Rhode Island Governor Gina Raimondo last week made the rounds in the state capital in Providence among lawmakers; fighting for the exclusive 20-year contract she negotiated with International Game Technology (IGT) to continue to run the state’s lottery system, including providing the bulk of the slot machines used by the state’s two Twin River casinos.
The contract has come under increasing criticism and scrutiny and attack by Twin River, which has partnered with another company to make a counter-proposal that, it says, would save the state money.
During a three and a half hour hearing before Senate Finance Committee, the governor criticized Twin River’s proposal to be allowed to bid, noting that the casino company has no experience running a lottery operation, and predicting that the state would lose about 1,000 jobs if Twin River were to get the nod. “I would say you can’t gamble on that … It’s a bad joke, but it’s true,” said Raimondo.
Some senators demanded to know why the IGT contract only requires the company to pay its employees 150 percent of the state minimum wage.
The twin casinos in Lincoln and Tiverton provide the third largest source of revenue for the Ocean State’s government, which was about $397 million in 2018. Recent figures indicate that table games revenue at Twin River Casino plunged 38 percent in August over the year before and that video slot revenue declined 16 percent. This is almost certainly the result of the recent opening of the $2.6 billion mega casino the Encore Boston Harbor in Everett, Massachusetts.
Raimondo has suggested that Twin River was unprepared for the Encore’s opening and that this accounted for the declines. Twin River President Marc Crisafulli dismissed this suggestion, stating that Twin River invested “over $170 million” to build its new Tiverton Twin River casino, which is just across the border from Massachusetts, a new hotel in Lincoln and to add a sportsbook café.
Other wrinkles in the state’s relationship with IGT have started to surface during the deliberations. On a TV appearance last week, Crisafulli said his company was required to give IGT “new business” at its casino in Biloxi, Mississippi, in return for IGT allowing “free play” to attract new customers.
“We needed better promotions,” he said. But “in order to get the right to do better promotions, we actually had to give IGT over $1 million worth of business in Mississippi just to get them to tell the lottery that we should be able to do more promotions.”
IGT Chairman Robert Vincent fired back, saying, “Over time, it has been a desire of the lottery to introduce free play and we have accommodated that by waiving our rights in certain instances to allow for free play … in return for remuneration or other considerations.”
Somewhat ominously, Vincent hinted at possible litigation: “We’ve simply stated we feel this is a violation of our rights and we will pursue remedies if necessary.”
Vincent told the Providence Journal, “GTech and now IGT have held from the beginning that free play—the promotional points that are given out—was a violation of our master contract because it eroded the percentage we would get for providing machines.”
Contractually, IGT gets 7 percent of slots revenue at both casinos.
Twin River spokesman Patti Doyle gave the Journal more details on the “free play” issue. “There is no contract language that compelled us to commit $1.2 million in additional machines for (the Biloxi property),” she said. “The opposition to it occurred in our conversations with IGT. In those conversations, IGT made it clear that it was opposed to more free play at our Lincoln property but dropped that opposition with the commitment of $1.2 million in additional business in Biloxi.”
This also “compelled” Twin River to agree to pay $500,000 a year in premium game rentals in Rhode Island, Doyle added. “In return, IGT agreed to waive any claims against the state.”
