ST. CROIX — The Virgin Islands government filed a civil complaint today in Superior Court seeking damages and expedited declaratory relief against VIGL Operations LLC for failure to develop the Randall “Doc” James Racetrack in accordance with a 2016 franchise agreement that was amended in 2021 and 2022.
The government is asking the court to revoke and terminate the franchise agreement and the sublease agreement it has with VIGL Operations, claiming VIGL has failed to meet numerous material obligations to include 40% completion by July 6, 2023.
Governor Albert Bryan Jr. said during his State of the Territory Address tonight that it should be evident to all that VIGL does not have the wherewithal, nor the resources to rebuild the racetrack before indicating the DOJ filed a lawsuit against the company for breach of contract. Bryan, who noted that $12 million is available, said the government can rebuild the racetrack and restore horse racing on St. Croix.
Government House also issued a statement tonight announcing that the governor authorized legal action against VIGL for failure to rebuild the racetrack and resume horse racing, noting no meaningful progress despite repeated extensions and concessions and a claim by VIGL that the company has spent $11 million on the project, with $2 million going toward architecture and engineering in the past two years. The governor said it is “unacceptable” that the people of St. Croix have nothing to show after eight years of delays and missed commitments.
“What we’re witnessing is a betrayal of trust,” Bryan said in a statement. “The government of the Virgin Islands is fully prepared to take the necessary steps to ensure the Randall ‘Doc’ James Racetrack is rebuilt and that horse racing returns to St. Croix. If VIGL cannot fulfill its obligations, we will move forward with a solution that puts the people of this territory first.”
The lawsuit claims VIGL failed to provide an $8 million performance bond or letter of credit to guarantee performance of its obligations, failed to timely break ground, failed to make the $15 million initial investment required, failed to make timely progress, and failed to promptly apply for all necessary permits. The government is asking the court to immediately remove VIGL from the racetrack property and transfer all permits the company obtained in support of the franchise agreement and the contemplated improvements to the government or its designee.
The government entered into a franchise agreement with VIGL Operations on October 27, 2016 that allowed for the construction and operation of a racetrack casino, or racino, on St. Croix and St. Thomas that was approved on December 1, 2016 by then-Governor Kenneth Mapp along with leases for the St. Croix racetrack and the Clinton E. Phipps Racetrack on St. Thomas, according to the lawsuit. The sublease for the St. Croix racetrack was mutually dependent with the franchise agreement, so a breach of the franchise agreement is equally a breach of the sublease agreement.
The government and VIGL amended the franchise agreement on July 7, 2021 to separate the Randall “Doc” James Racetrack obligations from the St. Thomas racetrack to allow VIGL to move forward with the St. Croix racetrack improvements following a dispute and litigation involving Southland Gaming relating to the St. Thomas racetrack. The franchise agreement was amended again on September 15, 2022 after settlement with Southland Gaming. VIGL relinquished the St. Thomas racetrack obligation altogether.
The second amended franchise agreement included deadlines for filing of permits to ensure the project would move forward in a timely manner. The governor committed to provide VIGL $5 million for specific projects in the development of the St. Croix racetrack as approved by the Virgin Islands Department of Sports, Parks and Recreation. The funds could only be disbursed 90 days after the commencement of the development/groundbreaking and for specific projects approved by DSPR.
The government claims VIGL failed to timely apply for the modification of its Coastal Zone Management permit, failed to meet its groundbreaking deadline, and failed to timely file for all the building permits with the Virgin Islands Department of Planning and Natural Resources.
After missing its groundbreaking deadline of September 28, 2023, VIGL notified the government it was awaiting one additional permit to break ground but also alleged that it needed a permit from the Virgin Islands Casino Control Commission prior to meeting any of the deadlines. The government objected to VIGL’s argument but informally declined to take enforcement action at that time. The CCC subsequently approved VIGL’s license to operate a casino at the racetrack on April 18, 2024.
The government sent VIGL a notice to cure on May 28, 2024, advising the company of four critical defaults of the agreement — violation of the bond requirement, failure to timely break ground, failure to make initial investment, and failure to timely file for all necessary permits, according to the lawsuit. The franchise agreement allowed for the government to request the Horse Racing Commission set a hearing to determine sanctions if VIGL failed to cure any violation within 30 days. VIGL did not respond, so the government filed a request for a hearing with the Horse Racing Commission on June 28, 2024, followed by a second request for a hearing on September 13, 2024. The meeting is scheduled for February 27.
Given the Horse Racing Commission’s excessive delay, the government seeks expedited relief from the court. VIGL has yet to cure any of the defaults identified in the May 28, 2024 notice to cure. No racetrack or casino has been built on the grounds of the Randall “Doc” James Racetrack.
The government requested to be awarded liquidated damages of $1,500 per day for each violation set forth in its complaint, the reasonable value of its attorney’s fees and costs of suit, and such other relief which the court may deem just and proper.
