Key Twin River Payments to RI Are Falling

GoLocalProv Business Team

Key Twin River Payments to RI Are Falling

John Taylor of Twin River
Twin River’s claim of “So much. So Close" is looking much more like “Too little. Too Late.”

In 2012, Twin River made big promises to Rhode Island voters that by approving table games Rhode Island would see a windfall, but according to new data from the RI State Auditor General's office, those promises are looking like a bad bet.

The Rhode Island State Auditor General Dennis Hoyle has found that two key revenue sources generated by Twin River are falling.

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The decrease in Twin River revenue coupled with millions in shortfalls from promises of sports betting is only exacerbating Rhode Island’s fragile budget situation. Rhode Island is now facing an estimated $158 million budget deficit in the 2019-2020 fiscal year.

In July, Twin River announced that it was merging with Dover Downs Gaming & Entertainment -- which will allow the company to go public.

Video lottery revenues continue their slide. In 2017, net video lottery revenue decreased 1.3 percent over the prior year. — “Video lottery accounted for $289.0 million or 77.5 percent of total gross profit,” according to the auditor.

The number continued to slide in 2018, “Video lottery accounted for $288.4 million or 76.9 percent of total gross profit.”

Twin River defended the slide. "VLT Revenue is down largely due to market competition and Plainridge Park coming on line... we thought the erosion would be in the 12 percent range. It’s not, more like 6 percent which is good news for Rhode Island."

Plainridge Park's total amount provided to the Commonwealth of Massachusetts has remained functionally stable over the past two years, according to the Mass Gaming Commission.

Twin River’s falling video lottery numbers are just one of the issues.

 

Table Games

Table game numbers are also falling too. According to the auditor's report, the overall table game revenue increased, but  “after commissions paid to Twin River and the Town of Lincoln, the state’s share of net revenue from table games amounted to $22.4 million (in 2017)” and then fell to $18.6 in 2018.

According to Twin River’s campaign to legalize table gaming “Win RI 2012,” approval of the gaming expansion would help Rhode Island.

“Despite the tough economic environment, Twin River has INCREASED its year-over-year revenue in 30 of the last 31 months for Rhode Island, while other casinos in the region have struggled. The reasons for this growth include Twin River’s personalized customer service, great restaurants, recently refurbished facility, and its variety of entertainment offerings — all within a short drive of its patrons.”

Twin River promised the state would receive 18 percent of the revenue from table games.

Craig Sculos, Vice President of Twin River refused to comment on the revenue numbers on Monday night.

In the 2012 campaign, the Pulitzer Prize-winning website Politifact found that the Twin River’s campaign claims about jobs were “Mostly False.”

“Because the company -- based on its own estimates -- is overplaying its hand, offering a statement that contains some element of truth but ignores critical facts that would give a different impression, we rate it Mostly False,” wrote Politifact.

 

Trends

Overall lottery revenue has been relatively flat. According to the audit, The Rhode Island Lottery paid $365 million to the state’s General Fund for the fiscal year ended June 30, 2018 -- a slight increase over 2017's $362.7 million. Lottery revenue is a key component of the RI State budget and is not keeping up with overall state spending.

In September, GoLocal reported that Rhode Island is likely to take a revenue hit. Rhode Island's sports betting rollout delay has the potential to cost the state millions of dollars in revenue, despite insistence from the Department of Revenue that it will not be the case.

"We're maintaining our fiscal year 2019 revenue projection of $23.5 million at this time," said Paul Grimaldi, the Chief of Information at the Rhode Island Department of Revenue. Data from Nevada show that Rhode Island will lose millions by missing the October 1 launch date and will adversely impact the Rhode Island state budget.

Sports betting
On August 24, IGT announced a five-year partnership with the state to implement sports betting in the state's two Twin River locations in Tiverton and Lincoln, with operations "expected to go live by mid-November."

Sports betting was legalized as part of the state budget in June with an October 1, 2018 start date. But, Governor Gina Raimondo announced with her budget that the October 1 was key to maximizing revenue and beating other states to market. This latest delay has the potential to cost the state millions in revenue during the hottest sports gambling months of the year.

During September and October of 2017, statewide reports from the Nevada Gaming Control Board and Gaming Commission show that Nevada casinos took in a combined $56.4 million in sports betting revenue from football alone, 73 percent of the annual total for the sport.

"November is pretty deep into the football season, so there's definitely a large potential for loss in Rhode Island, though it's impossible to say for sure," said Dr. David Schwartz, Director of the Center for Gaming Research at the University of Nevada, Las Vegas.

"Football betting seasons are generally big revenue drivers," Schwartz told GoLocal is a phone interview.

Early fall is the only time of year when all major sports are being played congruently. Both major league and college football kick off in early September. Major League Soccer playoffs run through the end of October. 


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