The inextricable ties between Bally’s Corp. and state government will be on display as the General Assembly vets a request from the operator of Rhode Island’s two casinos to expand gambling to allow state residents to play slots and table games for cash from the convenience of a smartphone.
The initiative to add iGaming in Rhode Island was first announced on Feb. 16 during the Greater Providence Chamber of Commerce’s annual legislative luncheon. With more than 50 state legislators in attendance, Bally’s Executive Vice President and General Counsel Craig Eaton took the podium and spoke to them directly.
“We see this as a vital step to ensuring our competitive advantage,” he said. “We look forward to continued discussions.”
It might be difficult for lawmakers to say no, considering how much money Bally’s Twin River Lincoln Casino and Bally’s Tiverton Casino & Hotel contribute to the state's coffers.
In fiscal 2019, the last full year before the COVID-19 pandemic struck, the R.I. Department of Revenue says casino gambling and lottery ticket sales totaled $397 million, making it the state’s third-largest source of revenue – not counting federal grants – behind only personal income tax and sales/use tax.
Bally’s says iGaming could bring in an additional $210 million in state revenue over a five-year period.
The proposal to expand gambling is being warmly received by House Speaker K. Joseph Shekarchi and Senate President Dominick J. Ruggerio.
“The prospect of potential new revenue is always appealing to Speaker Shekarchi, and he is keeping an open mind on the issue,” Shekarchi spokesperson Larry Berman told PBN. “He is looking forward to learning more details through a robust public hearing process.”
Bally’s says its proposal would limit online slot machine play and table gaming to people “who are confirmed to be physically present in the state of Rhode Island at the time of their bet.” The company, based in Providence, would like iGaming to go into effect by Jan. 1, 2024, and the measure would “effectively [give] the state complete regulatory control and the ability to ensure the integrity of the program,” Bally’s Vice President of Government Relations Elizabeth Suever said in a statement.
To buoy its lobbying efforts, Bally’s commissioned a report by consultant Spectrum Gaming Group, which concluded that online gaming could generate $93.3 million in gross gaming revenues in the first year, climbing to $130.6 million after five years. Those estimates assume higher-than-industry-average tax rates of 51% on slot and 18% on table games.
Bally’s spokesperson Patti Doyle declined to release the Spectrum study, citing proprietary information. But she said the report will be updated as more feedback is collected regarding potential tax rates, which would be codified in legislation that could be introduced as early as Feb. 28.
At the casinos, the state collects a 61% share of the income at the video slot terminals and 12.7% on table games.
Whatever the rates, there is data backing up Bally’s belief that online gaming is a growth industry. A study conducted by BlueWeave Consulting found the U.S. online gambling market, which reached $2.65 billion in 2021, is projected to grow to $7.6 billion by 2028.
The iGaming legislation will likely be filed by state Rep. Gregory J. Costantino, D- Lincoln, whose district includes the Twin River casino. Costantino said he is waiting for input from the legislative council – which is the principal research and legal team of the General Assembly – before forming an opinion. From there the bill will be forwarded to the House Finance Committee.
“It is in the works,” he said.
As the operator of Rhode Island’s only two casinos, Bally’s effectively has a monopoly on the state’s portion of a gambling industry that in 2022 reached $60 billion in the U.S., a 50% increase since 2019, according to the American Gaming Association’s revenue tracker. And as Bally’s goes, so do the state's coffers.
Supporters have argued that Bally’s remaining competitive, particularly with gambling sites in nearby Massachusetts and Connecticut, is a key to Rhode Island’s fiscal health. But new revenue sources are also in Bally’s interests. On Thursday, the company announced a $425.5 million loss for 2022 and is now amid expansions and acquisitions in Chicago, Pennsylvania, New Jersey and Las Vegas.
Costantino declined to speculate on Bally’s revenue projections for iGaming in Rhode Island, but he noted that estimates given by proponents promising new revenue streams often fall short of expectations.
“Looking back, we’ve always had these estimates,” he said. “And they end up not being what they appear. There have been plenty of times where we didn’t even get close to the estimates. It’s a lot of money. But is it going to be $200 million? $100 million? We will have to wait and see. Obviously, we will look and see if it makes sense.”
