Rhode Island's Taxpayer Subsidies

9/25/2006: Safety net for current slot halls: Taxpayers

By SCOTT MAYEROWITZ
Journal Staff Writer
Posted May. 1, 2015 at 11:44 AM

If business at Lincoln Park and Newport Grand declines because of the proposed West Warwick casino, Rhode Island taxpayers will have to cover their losses -- potentially millions of dollars -- because of a deal crafted by state lawmakers last year.

At that time, the company that owned Lincoln Park faced federal corruption charges and questions swirled throughout the State House about the impact of a guilty verdict.

If the owners were convicted - which they later were -- then the track would lose its license and be forced to close, costing the state $525,000 a day.

So when prospective buyer BLB Investors showed up, the state's leaders did everything possible to make a sale possible, including promising to protect Lincoln Park from any losses caused by a casino.

"Obviously, the specter of a casino was a big concern of theirs," House Majority Leader Gordon D. Fox said last week. "It was important for both the administration and the legislature to get the BLB deal done because . . . at the time we were dealing with a potential felon running a central money-making institution for the state."

Now, as Rhode Islanders debate whether they want to amend the state Constitution to allow a casino, that promise -- called a slippage clause -- has returned to the spotlight.

The casino proposed by Harrah's Entertainment and the Narragansett Indian Tribe promises to bring millions of new tax dollars to the state. But the casino would also probably hurt business at Lincoln Park and Newport Grand.

Gambling is the state's third-largest source of revenue. Slot machines last year accounted for $255.7 million of the state's budget.

Nobody is sure exactly how much damage the casino would cause to Lincoln Park and Newport Grand. Harrah's says it would be minimal; Lincoln Park and Newport Grand say it would be catastrophic. And the slippage clause -- which was also extended to Newport Grand -- complicates the matter further.

For taxpayers, the key to the debate is: will the new revenue from Harrah's be enough to offset the state's losses from the two existing facilities?

THE SLIPPAGE CLAUSE was the product of months of private negotiations between BLB, Governor Carcieri and top lawmakers.

In order to close the deal, both sides wanted something. An agreement had to be reached before BLB would commit to purchase the track.

The state sought a commitment from BLB to make at least $125 million in much-needed improvements at the aging track. BLB asked for 1,750 additional slot machines and to have its tax rate locked in for 15 years.

BLB also wanted something else: protection from a potential casino.

Carcieri and Senate President Joseph A. Montalbano, a North Providence Democrat whose district includes Lincoln, added a clause into the deal.

The state gets a bit more than 60 percent of the slot revenues at Lincoln Park and Newport Grand. Harrah's was proposing in 2004 to pay just above 25 percent. If the ballot question passes, lawmakers would then negotiate a tax structure for the casino.

The version the Senate passed said that if a casino was approved, it would have to have the same tax rate. Either Harrah's would pay 60 percent or Lincoln Park's rate would drop to 25 percent.

That didn't sit well with House Speaker William J. Murphy, a Democrat who had long been pushing for a casino in his hometown of West Warwick.

While the Senate quickly passed the deal, Murphy stalled and ended the House's session for the year.

But then a last-minute deal was struck and Murphy called back his members for a special session.

The tax-parity clause was dropped, and in its place the House inserted the slippage protection. Newport Grand was also given authorization for additional slot machines, a locked-in tax rate and its own slippage clause in exchange for a $20-million capital investment.

Harrah's could still pay a lower tax rate, and BLB was assured that its business would not lose money because the state would have to make up its losses.

Carcieri said he didn't like adding more slots at Newport and never spoke favorably about the slippage clause, which he points out came from lawmakers.

But he said he still signed onto the deal because it cleared the way for a change in ownership at Lincoln Park.

"We needed to get somebody else in there," he said last week.

Murphy and Montalbano did not respond to numerous requests for interviews.

THERE IS NO clear picture about what a Harrah's casino would do to Lincoln Park and Newport Grand.

Both facilities predict a 40-percent drop in revenue. A 2004 report by gambling analyst Sebastian Sinclair, prepared for the Town of West Warwick, forecast a 12.5-percent decline at Lincoln Park and a 33.6-percent decline at Newport Grand. Harrah's also says there will be a drop, but that it won't be nearly that steep.

