Poli-ticks

Arlene Violet: Another hoodwink reappears on Smith Hill

By Arlene Violet
Posted 7/23/20

Like a relative who comes to visit and never goes home, IGT (now joined by Twin River) is about to press the General Assembly for a renewed 20 year contract for gaming services. As you will recall, …

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Poli-ticks

Arlene Violet: Another hoodwink reappears on Smith Hill

Posted

Like a relative who comes to visit and never goes home, IGT (now joined by Twin River) is about to press the General Assembly for a renewed 20 year contract for gaming services. As you will recall, Governor Gina Raimondo made a secret billion dollar deal without bid. One of her cronies who were IGT’s former Chairman served with her when she headed the Democratic National Committee and he poured campaign contributions into her coffers. It seems that a sweetheart deal is poised for approval by the legislature despite numerous red flags.

Take, for example, the IGT promised “guarantee” of 1100 jobs, a target missed at least 5 times during the existing contract. The language of the legislation is so broad that IGT can fulfill its ”commitment” by counting employees of outsourcing or temporary employees retained by an employment agency. Usually, the latter are considered independent contractors and no funds are put into the state treasury for future unemployment or disability. In trying to mitigate the smoke and mirrors of this provision the CEO of IGT noted that the definition was in the last contract. In other words, the company hoodwinked the solons once before so it should be allowed to fudge the commitment again.

The House of Representatives hired a consultant to examine the proposed deal. He found that that the past IGT contract resulted in a loss of $2.5 billion in lost opportunity in top line over the last 10 years, $520 million in General Fund contributions, $130 million in retailer commissions and $1.7 billion in prizes. As ludicrous as it sounds, the General Assembly is poised to repeat the mistake despite all its hand-wringing about the shortage of revenue precipitated by the COVID-19 pandemic.

Alan Hassenfeld, former Chair and CEO of Hasbro, has argued input must be gathered from experts in gaming technology who can project the future of gaming. He notes that the longevity of any contract must be carefully examined given the rapidity of technology changes. “G” technology was unheard of years ago and the rapidity of technology could render gaming machines obsolete. Indeed, when Twin River was fighting with IGT for the contract, it noted that RI casinos had the lowest returns on IGT slots, pegging the shortfall as $52,000 per machine, relative to the competition. With regional competition returning higher returns it doesn’t take a rocket scientist to conclude that patrons won’t be ponying up to have their pockets picked in R.I.

Ironically, on the same day that the Providence Journal ran the story about the reappearance of the IGT/Twin River deal, the newspaper ran the story as to how the $3 million "guarantee" of revenue to the town of Tiverton for allowing the Twin River expansion isn’t really a guarantee at all so the town will be shortchanged.

The past performances on the promises and the future of gaming, given the changing technology and times, scream caution. No 20 year contract should be awarded. Other gaming states have fewer terms. States also have a guaranteed minimum of revenue. Finally, the gaming service still has not gone out to bid.

The General Assembly has plenty of time to put gaming services out to bid. That is the only aspect of any contract which should be passed in this session.

Arlene Violet is an attorney and former Rhode Island Attorney General.

Arlene Violet

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A lifelong Portsmouth resident, Jim graduated from Portsmouth High School in 1982 and earned a journalism degree from the University of Rhode Island in 1986. He's worked two different stints at East Bay Newspapers, for a total of 18 years with the company so far. When not running all over town bringing you the news from Portsmouth, Jim listens to lots and lots and lots of music, watches obscure silent films from the '20s and usually has three books going at once. He also loves to cook crazy New Orleans dishes for his wife of 25 years, Michelle, and their two sons, Jake and Max.