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Pea — Ea aN i fol ani fh ) — =) a gm, wal V.I. CASINO CONTROL COMMISSION FY 2021 ANNUAL REPORT 2/28/2022 VICCC’S ANNUAL REPORT TABLE OF CONTENTS LETTER TO THE GOVERNOR 1 LETTER TO THE SENATE PRESIDENT 2 THE VIRGIN ISLANDS CASINO CONTROL COMMISSION. 3 FISCAL YEAR 2021 REVENUES 3 BY REVENUE SOURCES 3 CASH FLOW STATEMENTS AS OF SEPTEMBER 30, 2021 4 CASINOS GROSS EARNINGS FOR A FIVE YEAR PERIOD 5 DISASTER RELIEF FUNDING 5 BANK ACCOUNT BALANCES AS OF SEPTEMBER 30, 2021 6 FISCAL YEAR 2021 STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION .......ccccsccsscssssseseeee 7 AN ASSESSMENT OF THE COMMISSION’S FY ‘21 FINANCIAL STANDING 8 FISCAL YEAR 2021 STATEMENT OF NET POSITION 9 ADMINISTRATIVE AND FINANCIAL MEASURES 10 APPENDIX I. DIVISION OF GAMING ENFORCEMENT 12 APPENDIX II. YOUTH PROGRAMS ACCOUNT 15 ifPage VICCC’S ANNUAL REPORT LETTER TO THE GOVERNOR February 28, 2022 Honorable Albert Bryan, Jr. Governor of the Virgin Islands of the United States Office of the Governor Government House, Charlotte Amalie St. Thomas, VI 00802 Dear Governor Bryan: The attached comprises the Virgin Islands Casino Control Commission’s Annual Report as mandated by 32 V.I.C. § 424 which states that, “The Commission shall make to the Governor and the Legislature an annual report of all revenues, expenses and disbursements, and shall include therein such recommendations for changes in this chapter as the Commission deems necessary or desirable.” As such, the enclosed documents report on the financial position of the Commission for Fiscal Year 2021, and our records indicate that this is the Commission’s second issuance of an Annual Report. Submitted to the Governor, as well as the Legislature of the Virgin Islands of the United States for the period of October 1%, 2020 through September 30, 2021 are the following reports: Statements of Net Position, Statements of Revenues, Expenses and Changes in Net Position, Cash Flow Statements and Casinos’ Gross Earnings for a five-year period. The report concludes with the Commission’s accomplishments for the fiscal year, challenges experienced during the fiscal year and the Commission’s goals and objectives for fiscal year 2022. The Commission Members and Staff remain readily available to assist the Executive and Legislative Branches in any attempts to update or implement changes to the existing laws that govern gambling and gaming activities in the Virgin Islands. Sincerely, arvin L. Pickering, Commissioner Usie R. Richards, Commissioner VICCC Chairman and CEO VICCC Vice-Chairman 1|Page VICCC’S ANNUAL REPORT LETTER TO THE SENATE PRESIDENT February 28, 2022 Honorable Donna A. Frett-Gregory President, 34 Legislature of the U.S. Virgin Islands Capitol Building, Charlotte Amalie St. Thomas, VI 00804 Dear Senate President Frett-Gregory: The attached comprises the Virgin Islands Casino Control Commission’s Annual Report as mandated by 32 V.I.C. § 424 which states that, “The Commission shall make to the Governor and the Legislature an annual report of all revenues, expenses and disbursements, and shall include therein such recommendations for changes in this chapter as the Commission deems necessary or desirable.” As such, the enclosed documents report on the financial position of the Commission for Fiscal Year 2021, and our records indicate that this is the Commission’s second issuance of an Annual Report. Submitted to the Governor, as well as the Legislature of the Virgin Islands of the United States for the period of October 15‘, 2020 through September 30%, 2021 are the following reports: Statements of Net Position, Statements of Revenues, Expenses and Changes in Net Position, Cash Flow Statements and Casinos’ Gross Earnings for a five-year period. The report concludes with the Commission’s accomplishments for the fiscal year, challenges experienced during the fiscal year and the Commission’s goals and objectives for fiscal year 2022. The Commission Members and Staff remain readily available to assist the Executive and Legislative Branches in any attempts to update or implement changes to the existing laws that govern gambling and gaming activities in the Virgin Islands. Sincerely, Marvin L. Pickering, Commissioner Usie R. Richards, Commissioner VICCC Chairman and CEO VICCC Vice-Chairman 2|Page VICCC’S ANNUAL REPORT THE VIRGIN ISLANDS CASINO CONTROL COMMISSION The Virgin Islands Casino