The deal the state struck with Lincoln Park protects it through 2020; Newport Grand is protected through 2015.

The slippage clause takes the average revenue at each facility in the two years prior to a casino opening and assumes that income there should grow each year by inflation. If revenues drop below that figure, the state has to make up the loss.

Lincoln Park estimates that by 2010 its slot machines will generate $547 million. The state would get $335.3 million. Lincoln Park would take $152 million. The rest of the money is split among other parties, including the Town of Lincoln, the slot manufacturers and GTECH, which manages the system.

If a casino caused a 10-percent drop in revenue, the state would be short $33.5 million. However, because of the slippage clause, the state would also have to pay out an additional $15.2 million to Lincoln Park, creating a $48.7-million shortfall, according to Journal calculations.

Harrah's estimates that its casino would provide the state with $113 million in new tax revenue that year, which would more than make up the hypothetical 10-percent loss at Lincoln Park.

But if revenues at Lincoln Park dropped by 30 percent, the state would lose $146.1 million. Even with Harrah's $113 million, there would still be a budget shortfall.

The state also has to consider potential revenue losses at Newport Grand.

House Majority Leader Fox noted that lawmakers have yet to agree with Harrah's on the terms of the casino's operation. That would happen after the Nov. 7 referendum.

"If this vote should pass, nothing prevents a discussion with the casino, with Harrah's, that if there is slippage . . . that they make it up," Fox said last week.

However, Harrah's doesn't appear so willing to make such payments.

Jan L. Jones, Harrah's senior vice president for communications and government relations, said last week that her company would be willing to cover any state losses in the first two years. But that offer does not extend to the slippage payments.

"I can't imagine any private company," Jones said, "that's going to make up another company's inability to operate."

Here's how it goes.....we told ya so!

Lincoln, Rhode Island residents overwhelmingly OPPOSED 24/7/365 GAMBLING.
Guess what they got from the bankruptcy court?

Lost Local Control!

Anticipating Massachusetts Slot Barns, Twin River got table games.

During one of the Edumacational Forums conducted by the Massachusetts Gambling Commission [no longer available on their web site - the video seems to have disappeared], it was readily acknowledged that Plainridge [AKA Penn National] would return for table games, an expansion of Predatory Gambling.

During one of the early Gambling Hearing held on Beacon Hill in Gardner Auditorium, the public was told that the state becomes a partner in the success of Predatory Gambling, the state becomes addicted to the Gambling Revenues.




There will never be a limit.

RHODE ISLAND

Twin River wins approval for hotel

By Jennifer Bogdan

Journal State House Bureau
Posted Apr. 25, 2015 at 9:16 PM


PROVIDENCE, R.I. — Gov. Gina Raimondo has signed legislation clearing the path for Twin River to build a hotel at the state's only full-fledged casino.

State law prohibited a hotel from being built on the casino's sprawling Lincoln property in recognition of concerns once voiced by the Providence hotel industry, which feared competition.

But with the state facing imminent competition from Massachusetts casinos, elected officials favored lifting the restriction. Massachusetts' first gambling facility — a slots parlor in Plainville — will open in June just 12 miles from Twin River.

"As our neighboring states look to draw revenue and economic development away from Rhode Island, we need to examine every possible way to remain competitive and create more economic opportunities here in Rhode Island," Raimondo said in a statement.

Twin River Management Group will now vet the site plan with officials in Lincoln.

"We're grateful for the support we receive from the legislature and governor in lifting the prohibition on a hotel at Twin River," casino spokeswoman Patti Doyle said.

Twin River officials have said the hotel will be built in the style of a Courtyard Marriott or a Hampton Inn. The four-story hotel will have 150 to 250 rooms and cost $30 million to $35 million to construct.

The project is expected to create roughly 200 temporary construction jobs and 100 full-time jobs for employees needed to operate the hotel.

The House legislation was sponsored by Rep. Jeremiah T. O'Grady, D-Lincoln. The Senate bill was sponsored by Majority Whip Maryellen Goodwin, D-Providence. There was no substantive difference in the bills signed into law aside from sponsorship.

