St. Croix News: New Horseracing Track & Casino planned for USVI
Governor Mapp has announced a partnership with VIGL Operations LLC, a Virgin Islands firm and operator of the Caravelle Hotel and Casino in Christiansted. VIGL’s parent company plans, designs, and operates casinos and other entertainment venues in Illinois and Louisiana. VIGL has enlisted a team of highly credentialed and experienced horse racing and betting experts to ensure that race tracks in St Thomas and St Croix are renovated and operated to meet the highest standards of the racing industry, which will purportedly add revenue into the territory’s coffers through taxes and such.
The plan, the Governor said, aims to unify both islands’ horse racing communities, including combining the horse racing commission into one, with four members from St. Croix, four from the St. Thomas – St. John district, and the ninth member being the commissioner of Sports, Parks and Recreation. Commission members would be selected by the Governor.
The new unified commission comes as part of Mapp’s proposed legislation that would amend the Horse Racing Assistance Act of 2010 to give the industry more economic value, and make it “a source of pride to the people and to the government.” The bill would also increase casino fees from 19 1/4 to 25 percent, which would be paid into a separate fund dubbed the “Horse Racetrack Casino Fund”.
The Deal
The agreement sees VIGL leasing both racetracks for a period of 20 years. It requires a large upfront investment of not less than $27 million, of which $14 million will be used to rebuild the St. Croix facility, and $12 million for the St. Thomas race track. While VIGL will be responsible for purchasing an additional 12 acres of land (costing $2 million) in St. Thomas, the government, once the lease is up, retains the property. Another $1 million will be held in a reserve fund.
Taxes, Fees and Payments
VIGL must pay full taxes and all permits and other fees. VIGL is also obligated to pay statutory casino fees, which will be increased under the amended legislation that Mr. Mapp will present to the 31st Legislature.
VIGL must also make a variety of payments for the duration of its 20-year lease, to include an annual license fee of $20,000, franchise fees that begin at $10,000 for the first three years and increase to $25,000 for the fifth and sixth years, and to $50,000 annually thereafter. The firm will also pay maintenance fees of 4 percent of annual racing gross revenues, and under separate lease agreements, rents of $108,000 annually for the St. Croix race track, and $24,000 annual for the St. Thomas race track.
Racing and Purse Requirements
For the first three years, VIGL must host a minimum of 18 live races, and a minimum of a combined 24 live races thereafter between the St. Thomas and St. Croix facilities. The purse for each race day at each track will be at least $100,000, making for a combined minimum of $200,000 each race day, which totals to a minimum of $2 million annually for years 1-3; $2.5 million annually for years 4-6; and $3 million annually thereafter. Additionally, whenever the purse exceeds the minimum amount, VIGL must increase the following year’s purse by the excess. For example, the minimum purse amount for years 1-3 is $2 million. If the purse reaches $2.6 million, the following year’s purse must be increased by $600,000.
Charitable Donations
VIGL must make three $1,000 donations for the first three years on each race day to select charitable organizations; an annual total of $54,000. The total increases to $74,000 in the fourth year. Thereafter, the minimum charitable donations will rise by 10 percent, and will be capped at $150,000 annually.
Termination of Traxco Lease
Traxco, currently enthralled in litigation with the government, has arrived to an agreement with the government and VIGL, which will see Traxco renouncing any claim to operate the St. Croix racetrack, in exchange for the right, through its parent company Treasure Bay VI Corp., to operate a racing on the St. Croix premises until VIGL executes its agreement with the government. The agreement also sees a reduction in Traxco’s gross receipt taxes from 12 percent to 8 percent, and Traxco will receive what the agreement describes as “certain payments” from VIGL.