7/4/09

7-4-09 Lookout Column: Going to the Dogs

You’ve got to hand it to Rhode Island legislators. With Lincoln’s Twin River slots parlor in bankruptcy and looking for a new owner, what does the gang that couldn’t legislate straight do to make things even more complicated and onerous? They pass legislation forcing Twin River to continue dog racing – a money losing activity for Twin River and the state. Other New England states are ending dog racing for obvious reasons: the so-called “sport” is in decline because of public disinterest and also revulsion at the lives the poor greyhounds are forced to lead. But here in Rhode Island old traditions hang on, protected by special interest Democrat legislators.


It’s appalling. Continuing dog racing at Twin River will make it that much harder to find a buyer in the next four months and could potentially overturn the entire restructuring effort, which could end up costing the state millions in expenses and lost revenue. Apparently legislators are more concerned about preserving the limited number of jobs tied to dog racing at Lincoln than they are about the future of Twin River itself and the state’s considerable stake in the place. Someone should remind them when they return sometime this summer, or perhaps not until the fall, that revenues from Twin River are the lion’s share of a $245 million expected (and absolutely needed) take from slots revenue. As all should know by now, that figure represents the third major source of revenue for the state after income tax and sales tax. Without it, Rhode Island goes belly up pretty fast.


Don’t get too excited when you read that Harrah’s or Boyd Gaming is salivating over the prospect of getting their hands on Twin River. Harrah’s itself is deep in debt and the entire gambling industry is in the doldrums because of overbuilding and far fewer customers hurt by the global recession. Any entity that takes over Twin River will face an uphill struggle to make a sustainable profit because of the terms set by the state. The fact is, 61 cents on every losing dollar going to the state is not in the best interests of any private owner/operator of Twin River. The owners of Twin River have made that well known and have tried to get the state to reduce its take by offering a lump sum payment and then a reduced state take per losing dollar. But Rhode Island is so dependent on its 61 cents per dollar that it can’t see its way to any compromise. That leaves the state and whoever ends up with Twin River in a mutual life support situation.


Adding table games and going all the way to make Twin River a full-blown casino would help a bit, and you can be sure that’s coming. Along with stiffing Twin River’s current owners with continued dog racing, the legislators did approve 24 hour/7 day a week operations, which will help the revenue stream a bit. (The town of Lincoln, the host community, gets no say in this.) The Governor has said he will veto the measure because of the dog racing requirement, but the General Assembly will likely override his veto upon its return.


The sooner Twin River becomes a casino with all the traditional trappings and entertainments of a casino the better, because Massachusetts is getting close to throwing itself into the gaming business, and that will certainly hurt even a casino operation at Twin River because Bay State day gamers will no longer have to travel across state lines to play their penny and nickel slots.


The only way the state is going to rescue itself and its finances from the big problem that Twin River has become is to refashion a revenue sharing formula with a new owner. The state should reconsider a big one-time payment offer along with a reduction in its take down from 61 cents per dollar (The industry standard is less than 30 cents per dollar.) That’s really the only way to gain a new owner and guarantee what would then be a viable casino operation. Otherwise this bankruptcy plan could unravel and the state could be left holding a whopper of a losing hand.