Twin River officials have said the hotel is not intended to draw in gambling from a larger radius. Instead, officials have said the focus remains on retaining "convenience gamblers" within the surrounding area who might be tempted to cross the Massachusetts border.

Casino officials have said they will not seek any tax breaks or concessions for the project.

Twin River and Newport Grand, the sources of a large share of state revenue, are under threat from gambling expansion in Massachusetts. Plainridge Park Casino — with 1,250 slot machines — will open this summer just 12 miles northeast of Twin River in the Massachusetts town of Plainville. In 2017, three resort casinos — with table games, hotel rooms, shops and other amenities are scheduled to begin opening across the the Bay State.

That competition — possibly joined by a tribal-run casino in Taunton — will drain millions of dollars in revenue from Twin River and Newport Grand.

The Rhode Island Public Expenditure Council, citing a recent analysis conducted for the Chafee administration by Christiansen Capital Advisors, forecasts a 13.8-percent decline in the state’s video-gambling revenue in 2016, and as much as 40 percent in later years.

“A hotel would complement table games and help Twin River to differentiate itself from the Plainridge casino,” said Alex Bumazhny, a Fitch Ratings financial analyst. “It could soften the blow from the new competition in Massachusetts but not offset it entirely.”


http://www.southcoasttoday.com/article/20150425/NEWS/150429507/101193/NEWS0301

Rhode Island Misplaced Hysteria

Ignored is REPEAL THE CASINO DEAL that will appear on the 2014 Ballot.

Rhode Island instead has genuflected before the limited Gam[bl]ing Industry that was supposed to preserve greyhound racing and much else, or at least their lopsided media coverage.

Rhode Island is now subsidizing the Gam[bl]ing Industry. So much for impartial journalism.

And Lincoln, RI? That voted to oppose 24/7/365 GAMBLING?


Border casino scare

Published: December 14, 2013

 

Rhode Island taxpayers may be feeling schadenfreude — German for pleasure in the pain of others — over the delay in opening casinos in Massachusetts. But state officials are duty-bound to prepare for losing state revenue to the Bay State within the next few years.

Assuming that the Massachusetts casinos do come, they will steal lots of business from Rhode Island, and especially from Twin River Casino, in Lincoln. That could mean a huge falloff in state gambling revenue, at an estimated $330 million this year. Gambling is the state’s third-largest revenue source, behind income and sales taxes.

The falloff could be up to $100 million — or more; economists can only guess. How many residents of Massachusetts will migrate to casinos nearer to home or remain loyal to their habits? We’d guess that proximity will win out in the end.

Nobody knows for sure where the new “gaming” sites will be, or how long it will take to build them.

Missed deadlines and lawsuits have delayed the state’s effort, kicked off in 2007, to have three casinos built, one near Boston, one in western Massachusetts and one in southeastern Massachusetts, plus a slots parlor (or “racino”) at some undetermined location. Voters in Milford, East Boston, West Springfield and Palmer have rejected casino proposals in recent months. Lakeville and Freetown turned thumbs down on proposals in nonbinding referenda last June.

Voters in Taunton, however, approved a casino proposal there last year, and while New Bedford voters have not spoken yet, voters in Plainville overwhelmingly approved a slots parlor there, which is the nearest proposed site to Twin River.

And talk in the Bay State of a referendum to repeal the 2007 casino initiative is still just talk. We trust that Ocean State officials are not counting out Massachusetts casinos. At least one of them, perhaps very close to Rhode Island, will probably open fairly soon.


http://www.providencejournal.com/opinion/editorials/20131214-border-casino-scare.ece

Rhode Island's Race to the Bottom

The arguments are the same - straight from the Gambling Industry Playbook.

The tactics are identical - make political contributions.

Schmooze the Rotary and Chambers of Commerce, they'll never question.

Make sure you pretend this will create jobs, even if the estimates are overstated.

Make sure you don't tell them that Table Games are now automated - no employees required.

Never let them know that this isn't the end of Gambling Expansion.

Casinos Pour Millions into Table Games Question
Monday, October 29, 2012
Dan McGowan, GoLocalProv News Editor

Twin River and Newport Grand have now poured more than $4 million into the campaigns to convince Rhode Islanders to vote in favor of bringing table games such as blackjack, craps and roulette to the state’s two casinos on next week’s ballot, according to a review a campaign finance reports.

