In a Motion filed Monday in Virgin Islands Superior Court, Southland Gaming of the Virgin Islands, Inc. (“Southland”) asked the Court to dismiss the Virgin Islands Government’s recently-filed lawsuit against it alleging breach of contract and tax issues. Southland has an exclusive contract with the Virgin Islands Lottery for video lottery games and operations. That contract was automatically renewed in July 2008, after 5 years of performance, without the Government claiming any breach or raising any of the issues now alleged in its lawsuit.

The suit asks the Court to determine whether the method by which video lottery revenues have been allocated for the past six years is correct under Southland’s contract with the Lottery. The suit also seeks a determination as to whether Southland’s video lottery commissions and those of the video lottery retailers are exempt from gross receipts taxes. Finally, the suit questions the validity of Southland’s Master License Agreement, which was required of Southland by the Lottery and approved by the Attorney General’s office. That License specifically confirms the exemption of video lottery commissions from gross receipts taxes.

Southland’s Motion To Dismiss asks the Court to rule that the Government is improperly seeking an advisory opinion from the Court since there are no active disputes between Southland and the Lottery or the Virgin Islands Internal Revenue Bureau (“IRB”) concerning the issues raised in the lawsuit. Southland’s papers supporting its Motion include a letter from the Lottery dated February 20, 2009, stating that “the Lottery will not take any legal action against Southland and does not consider Southland to be in a breach of its contract at this time…,”and a tax clearance letter from the IRB dated June 9, 2009, that states “we find that you are current in the filing and payment of your tax obligation.”

“We are confident that there is no merit to the Government’s lawsuit” Southland’s President Robert E. Huckabee, III, said. “After six years of our strict compliance with the terms of our contract, there was no legitimate reason for the Government to file this suit. We believe that the Government is responding to false information as well as a faulty and uninformed interpretation of the facts.

“How can it be,” Mr. Huckabee asked, “that the Lottery has accepted our checks every week for nearly six years without complaint, wrote us a letter that says we are not in breach of contract and then the Government files a lawsuit asking the Court to find us in breach? How can it be that the Government requires us to sign a License Agreement that confirms the statutory exemption of video lottery commissions from gross receipts taxes, makes no effort to collect those taxes from us for nearly six years and then sues us asking the Court to determine that we owe those taxes?

“As a long-time corporate citizen of the Virgin Islands,” Mr. Huckabee added, “we are concerned that this lawsuit sends a negative message about the climate for doing business in the Virgin Islands.”