of the recommended revisions into these proposed agreements,” Mr. Bryan said.
“We have worked with our horsemen, our legislators and our private sector partners to get to this point. We have negotiated in good faith, made the necessary adjustments and addressed the issues that were raised. Now it is time to move forward and deliver on our commitment to restore horse racing in both districts.”
The negotiations became increasingly contentious in August, when the Legislature declined to take a final vote on the Southland agreement after approximately 10 hours of testimony during a Committee of the Whole hearing.
As previously reported by The Consortium, 10 senators voted on August 26 to return Bill 36-0313 to the Committee on Budget, Appropriations and Finance for additional review.
Senate Majority Leader Kurt Vialet, who led the effort, questioned the extensive electronic gaming exclusivity provisions and whether the government had adequately evaluated the financial benefits Southland would receive in exchange for its investment.
“For this body to enter into any agreement with that type of exclusivity, you tying the hands of every other Legislature after this one,” Mr. Vialet said at the time.
He also questioned the lack of sufficient financial analysis to determine what the government would receive under the arrangement.
Governor Bryan responded sharply to the August vote, accusing lawmakers of effectively killing the proposal by returning it to committee rather than approving the agreement.
Mr. Vialet rejected that characterization, maintaining that lawmakers supported restoring horse racing but wanted to address the disputed provisions before committing the government to a long-term agreement.
The latest revisions are intended to resolve those disagreements, according to Government House, although the administration's Wednesday announcement did not provide a detailed comparison of the previous and newly proposed exclusivity provisions.
The revised proposal also retains a partial gross receipts tax exemption for the franchise holder.
Under the arrangement described by Government House, SGVI would pay 25 percent of the gross receipts taxes otherwise due during the first five years following the turnover date. Beginning in the sixth year, the company would pay 50 percent of the taxes otherwise due.
The proposed tax treatment represents a significant concession to the private investor, while preserving a portion of the revenue that would otherwise be exempted.
Earlier revisions submitted in July eliminated a proposed complete gross receipts tax exemption for entertainment activities at the racetracks. Those revisions also required SGVI to remain the promoter of horse racing for at least five years and doubled the St. Thomas-St. John Horsemen Association's share of revenue generated by the Clinton E. Phipps Racetrack's racino from 3 percent to 6 percent.
Government House said Wednesday that the latest changes reflect additional negotiations with the investor and lawmakers, along with revisions intended to correct legislative drafting issues.
The administration also highlighted SGVI's previous investments on St. Thomas, stating that the company completed reconstruction of the Clinton E. Phipps Racetrack and sponsored 12 race days at its own expense.
The situation on St. Croix remains substantially different. The Randall “Doc” James Racetrack has not hosted horse racing since the 2017 hurricanes, and reconstruction of the facility has yet to begin.
“We have spent months working through the details because we understand how important it is to get this right,” Mr. Bryan said. “But we also have to recognize what continued delays mean for our horsemen, our businesses and the families who have been waiting for racing to return.”
The governor said the ongoing closure has deprived horse owners, trainers, jockeys, vendors and other participants of economic opportunities associated with the sport.
“Every month that passes is another month without that economic activity and another missed opportunity to preserve a tradition that means so much to our people,” he stated.
The administration first transmitted the proposed agreements to lawmakers in April and submitted revisions in July following discussions with horsemen's associations, legislators and representatives of Southland Gaming.
The latest submission incorporates changes negotiated after the October 14 meeting, with the administration maintaining that the major issues preventing legislative consideration have now been addressed.
However, the agreements still require approval by the 36th Legislature before they can take effect, and no date for reconstruction of the St. Croix facility has been established under the newly submitted proposal.
“Horse racing is more than a sport in the Virgin Islands. It is part of our heritage, our culture and our economy,” Mr. Bryan said.
“We have done the work, brought the stakeholders to the table and made the changes necessary to reach this point. The opportunity to restore racing in both districts is now before us. I respectfully urge the Legislature to take up this measure in November and help us turn years of discussion and negotiation into real progress for the people of the Virgin Islands.”