The majority of the $3,987,711 Twin River has spent has gone toward toward polling, advertising and consulting fees, spending $3,987,711. Twin River’s political action committee (PAC) had contributed $7,700 to more than 20 lawmakers, including every member of House and Senate leadership, since the beginning of the year, but the PAC hasn’t filed a campaign finance report since June.

Meanwhile, Newport Grand’s has spent $379,314, which has Providence public relations firm Duffy and Shanley running its campaign. The slot parlor has spent nearly $130,000 with Warwick-based PriMedia on newspaper and radio ads and at least $80,000 on direct mailings.

The spending is not unprecedented. In 2006, Las Vegas-based Harrah’s Entertainment spent more than $12 million in an attempt to open a casino in West Warwick, but voters overwhelmingly shot down the proposal.

In August, Twin River spokesperson Patti Doyle said the casino’s board chairman John Taylor has attended Rotary and Chamber of Commerce meetings from across the state, talking about the importance of approving the table game question in order to bring jobs to Rhode Island. She said the campaign was working on “building an online community via our website where you can register to volunteer, and via Facebook and Twitter.”

“The education campaign isn't just about the paid media,” Doyle said at the time. “We've spent the summer months employing a street team of college students to be visible with education materials at a host of community events throughout the state.”

Campaigns Promise Hundreds of Jobs

The two ballot referendums (questions 1 and 2) will need to be supported by the majority of voters statewide as well as the town of Lincoln (for Twin River) and Newport (for Newport Grand) in November. It is possible for only one of the referendums to earn support.

Both campaigns have touted the benefits of voting in favor of table games, with Twin River claiming it will create 650 new jobs while preserving 900 jobs. Newport Grand says voting to expand to table games will preserve 200 jobs and create 50 more while protecting the $30 million the casino contributes in taxes to the state annually.  

But with Massachusetts committed to building three resort-style casinos and a slot parlor over the next decade, supporters of full-fledged gaming say the state could face economic peril if the referendum fails.

Gambling related revenue is the state’s third-largest source of income, at more than $300 million each year and Twin River has provided the state with over $2.5 billion since 1992. A report issued earlier this year by the Rhode Island Public Expenditure Council (RIPEC) suggested that table games would benefit Rhode Island, but it also noted that the state will not be able to depend on gambling income as much once the casinos are built in the Bay State.

“The advent of casino gaming in the commonwealth of Massachusetts – under any scenario – will likely negatively impact both revenues for the casino operators in Rhode Island, and the state of Rhode Island itself,” the RIPEC report stated. “While it appears that the opening of casinos in Massachusetts may occur later than originally anticipated, they will open in the next few years, and that Twin River, Newport Grand and the state will all see revenues decline. Allowing Twin River and Newport Grand to operate table games will offset some of these projected revenue losses; however, it is also clear that the state can no longer rely on gaming revenues to support the same share of government services once casinos open in Massachusetts.”

Opponents Line Up

Still, not everyone is convinced table games are the answer for Rhode Island. In Lincoln, District 17 State Senate candidate John Cullen, a Democrat, is urging voters to oppose the plan, claiming the town may now receive acut from table games.

“What's good about zero percent for Lincoln,” Cullen wrote in an op-ed earlier this year. “The bankers and the [General Assembly have a seat at the table games, while Lincoln and Newport get thrown under the table! This time Lincoln's no casino vote will get us a seat at the table!”

Cullen is joined by former Lincoln Town Council President Dean Lees Jr. in opposition to the proposal. Both men argue that the town will not benefit from table games.

“It is important for Lincoln’s voters not to be intimidated,” Lees Jr. said earlier this year. “For years, state and local officials have said that we may lose revenue to other states and that we need to compete. With Foxwoods facing an over 2.3 billion dollar deficit, Mohegan Sun laying off 346 employees and Vegas Casinos in the red, these only show me that gambling is not the answer to compete with other states, nor to put false hopes on increasing our revenues to manage our ever-failing economy.”

http://www.golocalprov.com/news/casino3/