Video Lottery Terminal

Video Lottery Terminal operator Southland Gaming and V.I. government are at odds over a contract to install gambling machines at the St. Thomas horse racing track.

Settlement negotiations between the V.I. government and Video Lottery Terminal operator Southland Gaming appear to have broken down, and attorneys for both parties have asked a federal judge to decide the dispute over a contract to install gambling machines at the St. Thomas horse racing track.

Lawyers for each side filed motions Friday requesting summary judgement, meaning they believe there is enough evidence for a judge to rule in their favor, without holding a trial.

In her motion, Assistant V.I. Attorney General Ariel Smith argued that the Virgin Islands government did enter an exclusive contract with Southland in 2003 to install VLTs at the Clinton Phipps track on St. Thomas — but it expired in 2008 and “the purported 2013 amendment is not valid. Yet, even if it were deemed valid, the exclusivity provision did not carry over.”

Southland’s attorney, Christopher Kroblin, argued that the government did breach its exclusive agreement with Southland when it entered into a 2016 contract with VIGL to operate both the St. Thomas and St. Croix tracks, and install slot machines at both facilities.

Southland originally filed suit in Dec. 2018, and the competing motions for summary judgement are the latest development in a case that is preventing the government from moving forward with plans to renovate both tracks, which have long suffered from neglect and were seriously damaged in the 2017 hurricanes.

Southland’s contract granted the company permission to operate VLTs under the supervision of the V.I. Lottery, while slot machines operated on St. Croix are overseen by the Casino Control Commission.

Kroblin argued in Friday’s motion that in the enabling legislation passed in 2016, “the government attempted to unilaterally rewrite Southland’s contract by restricting where Southland could operate and legislatively redefining ‘slot machine’ so that it would “not include a video lottery terminal” in order to defeat Southland’s exclusivity. As the court already recognized, such sleight of hand is not allowed.”

Former District Court Judge Curtis Gomez determined that VLTs and slot machines were functionally equivalent gambling machines, regardless of what the government chose to call them, and ruled in favor of Southland.

But current Judge Robert Molloy replaced Gomez in April before the case could be resolved, and vacated the previous order.

In September, Molloy set a new trial date and encouraged the parties to continue negotiating on a possible settlement agreement, which has not come to fruition.

Legislation that enabled former Gov. Kenneth Mapp to sign the VIGL contract is “void and unenforceable” because it violated Southland’s constitutional rights under the Contracts Clause, Kroblin argued, and he asked Molloy to permanently enjoin the government from “allowing VIGL to operate an entertainment center with 200 slot machines in St. Thomas for the duration of Southland’s contract.”

During his 2016 State of the Territory Address, Mapp said he was proposing the renovation project “to reposition horse racing in the Territory as a centerpiece of sports tourism in this region.”

But in her motion Friday, Smith argued that Southland’s contract is void because horse racing is not a tourist activity.

“Contrary to Southland’s assertions, its exclusivity to operate VLTs is limited to its operations on behalf of the Virgin Islands Lottery in approved tourist locations in the St. Thomas-St. John District,” Smith wrote.

The St. Thomas racetrack “has not been designated as a tourist destination,” Smith wrote. “As such, even if the 2003 exclusivity provision was integrated into the purported 2013 amendment, it did not extend to non-tourist destinations such as the Clinton Phipps Racetrack. Thus, Southland’s exclusivity argument must fail.”

Molloy has not yet ruled on either motion. The trial date is currently set for April 12.

— Contact Suzanne Carlson at 340-714-9122 or email scarlson@dailynews.vi.