HOUSE REPUBLICANS CALL FOR INDEPENDENT STUDY ON IGT CONTRACT EXTENSION AND TWIN RIVER COUNTER PROPOSAL
Today, House Republican Finance Committee members called for an independent study on the proposed IGT 20-year contract extension and the competing proposal from Twin River, Camelot, and Intralot.
“Given that the presentations by the Raimondo Administration and IGT differ in material aspects from that offered by Twin River, it is imperative that we take an informed and strategic approach to secure the best deal for Rhode Island taxpayers,” said Blake A. Filippi, House Republican Leader. “While we have a talented House Finance Committee and fiscal staff, we are not technology contracting experts, and must seek outside expert help to get this right. We must not gamble with our third largest source of state revenue.”
The key disputed issues are:
1. Does the proposed IGT contract include a premium on services as a subsidy to keep 1100 jobs in Rhode Island? The Administration and IGT claim there is no premium on services in the proposed IGT contract, while Twin River pegs the premium at approximately $300 million over the life of the proposed the contract. Similarly, we must also determine whether Twin River’s competing proposal offers market-driven rates, or whether it includes a premium on services for creating jobs.
2. How well do the IGT Video Lottery Terminals (VLTs) perform against their competitors on the Lincoln and Tiverton casino floors? IGT testified that their VLTs are modern and largely performing at or above their competitors’ machines on the Lincoln and Tiverton casino floors. Conversely, Twin River claims that the IGT machines are underperforming and largely outdated.
3. Is it in Rhode Island’s best interest to have IGT supply up to 85% of the video lottery terminals (VLTs) on the Lincoln and Tiverton casino floors? The Administration and IGT testified that this is an acceptable provision in the proposed IGT contract, which includes performance metrics to ensure IGT’s VLTs maximize revenue. On the other hand, Twin River contends that state revenues will be hurt if one company controls 85% of the casino floor, because it restricts competition by limiting the state’s ability to assess how the IGT machines are performing against competitors’ VLTs, and to then have the ability to remove underperforming machines.
4. Is 20-years an appropriate length of time for this type of technology contract? The Administration and IGT testified that this term is comparable to lottery contracts in other states and that Rhode Island is protected in the event of rapidly changing technology. Twin River testified that a 20-year contract is outside the norm and that the state would be disadvantaged by a long technology commitment, and has instead countered with a 12-year proposal.
5. What is the ultimate cost to the state from the competing proposals and how do they compare to other state’s gaming contracts? The Administration and IGT assert that the proposed $1 billion 20-year IGT contract extension reflects market rates for services. Twin River contends that the proposed IGT contract uses inflated pricing, and claims their proposal will result in less than $500 million in costs to the state over 12 years.
6. Can Twin River, Camelot and Intralot provide the services necessary to effectively and efficiently operate our lottery and VLT systems? It is indisputable that IGT has the technology know-how to operate these specialized systems. The Administration and IGT have questioned whether Twin River and their partners can similarly perform.
“Our hearings made it evident that we need a critical deep dive into the multitude of complex issues surrounding our gaming contract. Thankfully, former Hasbro CEO Alan Hassenfeld has offered to finance an independent analysis of the proposed IGT contract and we believe the General Assembly should take him up on his offer. We also believe this study should include a critical analysis of Twin River’s competing proposal and how it stacks up against IGT’s. Hassenfeld is uniquely positioned in the world of technology, gaming and marketing, and has urged the state to exercise caution with its gaming contracts. Since the current contract is not up until 2023, we have plenty of time to get this right,” said Senior Deputy Minority Leader Justin Price.
“With Hassenfeld's offer to finance this much needed analysis, we have nothing to lose and much insight to gain from his examination on behalf of Rhode Island taxpayers. We need to confirm that our gaming contracts maximize value for taxpayers. This study would give us all, legislators and citizens alike, a better handle on the best course of action,” explained Deputy Minority Leader Robert Quattrocchi.
“We have learned much over the past few weeks,” said Leader Filippi, “but perhaps most important, we have learned what we do not know. The complexities of this industry require outside expert assistance. We need to get this right. The future of gaming revenues is far too important to rush through when there is such conflicting testimony from the Administration, IGT and Twin River.”