RI Sports Betting Numbers Are in for Year One — They Are Abysmal
Wednesday, July 31, 2019
If you are looking for a sure bet then wager against the state of Rhode Island to be able to estimate revenue for sports betting.
The program rammed through by Governor Gina Raimondo’s administration that promised to deliver $23.5 million to the state coffers was a bust in its first year. In November, the state had even downgraded its expected take, saying that it would realize $11 million
Total revenue in fiscal year 2019 was just $6,867,769 or 29 percent of what was promised.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTIn neighboring Massachusetts passage of a sports betting program was not adopted this legislative session, but Governor Charlie Baker has predicted the Commonwealth will adopt a program in early 2020. A Massachusetts program would adversely impact RI's revenues.
I mean, it was my hope that we would get this done by the end of the summer so that it would be open and available here in Massachusetts for the football season in the fall. But I have a feeling it’s going to slide into next calendar year,” said Baker in an interview with WEEI this week.
Flaws Unveiled
The failure raises more questions about Twin River’s rollout and marketing of the program.
In April, GoLocal unveiled that the estimates used for the program were deeply flawed. As GoLocal wrote:
RI’s new sports betting program is underperforming by 90% and top experts with the leading gaming group say Rhode Island’s projections were fundamentally flawed from the onset. Now, the impact is leaving a massive hole in both this and next year's budget -- as much as $40 million combined.
According to top staff at the American Gaming Association (AGA), the projections used by Governor Gina Raimondo’s administration were fundamentally flawed and that Rhode Island misunderstood and used incorrect data from a study.
The AGA says, “We prove the value of the gaming industry through compelling research that supports best-in-class communications tools to inform policymakers and regulators. In addition, we elevate responsible gaming as a signature industry priority."
"Our research presented several possible combinations of tax rates and sports betting availability. Under the scenario closest to what Rhode Island implemented, we estimated that Rhode Island would generate $6.4 million in sports betting gaming tax revenue, $17.1 million less than the state projected," said AGA's Caroline Ponseti, the director, media relations in a statement to GoLocal in April.
"Further, our estimate is based on a fully stabilized market (not the first four months of operation), a tax rate of 15% (Rhode Island’s is about 50%) and a legal framework that does not include any 'unusual restrictions' (like Rhode Island’s prohibition on in-state college sports bets). All of these factors point to expected 2019 sports betting tax revenue of well below even our modest and reasonable projections," added Ponseti.
In a conference call with Sara Slane, senior vice president of public affairs of the AGA, and top researcher for the group David Foreman, the two told GoLocal that the numbers used by the state were based on a fully mature market and not a startup initiative.
“A mature market is 3 to 5 years,” said Foreman.
The report commissioned by the AGA, by Oxford Economics, states that it "primarily modeled the state estimates based on Oxford’s estimates of adult population in 2021,” rather than 2018 which Rhode Island officials used.
Mob Bookie Sides with American Gaming Association
AGA’s criticism of Raimondo’s estimates was backed up by a former mob bookie.
One of Rhode Island’s former top bookmakers says Rhode Island’s sports betting numbers are flawed and that the state can never realize the revenue it has projected.
“Their numbers are fraudulent,” said the former bookie in an interview with GoLocal.
The individual, who GoLocal agreed to refer to as “Carmine,” which is not his real name, was part of a major organized crime-backed illegal betting group that was busted in the mid-2000s by the Rhode Island State Police and local law enforcement.
GoLocal has confirmed his identity and his role in the mob-tied gambling group through conversations with former top law enforcement officers, a lawyer involved in the matter, and press reports at the time.
“Carmine” spoke with GoLocalProv under an agreement of confidentiality. He says he is no longer involved with bookmaking.
According to Carmine's analysis as a former bookie, “Rhode Island would have to win more than a million a week — never lose a bet to get to their projections. It is not going to happen.”
