Could IGT and Twin River Leave RI Without New 20 Year Contract?

Representatives from Twin River and IGT made the case on Tuesday during a House Finance Committee hearing for a 20-year lottery contract with the state of Rhode Island.

While both companies emphasized that with national and global operations, they could easily move operations -- and jobs -- from Rhode Island elsewhere, House Minority Leader Blake Filippi questioned whether IGT had upheld the terms of the existing contract and whether it would for a future one. 

The bill, (2021-H 5223), enables the State Lottery Division of the Department of Revenue to enter into a contract extension with IGT Global Solutions Corporation and contract extensions with Twin River and its affiliates.

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Bob Vincent, Chair of IGT Global Solutions, stressed that as the company globally realized significant cost-cutting measures during the pandemic, that there is an urgency to approve a contract in Rhode Island. 

"The world changed over the last year, but our commitment to fulfilling this deal has not," said Vincent. "We are committed to keeping the 1100 hundred good paying IGT jobs in Rhode Island and making an annual salary guarantee that is equal to 250% of the minimum wage will likely to grow to be over $85 million with the adoption of a $15 minimum wage."

"At the same time, I must also tell you that there is a real sense of urgency about these discussions," Vincent added. "One of the major areas of cost savings is in our real estate footprint. There is a major effort underway at IGT to reduce and consolidate our global presence. To give you a sense of that activity, our two major facilities in Nevada, our Gaming headquarters in Las Vegas and a one million square foot office and manufacturing facility in Reno, are on the market. It's notable that the Reno facility is where legacy IGT began. The same kind of activity is going on across the globe."

"Rhode Island has been fortunate in that our presence here is directly tied to our Rhode Island contract and our headquarters in Providence," said Vincent. "As you consider this legislation, I encourage you to keep in mind that, as a company, we continue to move forward and manage our business to the reality that is in front of us. Passing this legislation and thereby eliminating the uncertainty about our future relationship will protect our presence in Rhode Island from same pressures impacting the rest of our business."

Questions About Contract -- And Assurances 

House Minority Leader Blake Filippi asked about whether IGT had been fully compliant with the existing contract -- and how the state could be assured moving forward. 

"The $150 million dollars that IGT is required to spend over the course of this contract, that is to carry out their obligations that they have sprinkled throughout this 29-page document I presume. So they have to spend $150 million over the life of the contract — and that would include the purchase of the VLTs," Filippi said. 

"On October 3, 2019, Mr. Crisafulli [with Twin River] stated that over the last seven years there had been a lot of investments that IGT had been required to make under the contract were deferred and 'all of those deferred investments are coming due and I think they were trying to avoid them or only make them the context of having an extension,'" said Filippi. "Are there existing obligations do you know...that IGT hasn’t undertaken that are being rolled into this contract?”

Houe Finance fiscal advisor Sharon Reynolds Ferland answered his questions. 

"The things that can be included in the $150 million, it’s my understanding that some of the VLT purchases can count," she said. "I believe the previous requirements don’t count but I’ll stand to be corrected on that."

"What current obligations are outstanding? By entering into this contract, are we not getting the benefit of our prior bargain?" asked Filippi. 

Reynolds responded that it was up to the lottery to weigh in on the status of current -- and future -- contracts.

"And should a [new] contract be entered into under these terms, you would get an annual report on any changes, and not wait to have to ask," she said. 

Marc Crisafulli, CEO of Twin River, and Executive Vice President of Bally's, stressed that with growing operations, like IGT, they are looking for a commitment from the state. 

"The world has changed so dramatically in the last year. Many of you knew us as Twin River — we were a small, Rhode Island-based operator. We had four casinos in three states," said Crisafulli. "We have since transformed the company. We are now Bally’s, and we have 15 casinos in 11 states, and we’ve created another major dimension to the company — we’re acquiring a national sports betting technology company, and we’re acquiring other gaming assets that will allow us to grow nationally. We’re now official sports betting partners of the NHL and NBA."

"With all of that growth, we want to focus on having our home be in Rhode Island," Crisafulli added. "When we got to the stalemate [with IGT] at the end of 2019, the state legislature brought us together with IGT and wanted us to cut a deal. And in the negotiations, the state identified its top three priorities; jobs and economic development; the state wanted to solve the machines and protect and enhance the $300 million a year the state makes off the VLTs — and it wanted to eliminate risk on systems and technologies. They’ve all made their way into this legislation with new terms or improved terms."

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