RI to Face $307M Budget Hole from Lost Lottery Revenue

Monday, January 21, 2013


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Despite a November ballot measure which approved the implementation of table games at Lincoln’s Twin River Casino, the state of Rhode Island is projecting a loss of $307.6 million in lottery revenue over the next four years as gambling facilities come online across the border in Massachusetts.

The findings, estimated in Governor Lincoln Chafee’s budget proposal for the 2014 fiscal year, are based in part on a study the state commissioned last year that analyzed the financial impact the addition of table games would have on the facility ahead of last November’s statewide referendum.

Ultimately, over 70 percent of the voters approved the ballot measure and though the move is expected to create approximately 350 jobs on site and upwards of 300 jobs in the surrounding community, it won’t be enough to stave off a substantial loss in revenue when the Bay State begins opening its gaming parlors in either 2015 or 2016.

Location, Location, Location

According the Chafee’s budget, the state is estimating a loss of revenue from the lottery department of $53.7 million dollars in the 2016 fiscal year, $113.4 million in the 2017 fiscal year and a loss of $140.5 million in the 2018 fiscal year.

“The impacts of that are very dependent on where those casinos are located,” said Paul Dion, Chief of the state’s Office of Revenue Analysis. “No matter what, we’re going to lose some customers to those casinos in Massachusetts and that could be a significant decline in revenues, on the order of 40 percent in total over those three years.”

Thanks to a law passed two years ago, Massachusetts will soon license a slots facility and three full-fledged casinos—one in the Greater Boston area, one in southeastern Massachusetts and one in western Mass.

According to Dion, the biggest factor in how much Rhode Island stands to lose financially is where, exactly, the casinos are built.

“For example, if one of the resort casinos is going to be in Springfield, what they call the west region, that particular casino is too far from us to really have an impact on Twin River,” he said. “It would be a couple of hours to Connecticut from up there. One that would be closer and at one time they talked about it would be Foxboro. Well, that would have had a huge impact on us because that’s very close by to Twin River’s major market.”

“That obviously didn’t go through so it looks like maybe it will be up in Boston somewhere,” he continued. “So it’ll have less of an impact and there’s a southeastern casino that’s been talked about maybe in the Taunton area as well as in New Bedford and if it’s in New Bedford, it’s going to impact Newport Grand significantly. If it’s in Taunton, it will probably have a little bit more an impact in Twin River.”

Meet The Contenders

Last Tuesday was the deadline for companies interested in bidding on the casino licenses to file a $400,000 on-refundable application fee with the state of Massachusetts.
According to reports in the Boston Herald and the Associated Press, a total of 11 firms met that deadline while four more asked for extensions.

As it stands, four companies are vying for the western Mass. License: Mohegan Sun, Hard Rock, MGM and Penn National. The license in eastern Mass is expected to be a competition between Wynn Resorts, Caesar’s and Crossroads and Warner Gaming.

Plainridge Racecourse and Raynham Park have both expressed interest in the state’s slots parlor license.

Lastly, the Mashpee Wampanoag Indian tribe is expected to have the best chance of getting approved for the southeastern Mass. License.

Two companies, the Baltimore-based PPE Casino Resorts MA and Chicago’s Rush Street Gaming haven’t committed to seeking one particular license yet.

“Last year’s budget assumed this would happen a bit sooner,” said Thomas Mullaney, Budget Officer for the State of Rhode Island. “But we’re assuming that those slot machines at one of the race tracks in Massachusetts will start somewhere in our fiscal year 2016 so we’re expecting about $53-$54 million dollars of loss that year and then the new casinos in Massachusetts would open at some point in 2017 and our losses would start increasing.”

Twin River spokeswoman Patti Doyle says the estimates are right on track with where they thought they would be.

“That was a good impedes for passing the bill last year,” Doyle said. “It paved the way for the November ballot question which was approved by the voters to allow table games at Twin River to level the playing field in many ways, to level the playing field in terms of providing a more holistic entertainment and gaming experience that would be similar to what occurs in Connecticut and will occur in nearby Massachusetts.”

Twin River Remains "Focused"

The addition of table games is expected to lessen some of the losses the state would have suffered with the increased competition.

And, according to Doyle, that’s all Twin River is focused on right now.

“When the table games come online, which will be in July of this year, we’re projecting an additional $60 million in revenue so I think we’re seeing positive signs in the near-future,” Doyle said. “It’s hard to crystal ball what happens three years out when Massachusetts casinos come on but our focus has been on really just staying pretty true to our mission, just continuing to bring table games and stay focused on what we can do best. Sometimes you can’t always focus on what the other guy in the other state is doing.” 


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