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R.I. loses share of table game income due to drop in slots revenue at Twin River
Published: October 06, 2014
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The Providence Journal/Andrew Dickerman
A provision in the legislation allowing table games at Twin River dictated that if the facility ever saw a decline in revenue from the video gambling machines — often referred to as slots — it would trigger a 2-percent cut in the state’s share of table game revenue.
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In the last fiscal year, overall revenue to the state from Twin River increased thanks to the addition of table games.
By Jennifer BogdanJennifer BogdanThe Providence Journal
Published: October 06 2014 11:15
PROVIDENCE, R.I. — When more than 200 video gambling machines were removed from the Twin River Casino in 2013 to make way for table games, state officials said the reduction wouldn’t lead to a decline in overall revenue from the video terminals.
But they were wrong. Those revenues did drop in 2013, triggering a separate — and permanent — cut in the state’s share of revenue from Twin River’s table games.
As of July 1, the state’s cut of table game revenue fell from 18 to 16 percent — a loss of about $1.9 million based on revenue predictions in this year’s budget.
A provision in the legislation allowing table games at Twin River dictated that if the facility ever saw a decline in revenue from the video gambling machines — often referred to as slots — it would trigger a 2-percent cut in the state’s share of table game revenue.
The law calls for that money to be split, with an extra 1 percent going to Twin River and 1 percent, for the first time, going to the Town of Lincoln for four years. After four years, the entire 2 percent will go to Twin River.
House Minority Leader Brian Newberry said he was unaware that the state’s cut of table game revenue had been reduced. He had been critical of the 2012 legislation, sponsored by Sen. Maryellen Goodwin, D-Providence, and Rep. Helio Melo, D-East Providence, and the formula it set for divvying up the revenue stream.
“The bill was essentially written in secret. I could not get an answer from anyone as to how the percentage cuts were chosen for the state,” Newberry said. “There was no reason why we as a state should not get as much revenue for state taxpayers as we could.”
Before table games were added, Twin River heralded a phenomenon known as “companion play,” arguing that couples would come to the casino with one person playing slots and the other table games.
Patti Doyle, a spokeswoman for Twin River, said the casino believes this happened, and without that influx, the hit to slot machine play, which includes games like video blackjack, could have been worse. She said percentage declines in slot revenue were larger at Connecticut’s Foxwoods and
Mohegan Sun casinos. She also said some decline was expected.
“Naturally, when table games went live in June of 2013, the virtual table games saw a decline, so that is another reason for the overall decline in [slot] win. This was expected,” Doyle said. “I don’t know if [virtual table games] were specifically addressed in legislative hearings … but our regulator, the Rhode Island Lottery, was certainly aware as they track revenue from all games.”
That’s a decidedly different stance than the assessment that Lottery Director Gerald Aubin took prior to the arrival of table games at Twin River. At the time he said, “while there could be a temporary dip in the [electronic terminal] revenue during construction, we do not anticipate any negative impact due to the final removal of the estimated 225 to 265 [electronic terminals].”
Aubin did not return calls or respond to email requesting comment for this story.
In October 2012, Doyle told The Providence Journal that the removal of the 200 machines would not trigger the cut to table game revenue, because even at peak times, not all machines are in play. She also cited companion play.
The state keeps a little more than 61 cents out of every dollar played on the electronic gambling terminals at Twin River and Newport Grand. Last fiscal year — the first complete cycle since the introduction of table games — the amount of money each machine brought in per day went up by a little more than 1 percent, but that was not enough to counter the sliced number of machines, Dion said.
Overall, transfers from the Lottery — the third-largest revenue source for the state — totaled $376 million in fiscal year 2014, down less than 1 percent. This includes money from traditional lottery games as well as slot and table games. Slot revenue from both Twin River and the smaller Newport Grand slots parlor was down 3 percent. Table games yielded roughly $88 million, with the lion’s share — $72 million — going to Twin River.
But in the last fiscal year, overall revenue to the state from Twin River increased thanks to the addition of table games.
The casino, which employs 1,700, will not divulge its profits.
As revenue data trickled in throughout the year, both state officials and Twin River attributed the slump to everything from a cold winter to the Boston Red Sox and the New England Patriots making the playoffs and keeping customers away.
They have also cited the economy and an oversaturated Northeast gambling market as reasons for declining slot revenue. Rhode Island has been bracing itself for the potential impact of Massachusetts gambling, but all projections called for slot revenue to increase in the absence of Massachusetts gambling.
Governor Chafee made an attempt to position the state to hold on to its 18-percent stake in table game revenue. An article contained in his original budget for the current year stated that the state’s share of table game revenue would fall to 16 percent if slot revenue dropped after the onset of casino gambling in Massachusetts. However, it would remain at 16 percent for only four years.
“If after four years from the onset of Massachusetts casino gaming, [slot revenue] began to increase, we thought it only reasonable that the state’s share of net table game revenue be returned to the rate that existed before Massachusetts casino gaming,” said Faye Zuckerman, a spokeswoman for Chafee.
Asked if the state was misled, Zuckerman cited initial predictions that the addition of table games at Twin River would yield annual increases to the state’s revenues by between $16 million and $20 million.
