PROVIDENCE — Legislation giving IGT and its new technology partner — the Bally’s Corporation — a no-bid, 20-year contract to run Rhode Island’s gambling empire for the state Lottery won House approval on Tuesday.
The final vote in favor of the legislation- now headed to Senate – was 62-to-11.
The battle has gone on for years, but nears an end with the legislature’s outnumbered Republicans almost entirely alone now on the battlefield.
The fate of the first in a series of proposed GOP amendments signaled what was to come on Tuesday night. The bid to double Rhode Island’s share of the table-game revenue to 25% to match Massachusetts failed on a 53-to-11 vote.
Bottom line: The bill obligates the IGT-led partnership to 1,100-plus jobs in Rhode Island in exchange for exclusive control through 2043 of the technology that runs Rhode Island’s state-sponsored gambling, including the electronic and live table-game action at the two glitzy Twin River casinos.
The House GOP’s attempt to ensure the 1,100 jobs guaranteed by International Game Technology — and the 30 additional employees pledged by Bally’s (the former Twin River) — actually work for those companies failed 45-to-16.
When he unveiled the reworked bill last week, House Speaker K. Joseph Shekarchi said: “The legislation increases revenue to our state and preserves critical jobs.”
The required upfront payment is larger, at $27 million, than first proposed by then-Gov. Gina Raimondo, and the penalty for missing the 1,100 jobs guarantee is also larger.
But the leader of the House GOP took to social media to protest the length of the Lottery contract and the terms which — by his math — give Rhode island — which runs the casinos — half as big a share as Massachusetts gets from table games at its privately-run casinos.
In a two minute and 45 second video posted on Twitter, House Minority Leader Blake Filippi calls the proposed contract “the insider deal of insider deals,” with terms unseen in any other contract in the nation.
Among Filippi’s arguments: the deal guarantees as much as $800 million in “overpayments” to the IGT-led partnership over 20 years for electronic gambling machines that, he contends, the state could buy cheaper than lease; a paltry “12.7%” share of the table game revenue and a computer system that costs two-and-a-half times what Kansas is paying.
But IGT spokesman Bill Fischer hailed the proposed deal as “an economic development package that will protect and strengthen Rhode Island’s third largest revenue stream, ensure there are no interruptions of service to the Lottery, preserve and protect 1100 good paying jobs and add hundreds of millions of dollars of economic activity to Rhode Island’s economy.
“Unfortunately, here we go again,” he said of Filippi’s arguments.
“He continues to use faulty comparisons to other states about Rhode Island’s Lottery approach. These are not apples to apples comparisons, not even close.”
Shekarchi also disputed Filippi’s arguments point by point in an email to House colleagues.
He acknowledged the table game rate is “a low rate compared to other jurisdictions.”
But he said that reflects the thinking in 2012 when live table game play was introduced: “The State was NOT willing to reduce its exceptionally high take on the slot machines to make marginally more from table games. … RI gets $5.3 million for every 1% of slot revenues & $1.3 million for every 1% of table game revenues.”
With respect to the pros and cons of the state buying the thousands of video-gambling machines instead of leasing them, Shekarchi wrote:
“Such a purchase would require a huge upfront investment by the State and ongoing spending to stay competitive with MA and CT casinos. It would also limit the State’s responsiveness to changing needs … and transfer the risk for these decisions from the private vendors to the Rhode Island taxpayers.
“Maryland tried this approach and abandoned the effort, deeming it a failure.” he wrote..
Filippi called 20-year contracts rare.
“True,” Shekarchi responded. “But so are the jobs commitments linked to this …This is not something a competitive bid would produce.”
On the length, Shekarchi wrote: “They are required to upgrade technology after 10 years. Hence, the technology piece is like [two] 10 year contracts.”
House Republicans hold only 10 of the 75 seats in the House chamber but they dominated most of the debate Tuesday night with proposed amendments.
Among the other anticipated proposals: :
*Up the state’s share of the table game revenue to the same level as that in Massachusetts: 25%.
◘ Up the penalty for falling short of the jobs guarantee from $7,500 per job to the lost taxes — an estimated $23,545 per job.
◘ Put more protections for the state in the event Bally’s sells the R.I. casinos to raise money to “buy up casinos all over the country.” The GOP wants to obligate the company to spending the money in Rhode Island.
The maneuverings over the IGT-Bally’s contract are coming to a head after a period of uncertainty for Rhode Island’s third largest source of revenue.
The pandemic worsened but was not solely responsible for the double-digit revenue decline.
The state’s take dropped significantly, from $397.3 million in Fiscal Year 2019 to $283.9 million in the year that ended on June 30, 2020.
“The net revenue decrease during fiscal 2020 was largely attributable to the opening of a new casino in Massachusetts,” but the mid-pandemic closing of the R.I. casinos in the last quarter of the year “worsened the overall decline…and resulted in a 32% decrease,” the Lottery reported.
Now? “Temperature checks still taken upon entrance and masks on at all times. We are at approximately 50 percent capacity. No valet service as of yet and the hotels have not yet reopened,” casino spokeswoman Patti Doyle said.