House passes 20-year deal to run state-sponsored lottery

NEW TAX LEGISLATION could make buying sugary soft drinks costlier in Rhode Island, leading to debate over the measure’s potential positive effects on health and negative effects on the economy. / PBN FILE PHOTO/NICOLE DOTZENROD
HOUSE LAWMAKERS passed their reworked state lottery legislation on Tuesday, securing the state's 20-year agreement with International Game Technology PLC, and Bally's Corp., its third largest revenue stream. / PBN FILE PHOTO/NICOLE DOTZENROD

PROVIDENCE – The House on Tuesday approved an agreement with International Game Technology PLC, and its partner, Bally’s Corp., for a 20-year deal to run the state-sponsored gambling operation.

The 62 to 11 vote preserves the state’s third largest revenue stream, the gambling and gaming industry.

During the session, Republican leaders proposed eight amendments to the legislation that were all defeated.

“We will pass this bill and be locked into a technology bill for 20 years,” said House Minority Whip Michael A. Chippendale, R-Coventry, prior to voting in opposition to the bill.

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“There are so many flaws in this bill,” said House Minority Leader, Blake A. Filippi, R-New Shoreham, who called the legislation a corporate giveaway that should have been put out to bid.

Rep. Carol Hagan McEntee, chair of the House Committee on Small Business, said the legislation is a job creator. “This is not corporate welfare,” she said. “It is economic development.”

Rep. Marvin L. Abney, chair of the House Committee on Finance, said that the legislation was part of a three-year process. “So many people worked hard to make this a better bill than it was before.”

On May 6, lawmakers reworked the legislation to strengthen the agreement, and passed it out of the House finance panel two days later.

Annual estimates from the state budget office for the state’s continued share from its gaming operation are north of $250 million.

The legislation, called the Marc A. Crisafulli Economic Development Act, was introduced by House Speaker K. Joseph Shekarchi. It authorizes the state Lottery Division of the Department of Revenue to agree to an extension of the state’s partnership with IGT.

Per the agreement, the Department of Revenue is obligated to compensate IGT with 5% of annual sales up to $250 million; 4% for sales between $250 million and $400 million; and 5% for sales greater than $400 million.

IGT holds a 60% majority interest in the venture, while Bally’s Corp. is entitled to 40% of the operation.

The agreement requires IGT to pay the Department of Revenue $27 million, of which $13.5 million is due by June 30, 2023, and $13.5 million 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.

IGT is required to create 1,100 jobs in the state for the exclusive control of the state’s gambling system. It obligates 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.

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.

By involvement in the lottery agreement, Bally’s Corp. seeks to expand beyond its casino operations by monopolizing on gaming revenue that previously went 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.

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.

Cassius Shuman is a PBN staff writer. Contact him at Shuman@PBN.com.

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