On Election Day, Rhode Island will roll the dice on table games
By Brian Hallenbeck
Voters will decide whether gambling can expand at slots parlors
For all the focus on Massachusetts’ embrace of casinos, it’s another neighboring state that poses a far more immediate threat to the Foxwoods Resort Casino and Mohegan Sun.
Rhode Island voters will decide Tuesday whether to allow the Twin River and Newport Grand slots facilities in Lincoln and Newport to add “state-operated casino gaming, such as table games,” to the video lottery terminals and simulcast racing they now feature. In statewide and local balloting, voters could approve table games for one or both locations – or neither.
Many, including Twin River’s owners, are confident table games will fly.
“Overwhelmingly, people support the initiative,” said John Taylor, the Twin River chairman who’s been stumping in favor of table games for months. “Based on my travels, it’s maybe even stronger (than polls indicate).”
In a Brown University survey of 496 likely voters last month, 57.3 percent indicated they planned to approve Question 1, which would allow table games at Twin River, and 55.6 percent supported Question 2, which would allow table games at Newport Grand. The poll’s margin of error was 4.4 percent.
Gambling opponents concede the statewide ballot questions are likely to be approved, but they also believe binding local referendums on the ballots in Lincoln and Newport may not.
“We have a very good chance of beating it locally in Newport,” the Rev. Eugene McKenna, president of Citizens Concerned About Casino Gambling, said. “Mostly, we’re worried that if it passes, the state could move the casino downtown or into one of the mansions at some point. … We don’t think it’s good economic development.”
In Lincoln, John Cullen, a state Senate candidate, has spearheaded efforts to defeat the local referendum on table games, saying on his website that gambling “cannibalizes local businesses.”
Clyde Barrow, who studies gaming in New England as director of the Center for Policy Analysis at the University of Massachusetts Dartmouth, said local leaders in Lincoln and Newport have long opposed any expansion of gambling.
“It’s not so clear that it will pass at the local level,” he said.
Leveling the playing field
Massachusetts’ authorization last year of three destination resort casinos and a single slots-only facility upped the ante for Rhode Island, where Twin River and Newport Grand constitute the third-largest source of revenue for the state, behind income taxes and sales taxes. A study commissioned by the Rhode Island Department of Revenue determined that Massachusetts gaming facilities, which are not expected to materialize for several years, could cost Rhode Island $100 million or more in annual revenues.
“Competition is absolutely a factor, but this is also an opportunity to create jobs,” Taylor, the Twin River chairman, said. “Rhode Island has the second-highest unemployment rate in the country. … This is an opportunity to create 650 jobs.”
Twin River, which now employs 900 people, plans to hire, train and license 350 new employees if table games are approved, with another 300 jobs generated by vendors in the surrounding community who would do business with the facility, Taylor said.
The plan is to introduce 65 table games initially – they could be up and running by July 1 – and perhaps increase the number to more than 100 if demand warrants. The mix of games would include blackjack, roulette and craps, while poker is still under consideration, according to Taylor.
Table games would put Twin River on a par, at least gaming-wise, with Connecticut’s casinos.
“Clearly, this levels the playing field,” Taylor said.
He was quick to add, however, that Twin River would continue to operate at a significant tax disadvantage. In Connecticut, Foxwoods Resort Casino and Mohegan Sun pay 25 percent of their gross slot-machine revenues to the state and pay no taxes on their table-games “win,” resulting in an effective tax rate of 18 percent. Twin River, which pays 62.5 percent of its slots revenue to the state, would pay an 18 percent tax on its table games for an effective rate of about 57 percent, Taylor said.
The addition of table games would not alter Twin River’s classification as a “convenience” casino, one that draws most of its customers from within a 30- to 40-mile radius.
“They’re not adding a hotel, a spa, a golf course or a big entertainment arena,” Barrow, the gaming analyst, said, referring to Twin River’s owners. “But their adding table games will have some impact on the competition. Rhode Islanders spend more than $200 million a year at the Connecticut casinos, about three-quarters of it at Foxwoods. They would clearly recapture some of that.”
‘We would still exist’
Top executives at Foxwoods and Mohegan Sun said they’re ready for additional competition from Rhode Island.
“We anticipate it will pass and we’re prepared for it,” Scott Butera, Foxwoods’ president and chief executive officer, said of the table games initiative. “It introduces a new player in the market.”
Butera conceded Foxwoods would lose some convenience business to Twin River but stressed that the two properties offer different “experiences.”
“We’ll have to be as efficient as we can be with our marketing and find ways to replace the revenue that’s lost,” he said. “I don’t know if it changes anything; we’re already spending a lot of time on our other amenities, our retail, our food and beverage offerings …”
Bobby Soper, president and CEO of Mohegan Sun, presided over the 2010 introduction of table games at Mohegan Sun at Pocono Downs, the Mohegan Tribe’s racetrack casino in Wilkes-Barre, Pa. He said the expansion of gambling there increased revenues and enhanced the property’s competitiveness. In Pennsylvania, he said, slots revenues are taxed at 58 percent and table-games revenues at 14 percent.
Soper said the addition of table games at Twin River would have relatively little effect on Mohegan Sun.
“Our database shows the number of our customers who reside in the Rhode Island market is not that substantial,” he said. “We think the impact will be fairly modest.”
What if voters reject table games at Twin River?
“We’ve been successfully competing in the region, growing our business and getting our balance sheet in order and we’ll continue to do so,” Taylor said. “If this fails – and we don’t think it will – we would still exist as a business.”
Taylor noted that Twin River has increased its share of the New England slots market while posting year-over-year revenue gains in recent years. At the same time, slots revenues at the Connecticut casinos have declined precipitously. Over the last 18 to 24 months, Twin River has also benefited from a stronger relationship with the state of Rhode Island, which has provided it with marketing assistance, and a renewed emphasis on employee training, Taylor said.
“We think we’ve been doing the right things,” he said.
b.hallenbeck@theday.com
