With the statewide referendum on whether to allow a resort-style casino in Rhode Island five weeks away, opponents and supporters of the proposal last week rolled out studies that showed conflicting pictures of what the development would mean for Rhode Island’s economy.
The studies – released hours apart last Monday by the Rhode Island Building & Construction Trades Council and the Rhode Island Public Expenditure Council (RIPEC) – show vastly different results for the state should Las Vegas-based Harrah’s Entertainment be allowed by voters to build a casino in West Warwick.
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A referendum on the November ballot will ask voters whether they want to amend the state’s constitution to make way for a casino run by Harrah’s in partnership with the Narragansett Indian Tribe.
The first study issued last week, commissioned by the Trades Council, said that if the casino is built, the state will receive more than $681 million for property-tax relief in the casino’s first six years of operation.
Harrah’s has agreed to contribute money for property-tax relief to the state’s coffers, as a concession for allowing the casino to come to Rhode Island, but has said it will negotiate the exact figure with the state legislature if voters approve the referendum.
Another recent study, by the University of Massachusetts–Dartmouth’s Center for Policy Analysis, has predicted a casino would generate 10,000 new jobs, both directly and indirectly, and would provide Rhode Islanders with more than $444 million in new net income.
Last week’s RIPEC study, however, states that Rhode Island’s existing income from gaming is at risk should the casino be built.
Currently, the state takes 60 percent of the gaming revenue from Lincoln Park and Newport Grand, the state’s two gambling parlors. By contrast, Harrah’s has talked of giving the state between 25 and 40 percent of its revenues.
Using the 25 percent figure, the RIPEC study estimates the state could lose as much as $1.1 billion during the casino’s first decade of operation, assuming that the more upscale Harrah’s development would siphon business from the Lincoln and Newport facilities.
Additionally, RIPEC notes, the state already has agreed to make “slippage” payments to Lincoln Park and Newport Grand, should they lose money because of a new in-state gambling operation.
“Strictly from a dollars-and-cents point of view, the state would not take in as much money,” said Gary Sasse, executive director of RIPEC. (Sasse also is chairman of the committee on economics for Save Our State, an anti-casino proposal coalition.)
But Gary Loveman – CEO of Harrah’s, which said it didn’t have a part in the construction trades council’s study – said in an interview last week that he did not expect the Lincoln and Newport facilities to be significantly hurt by the proposed West Warwick casino.
Although the RIPEC study uses the premise that customers of Lincoln and Newport will instead travel to the Harrah’s casino, Loveman said an additional gambling facility in Rhode Island would only expand the market.
“When a new provider comes to the area with a compelling offering, the market grows,” Loveman said. “There was plenty of coffee to go around, but when Starbucks showed up, everybody drank more and paid more. … No one would argue today that there’s any less coffee being sold at the shop across from the [Providence Journal] because there’s also Starbucks and Dunkin’ Donuts in Rhode Island.”
Additionally, Loveman said, the Las Vegas-based Harrah’s will agree to compensate the state for slippage payments during the casino’s first two years of operation, should the West Warwick project be approved.
The economic impact of the Harrah’s proposal has long been a major factor in arguments both for and against the project.
Some industries, such as construction, have mostly supported the proposal, because of the boon the estimated $1 billion capital investment would provide to Rhode Island builders.
Others, including portions of the restaurant industry, have been vocal opponents of the plan.
Dale Venturini, president and CEO of the Rhode Island Hospitality and Tourism Association, has been against the casino because of the business her organization thinks the Harrah’s development would take away from existing restaurants and tourist attractions.
Last month, Venturini sparred with Harrah’s Senior Vice President Jan Jones over the creation of the Gateway Center, a component of the proposed casino that would aim to promote Rhode Island restaurants and cultural attractions to out-of-state visitors.
In a letter signed by her and association board chairman Brian Casey, Venturini took Jones to task over a letter to hospitality professionals, announcing the center’s creation.
In her letter, Venturini cited studies saying up to 75 percent of money spent in a casino would have otherwise been spent at a local restaurant or business.
In an interview last week, she said she still had no doubt that the casino would dramatically harm Rhode Island’s hospitality industry and that casinos aim to keep patrons on their property.
“[The Gateway Center] is just one of the show game they are playing,” Venturini said, calling it a good public-relations move.
Last week, Harrah’s and the individual it had hired to promote the Gateway Center – Federal Reserve owner Robert Burke – refuted Venturini’s statements, saying the casino would help draw tourists to other parts of the state. The Gateway Center is just one piece of that, they said.
Burke, a former casino opponent who now sees the potential for a positive impact on his industry, said the Gateway Center would help Rhode Island restaurants by publicizing them to visitors and including them in a points program that encourages casino patrons to visit other venues.
“We’ve got the amenities that people already come from all over the world to enjoy,” Burke said. “With the power that Harrah’s has to market … they become a very, very important partner in marketing Rhode Island as a global destination.”
Loveman, at Harrah’s, pointed to an opinion piece in the Sept. 18 Providence Business News, by University of New Orleans professor Kathryn Hashimoto, who said there is no evidence from other U.S. casino developments that local restaurants are harmed when casinos come into a market.
“There are going to be so many more people there that weren’t going to be otherwise,” Loveman said. “If just a small portion spill into the [Newport] mansions or into Federal Hill … then everybody comes out ahead.”
