Right time for expanded gaming in Newport?

(Editor’s note: This is the second in a three-part series of stories on statewide ballot questions voters will consider next month.)
Authorizing table games at Newport Grand could keep the struggling casino from closing, proponents and one independent analyst say, but opponents don’t think the step is necessary.
Passing table games in Rhode Island, one of two gaming questions on the Nov. 4 ballot, would be an opportunity for Newport to capture more market share from Massachusetts, where casinos are planned, and more patrons from Connecticut, home to Mohegan Sun and Foxwoods Resort Casino, said Clyde Barrow, a national gaming expert.
Formerly based at the University of Massachusetts Dartmouth and now chairman of the political science department at the University of Texas-Pan American, Barrow is also project manager for the New England Gaming Research Project, which annually conducts research and analysis of New England and Northeastern casino gaming.
“If [Rhode Island voters] don’t pass table games,” Barrow said, “Newport Grand continues to be a declining facility and at some point somebody is going to close it down. It’s the smallest revenue generator in New England and has been in decline [for] eight years.”
But casino opponents have a different view.
“There have been headlines across the nation of casinos failing,” Citizens Concerned About Casino Gambling political director Dawn Euer said. “It’s a bad decision on the part of the state to invest more effort and policies in supporting casino gambling because it’s not the economic driver we need now or in the future.”
Two years ago, Rhode Island voters rejected approving table games at Newport Grand, but there was no redevelopment associated with the ballot question as there is today. In fact, investor and former Providence Mayor Joseph R. Paolino Jr. and his two partners say they will invest as much as $40 million to add table games, a spa and an entertainment venue at the facility only if the two gaming questions on this year’s ballot pass.
At an Oct. 6 press conference at Newport Grand, Paolino said through Jobs for Newport, which the partners have formed to promote their plans, that the entertainment center that is planned also may become home to events like the Newport Summer Comedy Series. The series and other events may no longer be hosted by the Newport Yachting Center, which has been sold by Newport Harbor Corp. to the Peregrine Group LLC. Newport Harbor executives have said they intend to lease back portions of the property to continue running the Boat Show, the Charter Yacht Show and other private events but would not lease back the concert venue or marina. Voting yes on Question 1 would allow developers seeking to renovate Newport Grand to add table games to its slots offerings at 150 Admiral Kalbfus Road in Newport. The city’s share of slots income would increase from 1.01 percent to 1.45 percent, according to enabling legislation. The investors, Newport Entertainment and Leisure LLC, also would make six annual minimum payments of $1.5 million each to the city, according to the Secretary of State’s voters’ guide.
Voting yes on Question 2, which amends the state constitution, would assure that no casino in the state could be relocated unless a municipal referendum in the affected city or town were held, which developers hope will assuage fears that emerged in the past that Newport Grand could be relocated to the more heavily trafficked waterfront.
Question 2 also would apply to Twin River in Lincoln.
Tensions have run high on these questions, with a recent Superior Court lawsuit filed by three residents of Newport alleging that the table-games ballot question is unconstitutional and should be removed from the ballot.
The Newport City Council also recently voted 4-3 to reject a proposed host agreement with the investors.
In the context of the potential for Massachusetts gaming, Barrow acknowledges that a ballot question in that state calling for the repeal of the Massachusetts gaming law, which allows up to three casinos and a slots parlor in the state, could fail. But he believes that’s unlikely.
Developer Steve Wynn’s Greater Boston proposal, MGM Springfield in western Massachusetts, and a Penn National Gaming slot parlor in Plainville have tentative licenses. A resort license for southeastern Massachusetts could be awarded next year.
According to the state office of revenue analysis in the R.I. Department of Revenue, between fiscal years 2005-2014, net terminal income at Newport Grand has declined by just under $35 million – from $79.4 million nine years ago to $44.6 million today.
