Virgin Islands 'Getting Closer'

Despite uncertainty in Washington, D.C., the U.S. Virgin Islands this week inched a step closer to becoming the newest licensing jurisdiction for the offshore interactive gaming industry.

"We want to prove to Washington that this can be done the right way."

- Tom Colameco, USVI Technologies Initiative

On Tuesday, officials with the Casino Control Commission granted its first master service provider license to USVIHost. The license means USVIHost can begin recruiting sites to come to the Virgin Islands and develop hosting facilities.

Eileen Peterson, chairman of the Casino Control Commission said the hosting facility would also have to get accreditation from regulators, but USVIHost had taken a huge step in making the territory the newest online gaming jurisdiction.

"We are confident with the company and what they have to offer," she said. "We still have to sign off on any hosting facility they create or any potential licensees they bring in, but we are getting closer."

Peterson wouldn't speculate on a time frame for online gambling in the USVI, but she said the commission would be able to address any possible license applications when USVIHost is ready.

Tom Colameco, the managing partner for USVI Technologies Initiative, the parent company of USVIHost, said nine to 12 months is a reasonable estimation, but something could happen sooner if the right circumstances fell into place.

"We are only going after tier-one operators," he said. "We want to prove to Washington that this can be done the right way."

Peterson said the commission decided to move forward with interactive gaming after studying the issue for two years. She also said the prohibition movement in Washington won't deter them.

"We asked for the attorney general's office to clarify some questions for us a while back and it was determined that our laws and regulations were fully compliant with all applicable federal laws," she said.

To that end, USVI licensees won't be allowed to accept wagers from residents in jurisdictions where online gaming is illegal. The same policy has been followed in the Isle of Man and Alderney and operators in both jurisdictions have found it difficult to compete in the global market with U.S. bettors off limits.

Nevertheless, Peterson said the demand for I-gaming in the USVI is high enough to overcome that challenge.

The question of whether they can succeed under restrictive conditions could be moot, however, if USVI policy is overridden by a new prohibition law in the United States. The letter from the attorney general's office, dated Nov. 15, 2002, states that the USVI could move forward with I-gaming, but pending legislation in Washington could ultimately hamper their efforts.

Colameco is hopeful the movement in the USVI could cause some members of Congress to reevaluate their positions on Internet gambling.

"Our original goal was to be the model for the U.S.," he said. "We want to show them that you can have this and it can be safe and prove that there is no money laundering. We won't do anything, or allow any activity that is in a gray area."

He also said he's confident the United States will eventually look favorably upon a regulatory approach.

"Even if Washington goes through with the prohibition legislation, I think in another three to five years the issue will be resolved and they will open the industry up," he said. "By that time it will take other jurisdictions years to catch up with us."

If Colameco and Peterson have their way, the USVI will become a front-runner for I-gaming companies looking to relocate. Colameco said the USVI offers an unparalleled technology infrastructure because of its ties to the U.S. The North Atlantic Cable (NAC) and the South Atlantic Cable from Global Crossing, which essentially run the Internet for the Western Hemisphere, he pointed out, intersect in the USVI.

"The USVI is the furthest south you can go in the Caribbean and be under a United States flag," he said. "That is an ideal location for Global Crossing, and because of that there is more bandwidth down there than anywhere else in the Western Hemisphere. We have unlimited bandwidth and 10 times what is already available in the Isle of Man or Alderney."

The next step for USVIHost is to find a spot for a co-location facility. Colameco said he and his team are in the process of doing this and that they could have a temporary facility operating within six months if necessary.