Control Commission (VICCC) was established by Title 32 Virgin Islands Code Chapter 21, as amended, in November 1995 (Act No. 6069). The Commission is responsible for the regulation of casinos pursuant to the aforementioned Act and subsequently by Act No. 6419, Internet Gaming and Gambling Act; Racinos, pursuant to the Virgin Islands Racing Industry Assistance Act of 2011 (Act No. 7318) and the Casino IV Establishments (Act No. 7702). The VICCC is funded through four (4) different sources: (1) The General Fund for employee salaries and fringe benefits only, (2) A Special Casino Control Commission Checking Account, formerly the Casino Control Revolving Fund pursuant to 32 VIC §514, which was amended by Act 7643. This account is funded in the same manner as the former Revolving Fund, namely by casino and casino employee license fees, fines and other fees imposed by law or through regulation by the Commission, (3) The Casino Revenue Fund pursuant to 32 VIC §517 which is funded by the 12% tax on gross casino revenues. In this regard, the Commission receives a mere 10% of these taxes, with 90% being allocated to other Departments and Agencies of Government, and (4) The Horse Race Track Casino Revenue Fund pursuant to 32 VIC §901 (The Virgin Islands Horse Racing Industry Assistance Act of 2011 (Bill 29-0127; Act 73 18). The collections of these fees support the day-to-day functions requiring administrative and operational oversight of the casinos. FISCAL YEAR 2021 REVENUES BY REVENUE SOURCES General Fund Though the VICCC was appropriated $823,000 (per Act No. 8365), exclusive of fringe costs, for fiscal year 2021 for the Agency’s funded positions, the actual payroll cost was $745,297, not including fringe costs of $320,701. The amount remains consistent with funds disbursed in fiscal years 2019 and 2020. Special Casino Control Commission Account The VICCC received a total of $497,101 from casino license fees, casino employee fees, fines, and other fees imposed by law or through regulations set by the Commission. Casino Revenue Fund The VICCC received a total allotment of $164,732 which represents 10% of taxes collected from licensed gaming entities by the Government of the Virgin Islands. 3|/ Page VICCC’S ANNUAL REPORT " A total of $164,732 was also collected for youth related programs which represents 10% of Casino Revenue Taxes and administered by the VICCC pursuant to Title 32, Chapter 21, Article XI, §518 (A-G). CASH FLOW STATEMENT AS OF SEPTEMBER 30, 2021 Table 1 provides an illustration of the flow of revenues generated by the Commission for fiscal year 2021. Table 1 Virgin Islands Casino Control Commission Statement of Cash Flows October 1, 2020 through September 30, 2021 October 2020 — September 2021 OPERATING ACTIVITIES Change in Net Position $ 167,968 Net Increase in Liabilities $ 51,155 Net Cash Provided by Operating Activities $ 219,124 Cash at the Beginning of the Period $ 90,756 Cash at the End of the Period $ 309,880 « The VICCC received $164,732 in revenues generated from 10% of Casino Revenue Taxes. # FY 21 recorded collections for work license fees, work permit fees, fines and other income was $497,101. « Funding from the GVI for Salaries and Fringe in the amount of $1,065,998 = FY 21 recorded expenditures, including salaries, totaled $1,524,555. # FY 21 change in net position was $167,968 4|Page VICCC’S ANNUAL REPORT CASINOS’ GROSS EARNINGS FOR A FIVE YEAR PERIOD 2017 - 2021 Total Annual Gross Earnings for VIGL (Caravelle Casino) January — December 2017 $ 5,533,332 January — December 2018 $ 8,978,204 January — December 2019 $10,385,466 January — December 2020 $ 4,451,218 January — December 2021 $ 6,662,230 Total Annual Gross Earnings for DIVI Carina Bay Casino DIVI *January — September 2017 $ 7,662,742 September — December 2018 $ 4,139,403 January — December 2019 $12,075,484 January — December 2020 $ 6,852,059 January — December 2021 $11,903,296 *On September 20, 2017 Hurricane Maria caused DIVI Carina Bay Casino to close due to the significant damages to the casino. DIVI Casino reopened in September 2018. “Gross revenue”, as defined by the Casino Act — The total of all sums, including checks received by a casino licensee pursuant to section 457 of this title, whether collected or not, actually received by a casino licensee from gaming operations, less only the total of all sums paid out as winnings to patrons and a deduction for uncollectible