8/20/10

Casino Question Up in the Air

Rhode Island legislators missed a big opportunity when they failed to return to session to override the Governor Carcieri’s veto on the casino referendum. Although the legislation was flawed and incomplete, it would have allowed voters to move Twin River and Newport Grand to full casino status with table games. We needed to do that and without the delay we may be looking at now.

Why is this so important? Well, because we are in a looming war with Massachusetts over future gaming dollars. Massachusetts legislators may have failed to reach a compromise with Governor Deval Patrick over the Bay State’s own move to authorize gaming sites – the legislation foundered on the Governor’s refusal to accept two racino sites presented by the legislature – but what Rhode Island is ignoring by our inaction is the speed in which Massachusetts can return to the issue. That could come back to bite us.

Here’s why: in contrast to Rhode Island, Massachusetts does not have to put casino-related issues on its ballot, which affords them a much speedier process. We do have to place such issues before voters, and that opportunity comes only every two years unless we move to a cumbersome special election. Bay State legislators can return at any time to readdress the casino issue, and could do so as soon as January.

With the collapse of the Bay State legislation, Rhode Island had an open window of opportunity to get our own racino-type gaming facilities – or certainly Twin River (our true cash cow) -to full casino status and keep Bay State gamblers coming to our facilities. It has been estimated that some forty percent of gamblers using our facilities are crossing into Rhode Island to do so, helping to deliver the approximate $250+ annual take that goes to state coffers.

It should be noted that it takes five years to site, zone and construct a casino but only ninety days to get slots operating in existing race tracks. If an eventual deal in Massachusetts is worked out, competition from one or more racinos could come at us fast.

Now, to the important issues the Governor cited in vetoing the bill that made its way to his desk this past June. The legislation did not address two crucial matters for the state: (1) a one-time casino-licensing fee and (2) assurance of the state’s take on every losing dollar (a very high and exceptional 61 cents presently). The Governor feels that absent language defining these two issues, the state could open itself up to unpleasant surprises. He’s right of course, and the General Assembly, instead of running out of the building early on June 4th, should have dealt with them. They certainly had time to deal with them so this didn’t happen, but it’s actually on a par with previous casino legislative efforts that have also emerged seriously flawed and then been run aground. It’s pretty much the same faulty script here.


My contention is that, considering what’s at stake, these matters could have been handled later. After all, the situation with Twin River is complicated at best: its previous owners couldn’t pay the construction bills so the place went into bankruptcy; the state had to take it over and search for a new owner/operator, and legislation had to be passed (which the General Assembly did accomplish) providing certain assurances and guarantees to whatever entity (there is supposedly one waiting in the wings) eventually takes it over from the state. The interested outside parties have been clamoring for the referendum to approve going to full casino status because they too understand that only by doing that –and doing it as soon as possible – will they have a chance at survival down the road.

If we are serious about protecting our considerable investment in this third major stream of revenue, then we should have gotten the casino issue in front of voters this November. The legislature’s failure to address this issue in the full manner required, such that the Governor would not have felt the need to issue a veto, is confounding and could have serious consequences.