Mass. may raise R.I.’s bet on gaming

Massachusetts’ seemingly unstoppable march toward casino gambling is threatening to take a multimillion-dollar chunk of revenue from Rhode Island’s big moneymakers, Twin River and Newport Grand.
Bay State leaders appear ready to allow two licensed casinos and hundreds of slot machines at four racetracks, moves that would severely cut into the number of out-of-state patrons visiting the Ocean State’s two slot parlors.
Adding to the looming troubles: A proposal unveiled last week to build a $500 million casino in Fall River, just a 25-minute drive from downtown Providence.
These developments have intensified the sense of urgency to what has become an annual legislative debate on the pros and cons of permitting full-blown casinos in Rhode Island.
Clyde W. Barrow, director of the Center for Policy Analysis at the University of Massachusetts Dartmouth, said already cash-strapped Rhode Island stands to lose an estimated $50 million – and maybe more – in gambling revenue from the reduced cross-border traffic to Twin River and Newport Grand unless the Ocean State makes a matching move to clear the way for casinos.
“If [lawmakers] do nothing, it will be a real financial mess for the state,” said Barrow, a former adviser to the R.I. Senate on gambling policy.
The casino discussion is well under way at the Statehouse.
Last week, the House Finance Committee heard a bill that would put the casino question before voters statewide in November, seeking permission to allow Twin River in Lincoln and Newport Grand in Newport to convert to full casinos.
House Finance Chairman Steven M. Costantino has backed the referendum.
Also, Attorney General Patrick C. Lynch appeared on Smith Hill to urge lawmakers to approve his legislation that would create a regulatory system to oversee casinos. “We need to start preparing now for a gambling marketplace that’s about to become a lot more competitive,” the Democratic gubernatorial candidate said in a press release.
Political observers believe it’s a sure bet that Massachusetts lawmakers will sign off on licensing at least two casinos and permitting 750 slots at each of the state’s four race tracks, including Raynham Park. The House passed legislation last month, and the Senate is expected to approve its own version by July. Gov. Deval L. Patrick already has backed adding new gaming sites as the state tries to weather its fiscal problems. Officials favor placing one of the casinos in southeastern Massachusetts.
To that end, the Mashpee Wampanoag tribe last week unveiled plans to build a casino complex in Fall River, complete with three hotels, a shopping mall and a cinema. The project was slated for a 300-acre parcel initially intended to be developed as a biotech park.
At the same time, the tribe abandoned longtime plans to construct a $1 billion gaming facility in Middleboro.
The Fall River proposal hit some early snags last week. The property owner, the Fall River Redevelopment Authority, held off taking action at a public hearing after nearly four hours of debate. The authority is expected to reconvene on May 26.
Then the Patrick administration demanded the tribe be ready to reimburse about $35 million that the state paid to build a highway ramp on Route 24, if the casino comes to fruition. Public financing for the ramp was intended to develop the biotech park.
Still, Barrow said the Fall River proposal has advantages over the Middleboro plans, for both the tribe and the state.
The new site likely would not be deemed tribal land, making a casino there subject to state oversight and taxes. For the Mashpee Wampanoag tribe, it would sidestep a Supreme Court ruling blocking the tribe’s desire to place the proposed Middleboro property into federal trust.
In addition, Barrow said, the Fall River site could take advantage of the city’s more substantial public-safety departments and infrastructure. It’s also situated with easy access from Providence and Boston.
“It’s a good location,” Barrow said, although he acknowledged it would be a “worst-case scenario” for Rhode Island.
With Massachusetts moving forward with plans for casinos and racetrack slots, Twin River’s operators are growing anxious.
“There’s got to be a plan,” Patti Doyle, spokeswoman for Twin River, said last week. “It’s not just about expanding revenue at this point; it’s about preserving a revenue stream of more than $300 million.”
Twin River parent company UTGR Inc. – a subsidiary of BLB Investors LLC – filed for bankruptcy protection last year, unable to pay back about $560 million in loans after paying $445 million for the slot parlor and greyhound racetrack in 2005 and then plowing $225 million into renovations in 2007. With state leaders grappling with multimillion-dollar budget deficits in recent years, they have made moves to protect the more than $250 million both Twin River and Newport Grand bring in to the state’s coffers annually.
In recent years, state officials have permitted significant increases in video-slot machines and allowed virtual gaming tables. As part of Twin River’s reorganization plan, they also consented to 24-hour operations and cleared the way for Twin River to close its greyhound racetrack.
The state has come to rely heavily on money raised at the two slot parlors. As of the end of April, the video-slot terminals at both locations had brought in net revenue of $386.95 million in fiscal 2010, according to lottery officials, of which the state has taken $273.82 million.
In a report on New England gaming released in March, Barrow estimated that more than 47 percent of Twin River’s patrons and more than 44 percent of Newport Grand’s come from Massachusetts, based on a survey of license plates in parking lots.
From that, Barrow calculated that Massachusetts residents contributed about $133 million to Rhode Island’s general treasury in calendar year 2009.
But that won’t last if casinos and racetrack slots become reality in Massachusetts. Barrow estimated that the Bay State would “recapture” at least half the gaming revenue going into Rhode Island, and it would draw in a new flow of Rhode Island patrons.
“You’re talking about Rhode Island’s state budget losing $50 million to $100 million,” he said.
Gov. Donald L. Carcieri has no objection to putting the casino question before the voters, according to his spokeswoman, Amy Kempe.
“The governor is well aware of the developments in Massachusetts,” Kempe said last week. “He believes the state has an obligation to protect the facilities [Twin River and Newport Grand] and the taxpayers.”
But, she added, Carcieri is concerned about getting the right licensing system in place to “capitalize on the value” of legalizing full-scale casinos. •