gaming receivables. The deduction for uncollectible gaming receivables shall not exceed the lesser of: (1) a reasonable provision for uncollectible patron checks received from gaming operations; or (2) four percent (4%) of the total of all sums including checks, whether collected or not, less than the amount paid out as winnings to patrons. Gross revenue shall not include any amount received by a casino from casino simulcasting. For the purpose of this definition, any check which is invalid and unenforceable pursuant to subsection (f) of section 457 of this title, shall be treated as cash received by the casino licensee from gaming operations. DISASTER RELIEF FUNDING The VICCC received approval of a Project Work Sheet in the amount of $123,326.72 in disaster relief funding for fiscal year 2020. The VICCC has received $2,760 in reimbursement for disaster relief to date. Utilization of the funds remains dependent upon incurred expenses prior to applying for reimbursement. Approved funding has been and is being directed to internal building damages, mold remediation, security cameras and damaged vehicles. 5| Page VICCC’S ANNUAL REPORT BANK ACCOUNT BALANCES AS OF SEPTEMBER 30, 2021 A financial overview of the Commission, by bank account for the period of October 1, 2020 thru September 30, 2021 is compiled in Table 2 below. Table 2 Beginning Balance Ending Balance tober 1, SECOLUIES eel Sh Sgt a oe alge OE = ie eel September 30 Sra : m 1 202i Rive — (operant feeder tr ot ete eS re Commission Operating Account (BP) $49,693 $67,840 Commission Revolving Account $41,063 $241,839 Pe Cash $-0- $200 i. a LL | a The two accounts listed in Table 2 had a combined beginning balance of $90,756. a At the end of FY 21 the combined total ending balance was $309,880. Exhibit I. Virgin Islands Casino Control Commission Income/Expense Trend Report Fiscal Year 2021 $ in 1,000’s 1400 1200 1000 B00 600 400 200 oe ee ae ee oe Oct Hoy Dec Jan Feb Mar Apr May aun Jul Aug = Sep ME income MG Expense a The annual payroll contributions and payroll expenses received from the GVI is reflected in the information presented for the month of September. 6|Page VICCC’S ANNUAL REPORT STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION Table 3 represents VICCC’s Statement of Revenues, Expenses and Changes in Net Position for fiscal year 2021. . Table 3 Virgin Islands Casino Control Commission Statement of Revenues, Expenses and Changes in Net Position October 1, 2020 through September 30, 2021 Oct '20 - Sep 21 Operating Revenues Income Casino Revenue Fund 164,732 License Fees 341,240 Other Income GVI Payroll Contributions 1,065,998 Other Income - Other 11,149 Total Other Income 1,077,147 Slot Fees 86,112 Stipulated Settlement 4,160 Work Permit Income 54,440 Total Operating Revenues 1,727,831 Operating Expenses Advertising and Promotion TAT Automobile Expense 16,785 Bank Service Charges 1,127 Building Naming 3,590 Cable Expense 1,659 Computer and Internet 41,180 Dues and Subscription 526 Electronic Equipment 4,712 Employee Recognition 500 Government Insurance Fund yep Investigative Fees 58,827 Janitorial Services 7,035 Liability Insurance 1,823 Meals and Entertainment 1,043 Merchant Fees 5,680 Office Supplies 6,694 Other Types of Expenses 1,800 7|Page VICCC’S ANNUAL REPORT Past Due License Fees 23,051 Professional Fees 118,452 Rent Expense 86,206 Repairs and Maintenance 13,057 Salaries GERS Contribution 148,222 Medical, Dental and Life Ins 115,464 Medicare 10,807 Payroll 745,297 Social Security 46,209 Total Salaries 1,065,998 Telephone Expense 5,192 Training, Conferences and Dues 24,216 Travel Expense 4,207 Utilities Electricity Expense 20,717 Securities Expense 790 Water Expense 1,765 Total Utilities 23,272 Total Operating Expenses 1,524,556 Prior Year Obligations q) 35,307 Total Expenses 1,559,863 Change in Net Position 167,968 (1) Credit card payments for prior Commission expenditures AN ASSESSMENT OF THE COMMISSION’S FY21 FINANCIAL STANDING In FY 2021, revenues were classified by specific categories. OD Casino Revenue Fund License Fees i 0 GVI Payroll eee Contributions Other Income Slot Fees B Stipulated Settlement B® Work Permit Income 8| Page VICCC’S ANNUAL REPORT Accounting for 61% of operating revenues and 70% of expenditures received in fiscal year 2021, is listed under the category entitled “Government of the Virgin Islands Payroll Contributions.” [sie Sse oie! precludes