Those facts also are reported in a study completed by Edward M. Mazze, a professor of business administration and former dean of the College of Business Administration at the University of Rhode Island, for Newport Entertainment and Leisure LLC, which lobbied to get the gaming questions on the ballot. Mazze’s study determined the project not only would preserve 175 jobs, but also create $50 million in economic activity in the state, adding 350 new permanent full-time jobs in gaming and hospitality, and supporting another 414 full-time and indirect construction jobs.
“Certainly table games create more jobs than slot machines and better-paying jobs,” said Barrow. “It makes sense [to add table games] if you want to go with expanded gaming.”
The Newport Chamber of Commerce has deliberately remained neutral on the two ballot questions because the issue has “polarized” members, said Executive Director Jody Sullivan.
“We did have each side [come] to a Chamber board of directors meeting and we listened to each of their positions so our board could understand both sides,” she said. “But generically, some residents believe it will be good for our local economy and some believe it would be bad. That’s why we give the residents the right to decide in the end.”
The table-games ballot question is different from the one put forth in 2012, according to R. Daniel Prentiss, the lawyer for Newport residents Deborah Arnold, Elizabeth P. de Ramel and Charles Weishar, because it does not, as the constitution stipulates, call for two votes, a statewide and a local vote, but rather one statewide vote in which Newport votes will be tallied separately. Voters statewide and in Newport must still approve the question for it to pass, just as in 2012.
The residents’ lawsuit, which names the city of Newport and Secretary of State A. Ralph Mollis as defendants, also references the 2012 referendum, in which the city had its own local question and there were 249 more ballots cast on that question than in the statewide referendum, with 170 more votes to reject it.
“Even if the referendum goes forward and voters approve the statewide referendum, it still will not have been the subject of a [separate] local referendum as required by the constitution, so therefore, a law expanding gambling cannot take effect,” Prentiss said.
Newport Mayor Harry Winthrop, who voted for the host agreement on Sept. 24, believes the proposal to add table games would preserve the jobs there today, which he said actually number closer to 200. If table games are not added, he said, revenue will continue its downward slide. “My feeling is,” said Winthrop, “with the pressure that’s coming from the Massachusetts casinos, it will put so much pressure on Newport Grand, and revenue has already tailed off, [so] that revenue will continue to dwindle and people will be out of jobs five or six years from now. That’s a huge fear on my part.”
Sen. M. Teresa Paiva Weed, D-Newport, had supported the table-games question contingent on Newport approving the host agreement. Since the host agreement was rejected, she said, she cannot support the ballot question. Nonetheless, she does fear for the casino’s future.
“I am not supporting the referendum,” she said. “Newport Grand is an ongoing, existing business regardless of whether the referendum passes or fails.”
Yet, while the decision is up to state and city voters, Weed added, “I am concerned about the people that work at Newport Grand and the potential loss of revenue to the state and city, much of which will be dependent on the outcome of the referendum in Massachusetts.”
Citizens Concerned About Casino Gambling’s Euer called Newport Grand a “great employer and community partner.” She said the focus should be simply on ensuring that casino employees don’t lose their jobs, no matter how the referendums turn out.
With Massachusetts casino gaming seemingly on the way, the Northeast has “hit a saturation point,” she added. “We’re so small in Rhode Island, we’re going to continually be competing with our neighbors, so putting more eggs in the gambling basket is a losing bet, and we need to focus on our local businesses.”
As for Paolino, he said he is leveling his own grassroots campaign, walking neighborhoods and promoting passage of the two ballot questions.
“We want to make this a boutique European facility,” he said. “It’s going to be separate from what we’re seeing in America. By making it European, gaming will not be the highlight, it will just be a component. [But] the gaming is what’s going to make it happen. My message is, it’s already a casino.”
Newport Grand CEO Diane Hurley, who has avoided public comment on the ballot questions, did not immediately return a call last week.
Twin River spokeswoman Patti Doyle says that if the referendum doesn’t pass, “It’s safe to say there’d be less revenue coming to the state. And you’d have to look at the long-term viability of Newport Grand. So, from the state’s perspective, it’s helpful to have a competitive Newport Grand.” •

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