“The net impact of the expansion to table gaming at Twin River resulted in $5.5 million more [last fiscal year] transferred to the state’s general fund, less than a third of the minimum amount touted by Twin River.”
http://www.providencejournal.com/breaking-news/content/20141006-r.i.-loses-share-of-table-game-income-due-to-drop-in-slots-revenue-at-twin-river.ece
But they were wrong. Those revenues did drop in 2013, triggering a separate — and permanent — cut in the state’s share of revenue from Twin River’s table games.
A provision in the legislation allowing table games at Twin River dictated that if the facility ever saw a decline in revenue from the video gambling machines — often referred to as slots — it would trigger a 2-percent cut in the state’s share of table game revenue.
The law calls for that money to be split, with an extra 1 percent going to Twin River and 1 percent, for the first time, going to the Town of Lincoln for four years. After four years, the entire 2 percent will go to Twin River.
House Minority Leader Brian Newberry said he was unaware that the state’s cut of table game revenue had been reduced. He had been critical of the 2012 legislation, sponsored by Sen. Maryellen Goodwin, D-Providence, and Rep. Helio Melo, D-East Providence, and the formula it set for divvying up the revenue stream.
“The bill was essentially written in secret. I could not get an answer from anyone as to how the percentage cuts were chosen for the state,” Newberry said. “There was no reason why we as a state should not get as much revenue for state taxpayers as we could.”
Before table games were added, Twin River heralded a phenomenon known as “companion play,” arguing that couples would come to the casino with one person playing slots and the other table games.
Patti Doyle, a spokeswoman for Twin River, said the casino believes this happened, and without that influx, the hit to slot machine play, which includes games like video blackjack, could have been worse. She said percentage declines in slot revenue were larger at Connecticut’s Foxwoods and
Mohegan Sun casinos. She also said some decline was expected.
“Naturally, when table games went live in June of 2013, the virtual table games saw a decline, so that is another reason for the overall decline in [slot] win. This was expected,” Doyle said. “I don’t know if [virtual table games] were specifically addressed in legislative hearings … but our regulator, the Rhode Island Lottery, was certainly aware as they track revenue from all games.”
That’s a decidedly different stance than the assessment that Lottery Director Gerald Aubin took prior to the arrival of table games at Twin River. At the time he said, “while there could be a temporary dip in the [electronic terminal] revenue during construction, we do not anticipate any negative impact due to the final removal of the estimated 225 to 265 [electronic terminals].”
Aubin did not return calls or respond to email requesting comment for this story.
In October 2012, Doyle told The Providence Journal that the removal of the 200 machines would not trigger the cut to table game revenue, because even at peak times, not all machines are in play. She also cited companion play.
The slump
Paul Dion, chief of the state Office of Revenue Analysis, said there’s no doubt that the decline is due in part to the removal of roughly 215 of the facility’s collection of 4,750 video gambling machines. The machines were removed to make room for 66 new table games, where the state’s share of the revenue pie is far less.The state keeps a little more than 61 cents out of every dollar played on the electronic gambling terminals at Twin River and Newport Grand. Last fiscal year — the first complete cycle since the introduction of table games — the amount of money each machine brought in per day went up by a little more than 1 percent, but that was not enough to counter the sliced number of machines, Dion said.
Overall, transfers from the Lottery — the third-largest revenue source for the state — totaled $376 million in fiscal year 2014, down less than 1 percent. This includes money from traditional lottery games as well as slot and table games. Slot revenue from both Twin River and the smaller Newport Grand slots parlor was down 3 percent. Table games yielded roughly $88 million, with the lion’s share — $72 million — going to Twin River.
But in the last fiscal year, overall revenue to the state from Twin River increased thanks to the addition of table games.
The casino, which employs 1,700, will not divulge its profits.
As revenue data trickled in throughout the year, both state officials and Twin River attributed the slump to everything from a cold winter to the Boston Red Sox and the New England Patriots making the playoffs and keeping customers away.
They have also cited the economy and an oversaturated Northeast gambling market as reasons for declining slot revenue. Rhode Island has been bracing itself for the potential impact of Massachusetts gambling, but all projections called for slot revenue to increase in the absence of Massachusetts gambling.
Downward trend
Still, overall net income from the electronic terminals has now fallen for two straight years. At Twin River alone, the slot revenue dipped by $3.4 million in fiscal year 2013. In fiscal 2014, it took an even greater hit of $10.2 million, finishing at $462.4 million.Governor Chafee made an attempt to position the state to hold on to its 18-percent stake in table game revenue. An article contained in his original budget for the current year stated that the state’s share of table game revenue would fall to 16 percent if slot revenue dropped after the onset of casino gambling in Massachusetts. However, it would remain at 16 percent for only four years.
“If after four years from the onset of Massachusetts casino gaming, [slot revenue] began to increase, we thought it only reasonable that the state’s share of net table game revenue be returned to the rate that existed before Massachusetts casino gaming,” said Faye Zuckerman, a spokeswoman for Chafee.
Asked if the state was misled, Zuckerman cited initial predictions that the addition of table games at Twin River would yield annual increases to the state’s revenues by between $16 million and $20 million.
“The net impact of the expansion to table gaming at Twin River resulted in $5.5 million more [last fiscal year] transferred to the state’s general fund, less than a third of the minimum amount touted by Twin River.”
http://www.providencejournal.com/breaking-news/content/20141006-r.i.-loses-share-of-table-game-income-due-to-drop-in-slots-revenue-at-twin-river.ece
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