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Tuesday, November 17, 2009

Rhode Island: The Bottom Gets Murkier

The Race to the Murky Bottom! addressed the broken promises of predatory gambling and the addiction of the State of Rhode Island to dwindling gambling revenues to fill state coffers, even to the extent of replacing the current management with insolvent partners.
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(State business regulation chief Michael Marques has confirmed his agency is vetting an application by John J. McLaughlin, a former top executive at Harveys Casino resorts who now heads Centaur Inc., to take on “key role” at Twin River.)


The Provident Journal now reports --

R.I. senator seeks probe into future of Twin River license

PROVIDENCE,R.I. -- State Sen. Frank A. Ciccone is calling for a legislative inquiry into the state's role in choosing managers for the bankrupt Twin River, and potential award of the gambling license - worth hundreds of millions of dollars - to new owners without a competitive and public vetting process.

Ciccone, a Providence Democrat, suggested the commission consider the potential termination, "due to breaches,'' of Twin River's "master contract'' to operate more than 4,750 video-slot machines placed there by the state Lottery.

He said the commission should then look at "the possible options of the state, in the event that the license is revoked, to reissue the license in accordance with a bidding process, or to a better location in the state, or on more desirable terms,'' and in the interim, "the right of the state to approve or disapprove the next owner or manager.''

Ciccone, a top-ranked official in the Laborers International Union affiliate that represents state court employees, tried without success to force the current owners of the Lincoln slot-parlor and greyhound track to drop their plans to suspend dog-racing in August. The governor vetoed the legislation.

Ciccone based his current campaign for the "immediate creation'' of legislative study commission on events since the last changeover in ownership, that led him to question the depth and extent of the state's oversight.

Twin River is currently owned by a subsidiary of BLB Investors, a holding company made up of the principals in Kerzner International, Starwood Capital Group and Waterford Group LLC.
Ciccone listed the following concerns:

"BLB was awarded a long-term contract by the state and lobbied against a full-scale casino in the 2006 casino referendum, only to announce afterward that it was teaming up with a Massachusetts Indian Tribe to build a full-scale casino in Massachusetts that would compete against Rhode Island.

"While BLB was pursuing a casino in Massachusetts, it shut down restaurants and other amenities in Lincoln and filed for bankruptcy in breach of its long-term contract with the state.

"Most recently...Warner Gaming- who I presume the bondholders and Governor Carcieri [had] chosen to manage [the former] Lincoln Park- announced in the Boston Globe in late October that it is planning to build a casino in Milford, Massachusetts because it is, and I quote, an 'ideal location' and will capture traffic which heads to 'Rhode Island gaming facilities today.''

Warner's Massachusetts proposal would create a gambling complex that could house 5,000 slot machines, 250 gambling tables, hotel rooms, restaurants and all the accoutrements of a full-fledged casino resort. The complex, known as the Crossroads Resort Project, would be located along Route 495 in Milford -- about 20 miles north of Twin River.

Soon after William H. Warner withdrew his application to manage Twin River earlier this month, the state's director of business regulation, Michael Marques, said he "indicated he was withdrawing his application because [Twin River's] lenders communicated to him that they were not comfortable with his plans for gaming in another state.''

Ciccone said he is not concerned about the bondholders, BLB or Warner Gaming.

"I am worried about the state of Rhode Island and our ability to control this license," he said. "This license is an asset of the state and should revert to the state. It does not permanently belong to bondholders, BLB or Warner Gaming; it belongs to the state and should only be issued to a company that has the history, brand recognition, management and marketing experience to help Rhode Island compete in this increasingly competitive marketplace."

"It should not be with a company that is less than two years old that recently announced that it plans to build a casino in Massachusetts to compete against Rhode Island," he continued. "Maybe this plan somehow works for the bondholders, but it does not work for, and is not in the best interest of, Rhode Island. And the state of Rhode Island should control the license."

Once a stand-alone state agency with a board of directors made up of lawmakers and gubernatorial appointees, the state Lottery is currently a division within the executive branch of state government, under Governor Carcieri.

There was no immediate comment on Ciccone's proposals from Senate leaders or the Carcieri administration.


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