PROVIDENCE – Rhode Island’s House Finance Committee passed its amended lottery contract legislation by a vote of 11 to two on Thursday at Veterans Memorial Auditorium. Two Republicans, House Minority Leader, Blake A. Filippi, R-New Shoreham, and Rep. George A. Nardone, R-Coventry, opposed the bill.
The legislation will be voted on in the R.I. House of Representatives on May 11, and then sent to the R.I. Senate for consideration.
Understanding Breast Health: The Vital Role of Annual Screenings
Breast health is a critical aspect of overall well-being, and regular screenings play a vital…
Learn More
Lawmakers reworked the legislation on Tuesday to ensure that the state preserves its third largest revenue stream, the gambling and gaming industry.
With the amended legislation, lawmakers secured the state’s agreement with International Game Technology PLC and its partner, Bally’s Corp., for a 20-year deal to run the state-sponsored gambling operation.
Annual estimates from the budget office for the state’s continued share from its gaming operation are north of $250 million.
The legislation, which was introduced and sponsored by House Speaker K. Joseph Shekarchi, authorizes the state Lottery Division of the Department of Revenue to agree to an extension of the state’s partnership with IGT.
The legislation is called the Marc A. Crisafulli Economic Development Act due to the Bally’s Corp. executive vice president’s current battle with cancer.
Per the agreement, the Department of Revenue would be obligated to compensate IGT with 5% of annual sales up to $250 million; 4% for sales between $250 and $400 million; and 5% for sales greater than $400 million.
IGT would hold a 60% majority interest in the venture, while Bally’s Corp. would be entitled to 40% of the operation.
The agreement requires IGT to pay the Department of Revenue $27 million, of which $13,500,000 is due by June 30, 2023, and $13,500,000 is due by June 30, 2024, for the right to be the exclusive provider of products and services related to the state’s gambling industry. In the previous version of the legislation the state would receive $25 million.
IGT would be required to create 1,100 jobs in the state for the exclusive control of the state’s gambling system. It also would obligate Bally’s Corp. to employ no fewer than 30 new senior management employees at a corporate headquarters in the state by Dec. 31, 2022.
IGT and Bally’s Corp. would incur a $7,500 penalty for each job that they failed to employ under the terms of the agreement. In the previous version of the legislation, the penalty was $6,400.
The penalty will be assessed for each period of three consecutive calendar years, commencing with the three-year period expiring on Dec. 31, 2024, and tested annually thereafter.
The legislation also calls for Bally’s Corp. to expand its Lincoln Gaming Facility by 50,000 square feet at a cost of $100 million, and obligates the company to lease at least 20,000 square feet of commercial space in Providence through the extended expiration date of 2043.
A few changes in the amended legislation include IGT increasing its financial commitment to the state from $150 million to $155 million for acquiring real property; Bally’s would pay $250,000 in year one; $150,000 in year two, and $100,000 per year thereafter from July 1, 2021 forward until expiration of the contract, to the I-195 Redevelopment District Commission for park naming rights; and the joint venture would increase its funding for problem gambling, from $125,000 to no less than $200,000.
By involvement in the lottery agreement, Bally’s Corp. seeks to further expand beyond its casino operations by monopolizing on gaming revenue that had previously gone to outside gaming entities. Its partnership with IGT accomplishes
that goal and ends what was a controversial and sometimes bitter battle for the state lottery contract.
In 2019, Crisafulli alleged that Brett Smiley, former director of the R.I. Department of Administration, threatened the company, then known as Twin River Worldwide Holdings Inc., with consequences if it did not remain silent on the proposed lottery contract with IGT. The allegation was refuted by Smiley and former Gov. Gina M. Raimondo.
Filippi said the legislation has been rushed through the legislature and is bad for the state’s taxpayers.
“There certainly was a rush to move this thing,” said Filippi, who noted that the lottery agreement was set to expire in two years. “It’s a corporate giveaway. There are a lot of problems with it.”
Filippi said the state is overpaying by leasing the gaming equipment from IGT and Bally’s Corp. instead of purchasing its own machines. He also said the length of the deal should be 10 years instead of 20 years.
“This is a technology contract. No one is entering into 20 year contracts,” Filippi said. “You don’t do it. Twenty years ago I still had a flip phone. People were still using beepers. This should be a 10-year contract with a 10-year option for the state to renew.”
The Lincoln-based Bally’s Corp. owns and manages 13 casinos across eight states, a horse racetrack and 13 authorized OTB licenses in Colorado. With more than 6,000 employees, the Company’s operations include 13,308 slot machines, 460 game tables and 3,342 hotel rooms.
International Game Technology PLC, formerly Gtech S.p.A. and Lottomatica S.p.A., is a multinational gambling company that produces slot machines and gambling technology. The company is headquartered in London, with offices in Rome, Providence and Las Vegas.
Updates throughout to include details of the House Finance Committee vote.
Cassius Shuman is a PBN staff writer. Contact him at Shuman@PBN.com.
