Rhode Island lawmakers last week grilled representatives of IGT and Twin River about their proposed joint venture to exclusively contract to the state for 20 years to provide lottery services. The lottery also oversees the video lottery terminals that are deployed at the state’s two casinos, Twin River Casino Hotel and Tiverton Casino Hotel.
International Game Technology and Twin River, once bitter enemies over this issue, mended fences recently and agreed to a joint proposal to the state. Then last week they found themselves undergoing new tough questioning by the House Finance Committee Wednesday.
They also faced probing questions from the state Department of Revenue, which oversees gaming. The department implied that the proposed contract does have a large enough up-front payment from the companies.
Director of Revenue Marc Furcolo wrote the committee: “The proposal in this bill includes exclusive management of 100 percent of the video slot machines by an IGT/Twin River Joint Venture. Given that this proposal is for two exclusive licenses instead of one, the committee may want to consider an increase in the upfront payment.”
The partners propose to pay Rhode Island $25 million over two years, similar to what IGT had negotiated with the state to pay last year. Twin River opposed that contract and launched a long and bitter public relations campaign, in which both companies found themselves at the receiving end of advertising.
Then both companies followed the urging of legislative leaders, began talks on a joint agreement. They reached an agreement in January to include Twin River in the lottery contract in return for the casino company agreement to invest $100 million on its casino in Lincoln. The deal gives IGT 60 percent of the lottery receipts and 40 percent to Twin River.
Furcolo also questions Twin River’s proposal to raise its debt limit as part of the contract. This would allow it to form a REIT and lease back the property where its casinos are.
Some lawmakers have said that Rhode Island will pay the partners too much for the lottery service and criticized the agreement for not requiring that slot machines be replaced fast enough. They also point out that the state’s lottery underperforms neighboring Massachusetts’s.
Another critic, Steven Frias, says the contract shouldn’t be longer than ten years. He wrote, “This no-bid contract provides a subsidy to IGT that exceeds the amount of tax revenues it directly generates to Rhode Island. It will undermine the ability of the State of Rhode Island to maximize its lottery and gam-bling revenues for the next two decades. To get the best deal for taxpayers, Rhode Island should go out to competitive bid.”
Twin River Executive Vice President Marc Crisafulli told the committee members, “We acknowledge this has to be a better deal for Rhode Island taxpayers and one that is better than anything that could be accomplished through a competitive bidding process.”
He added, “We thought it essential to create a three-way partnership between the state, Twin River and IGT to enhance our ability to compete with Massachusetts and Connecticut and maximize revenues.”