ge Soe Ses ae Re alae a aia SRL) GEES” be Salaries Expense GERS Contribution $148,222 $126,498 Medical, Dental and Life Insurance 115,464 78,759 Basic Life 0 218 Medicare 10,807 10,019 Payroll 745,297 691,298 Social Security 46,208 42,838 Total Salaries Expense $1,065,998 $949,630 FISCAL YEAR 2021 STATEMENT OF NET POSITION Table 4 represents VICCC’s Statement of Net Position as of September 30, 2021. Table 4 Virgin Islands Casino Control Commission Statement of Net Position As of September 30, 2021 30-Sep-20 ASSETS Current Assets Cash Petty Cash 200 Total Petty Cash 200 Checking/Savings Commission Operating Account 67,840 Commission Revolving Account 241,839 Total Checking/Savings 309,680 TOTAL ASSETS 309,880 Net Position Opening Balance at 10/01/2020 90,756 Liabilities Due CCC-Y outh Programs Account 35,307 Liabilities Due -DGE 15,848 Change in Net Position 167,968 TOTAL NET POSITION 309,880 9|Page ADMINISTRATIVE AND FINANCIAL MEASURES Below is a listing of the Commission’s major accomplishments during the Fiscal Year Ended September 30, 2021: * Issued for the first time in the Commission’s history, the Annual Report to the Governor and the Legislature as mandated by 32 VIC §424. = Successfully on-boarded the new Chairman/Chief Executive Officer. = Hired and successfully on-boarded the new Executive Director. # Established on-line payment portal on the Commission’s website for the collection of license fees through Banco Popular to expedite collection of revenues. » Successfully negotiated a renewal rental lease agreement with the Government Employees Retirement System for a one-year term with a renewal option for an additional year. # Improved the financial reporting processes to separate the financial activities of the Commission, the Division of Gaming Enforcement and the Youth Fund Programs and provide monthly financial reports for each entity. = Implemented procedures to provide monthly financial reports to the Attorney General and the Director of the Division of Gaming Enforcement. = Implemented the provisions of Act Nos. 8132 and 8451 in naming the Commission’s office the Eileen Ramona Petersen Casino Control Commission Building. CHALLENGES EXPERIENCED IN FY 2021 = The Commission lacks a full complement of Commissioners with the vacancy of a member from the St. Thomas/St. John District. « Lack of a long-term lease for the Commission’s offices; term of one year with a none- year option to renew creates uncertainty. GOALS FOR FISCAL YEAR 2022 = Re-activate the VI Alliance for Responsible Gaming. « Conduct a review of the Internet Gambling and Gaming laws and regulations to determine if any amendments are necessary and ensure that the Master Franchisees execute the mandates of the laws and regulations. 10| Page VICCC’S ANNUAL REPORT Upgrade the IT infrastructure of the Commission by the acquisition of new servers and other related computer equipment and related software applications. Ensure that Commission members and staff are provided ethics training on a continuous basis. Post the Commission’s financial reports on the website to achieve the ongoing goal of financial transparency ll |Page VICCC’S ANNUAL REPORT Working in unison with the Casino Control Commission, the Department of Justice’, Division of Gaming Enforcement (DGE) provides an investigative arm in matters for investigation, prosecution, and the search for evidence of a violation of the Virgin Islands Casino and Resort Laws. Twenty percent of the funds collected in the Commission’s Revolving Account are allocated to DGE for operating expenses. FISCAL YEAR 2021 REVENUES CASH FLOW STATEMENT AS OF SEPTEMBER 30, 2021 Table 5 represents the flow of revenues generated by the Division of Gaming and Enforcement for fiscal year 2021. Table 5 Division of Gaming Enforcement Statement of Cash Flows October 1, 2020 through September 30, 2021 October 2020 — September 2021 OPERATING ACTIVITIES Change in Net Position $123,352 Net Increase in Liabilities $ 7,546 Net Cash Provided by Operating Activities $ 130,898 Cash at the Beginning of the Period $ 53,755 Cash at the End of the Period $ 184,653 s FY 21 recorded collections for work license fees, work permit fees, fines and other income was $134,120. « FY 21 recorded expenditures totaled $10,768. 