Twin River Worldwide Holdings, operator of Rhode Island’s two casinos, is negotiating with Governor Gina Raimondo over a new regulatory agreement that covers its share of revenues from the state-sponsored casinos, which provide the state’s third largest revenue source.
An agreement was supposed to have been reached by November 13, but that deadline passed.
Twin River operates more than 5,000 VLT slot machines at the casinos in Lincoln and Tiverton and keeps 28.05 percent of the gross. It retained an estimated $149.9 million last year, and the state kept about $400 million.
Marc Crisafulli, executive vice president of Twin River, told the Providence Journal, “Our master contract … says if the state VLTs take a downturn as a result of competition from Massachusetts or elsewhere that we have the opportunity to reset our net VLT rate based upon that.”
He added, “It’s worth millions of dollars, but as part of this agreement we’ve agreed to refrain from doing that for this state fiscal year and if we reach a permanent agreement by November 13, which we hope to do, we’ll waive that provision forever.”
He concluded, “In exchange for that we would be updating the regulatory agreement to allow us to invest and continue to grow the way we want to nationally.”
Twin River and the governor are also engaged in a battle in the state house over the 20-year, $1 billion contract Raimondo has proposed with International Game Technology (IGT) to operate all the slot machines and the state lottery. Twin River argues there should be competitive bidding on the contract.
Twin River formed a consortium with Scientific Games, IGT’s largest competitor in game manufacturing, to oppose the proposed contract and make a bid of its own. Its main objection is the provision that IGT can provide up to 85 percent of the machines in the two facilities. Twin River claims IGT’s machines have performed under par compared to Scientific Games’ machines.
Last month during the legislature’s hearings over the contract, Crisafulli claimed the governor’s chief of staff had threatened “consequences” if the company opposed the deal. That official, Brett Smiley, denies making the alleged threat.
Crisafulli said the threat came during “an ongoing conversation” about how a debt refinance by the company might affect its licensing agreement with the state.
During a quarterly conference call with investors, Twin River CEO George Papanier said the dispute with the state might not be put to bed until 2020.
But he downplayed the long-term effects of the dispute, claiming, “We’ve enjoyed good discussions and we’ll continue to work in partnership.”
In related news, Twin River is expanding. It currently operates four casinos and a racetrack. In the spring it hopes to finalize the purchase of three casinos in Black Hawk, Colorado. These properties’ worth is expected to increase due to the recent vote by Colorado voters to approve sports betting for the state’s three casino towns. Twin River is also purchasing two casinos in Mississippi from Eldorado Resorts early next year.
Investors learned that the company’s revenue grew in the third quarter by 17 percent. To $129.3 million, largely because of the acquisition of Dover Downs in Delaware.
The Rhode Island casino were affected by the opening of the $2.6 billion Encore Boston Harbor in June. That caused total revenue in Rhode Island to plummet 9.3 percent from the year before.
Papanier called the Boston area casino the “only competitive threat the company is seeing” to any of its properties.
