Video Lottery Terminals Benefit Businesses and Government Coffers

Video lottery terminals (VLTs) line a wall at Polli’s restaurant at the Lumberyard Complex in Cruz Bay. VLTs are gaining in popularity and numbers on St. John.

The rising popularity of gaming – and video lottery terminals (VLTs) in particular – is spreading across St. John and helping to boost individual business profits and fill V.I. government coffers.

Since VLTs were first allowed in the St. Thomas/St. John district two years ago, about 40 have popped up across Love City, and more could be coming in the future, according to Paul Fleming, executive director of the V.I. Lottery Commission which regulates the machines.

1,000 Terminals Allowed in District
The St. Thomas/St. John district is allowed 1,000 terminals in total, but there are currently only about 350. Four establishments in Love City have machines – Polli’s, Cap’s Place, Larry’s Landing and Captain’s Corner – and a maximum of 10 VLTs are allowed at each site.

VLTs are not allowed on St. Croix because casino legislation protects gaming interests on the big island.

In order to have a VLT in an establishment, a contractor applies to the V.I. Lottery Commission. If approved, the contractor then deals with Southland Gaming, which manages the machines for the government, Fleming explained.

Education Initiative Fund Benefits
A portion of the revenues generated by VLTs goes to the General Fund and a portion of that is then appropriated to the Education Initiative Fund and the Pharmaceutical Fund, according to Fleming.

“The education fund was established in order to aid and help support mandated programs like text books and the People with Disabilities Special Fund,” he said. “Revenues also support the Summer Employment for the Youth and the Pharmaceutical Fund for seniors.”

The Education Initiative Fund was established in 1995 to cover basic school costs, according to the V.I. Office of Inspector General, who performed an audit on the fund in 2003.

The audit determined that for fiscal years 2000 and 2001, the funds were released by the Office of Management and Budget later than the mandated 15 days after the start of the school year.

The audit also disclosed that some schools amount of the Initiative Funds they were allotted each fiscal year.”

“In 1995, the V.I. Legislature passed Act 6088 which created the Education Initiative Fund,” according to the background section of the audit. “It was created to enable the acquisition of certain items of goods and services that are essential for the routine functioning of the public schools and the public adult education facilities.”

Sliding Scale for Revenues
The amount of money earmarked for the government from the overall revenues generated by VLTs is based on a sliding scale, so the more that a machine generates, the more the government receives, Fleming added.

“The sliding scale is based on the weekly net gain of particular contractors,” he said. “The more that the contractor makes, the more that the government makes because the percentage margin for the contractor diminishes.”

If a machine generates under $300,000, 48.75 percent of the funds goes to the contractor, with the rest set aside for the government. If a VLT generates between $300,000 to $600,000, 44.75 percent is allocated for the contractor, and if a machine generates more than $600,000, 41.5 percent goes to the contractor.

More than $1M for Education Fund
The money raised from VLTs is significant, as more than $1 million was allocated to the Education Initiative Fund last year from VLTs alone, according to Fleming.

“For fiscal year 2005, contributions to funds was divided with 25 percent going to the Education Initiative Fund which amounted to $1,685,097.43,” he said. “Fifteen percent of the revenues went to the Pharmaceutical Fund which amounted to $854,126.20 and an additional $326,744.96 went to the General Fund.”

VLTs are a boost to the economy and the government’s coffers, according to Fleming.

Boost to Economy and Special Funds
“In my opinion, it is generating a great deal of revenue to support the programs that it is supposed to,” he said. “The overall gaming industry is good for the government because it is a compliment. VLTs compliment the traditional games, but they are also competitive in themselves.”

The lottery commission is dedicated to responsible gaming, Fleming added.

“We are making sure that there is responsible gaming advertising to make VLTs more credible,” he said. “Although we manage the industry, the government regulates the games.”

Responsible Gaming Regulations
“I feel that consideration must be given to the participants in the game, and that is where regulations come in,” Fleming continued. “To make sure that people need to be 18 and over and make sure that they are aware of the positive and negative impacts of gaming.”

The V.I. Lottery Commission is part of the Gaming Alliance, which aims to inform the public how to play responsibly, Fleming explained.

“We educate the public about signs of compulsive gaming and provide programs to address these concerns as they develop,” he said.

Fleming has been executive director of the V.I. Lottery Commission since 2003, and has already restructured the system. “The V.I. Lottery system didn’t turn a profit for 10 or 15 years,” he said. “I have complied with turning around the agency and making it profitable for the government.”