12|Page VICCC’S ANNUAL REPORT BANK ACCOUNT BALANCES AS OF SEPTEMBER 30, 2021 A financial overview of the Commission’s DGE Revolving Account for the period of October 1, 2020 thru September 30, 2021 remains as follows. Table 6 Beginning Balance Ending Balance Septemb UD Commission/DGE Revolving Account _ a $53,755 $184,653. STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION Table 7 represents DGE’s Statement of Revenues, Expenses and Changes in Net Position for fiscal year 2021. . Table 7 Division of Gaming Enforcement Statement of Revenues, Expenses and Changes in Net Position October 1, 2020 through September 30, 2021 Oct '20 - Sep 21 Operating Revenues Income Inv Income - Incredible Tech 4,113 Inv Income Fees-Interblock USA 0 License Fees 59,395 Other Income 25,086 Slot Fees 7,020 Work Permit Income 38,505 Total Operating Revenues 134,120 Operating Expenses Advertising and Promotion 1,028 Automobile Expense 1,143 Bank Service Charges 47 Computer and Internet 495 Meals and Entertainment 927 Office Supplies 12 Professional Fees 1,890 Rent Expense 2,660 Training 2,510 Travel Expense 56 Total Operating Expenses 10,768 Change in Net Position 123,352 13 | Page VICCC’S ANNUAL REPORT FISCAL YEAR 2021 STATEMENT OF NET POSITION Table 8 represents DGE’s Statement of Net Position as of September 30, 2021 Table 8 Division of Gaming Enforcement Statement of Net Position As of September 30, 2021 "Sep 30, 21 ASSETS Current Assets Checking/Savings DGE Revolving Account 184,653 Total Checking/Savings 184,653 TOTAL ASSETS 184,653 Net Position Opening Balance at 10/01/2020 ck wp! Liabilities 7,546 Change in Net Position 123,352 TOTAL NET POSITION 184,653 14|Page VICCC’S ANNUAL REPORT APPENDIX II aaa tors p nD. U ae Ten percent of taxes collected from licensed gaming entities by the Government of the Virgin Islands is earmarked to youth related programs. The following training programs are subsidized by the Commission, in accordance with Virgin Islands Code, Title 32, Section 518: 1 Financial assistance to help casino employees obtain their G.E.D. and further their education, to include but not limited to college education, Financial assistance for casino employees to obtain certification in the field of Hotel/Hospitality Management, Fifty percent (50%) of the budgetary needs of the Jobs for America’s Graduates Virgin Islands program, and 4. Make available to the casino licensee half the cost of each employee participating in the G.E.D. or Hotel/Hospitality programs. 15|Page FISCAL YEAR 2021 REVENUES CASH FLOW STATEMENT AS OF SEPTEMBER 30, 2021 Table 9 represents the flow of revenues deposited into the Youth Program’s Account for fiscal year 2021. Table 9 CCC-YOUTH PROGRAM ACCOUNT Statement of Cash Flows October 1, 2020 through September 30, 2021 October 2020 — September 2021 OPERATING ACTIVITIES Change in Net Position $165,699 Receivables Due from VICCC $ 35,307 Net Cash Provided by Operating Activities $ 130,391 Cash at the Beginning of the Period $ 366,247 Cash at the End of the Period $ 496,638 « The CCC’s Youth Program Account received $164,732 in revenues generated from a percentage of sales from Casino Revenue Taxes. » The CCC’s Youth Program Account received $967 in interest income. BANK ACCOUNT BALANCES AS OF SEPTEMBER 30, 2021 A financial overview of the Commission’s Youth Program Account for the period of October 1, 2020 thru September 30, 2021 remains as follows. Table 10 Beginning Balance Ending Balance CCC’s Youth Program Account | $366,247 $496,638 16| Page VICCC’S ANNUAL REPORT STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION Table 11 represents the VICCC’s Youth Program Statement of Revenues, Expenses and Changes in Net Position for fiscal year 2021. . Table 11 CCC-YOUTH PROGRAM ACCOUNT Statement of Revenues, Expenses and Changes in Net Position October 1, 2020 through September 30, 2021 Oct '20 - Sep 21 Operating Revenues Income Casino Revenue Fund 164,732 Interest Income 966 Total Operating Revenues 165,699 Change in Net Position 165,699 FISCAL YEAR 2021 STATEMENT OF NET POSITION Table 12 represents the Statement of Net Position for CCC’s Youth Program Account as of September 30, 2021. Table 12 CCC-YOUTH PROGRAM ACCOUNT Statement of Net Position As of September 30, 2021 ” Sep 30, 21 ASSETS Current Assets Checking/Savings CCC's Youth Program Account 496,638 Total Checking/Savings 496,638 Accounts Receivable Receivables Due from VICCC 35,307 TOTAL CURRENT ASSETS 531,946 Net Position Opening Balance at 10/01/2020 366,247 Change in Net Position 165,699 TOTAL NET POSITION 531,946 17 | Page