New Data Shows How RI Lawmakers Got Hustled By the Gambling Industry on Sports Betting

New Data Shows How RI Lawmakers Got Hustled By the Gambling Industry on Sports Betting

The gambling industry had all the answers.

Governor Gina Raimondo’s administration wanted to be first to market — the first state to jump into the sports betting business after the U.S. Supreme Court legalized sports betting for the states.

Raimondo’s team decided to use data from the gambling industry rather than commission any independent analysis or tap into research resources at the local universities.

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Looking to American Gaming Association for Answers

Sports betting was going to be a windfall for Rhode Islanders.  Raimondo’s budget booked $23.5 million. By this time Rhode Island should have realized more than $13.6 million, but to date Rhode Island has only realized just over $150,000, with $300,000 in "book" revenue -- meaning Rhode Island has only realized 1.1% of the expected revenue.

“OMB [Office of Management and Budget] got to its estimate: the revenue estimate ($23.5M) is based on assumptions from an Oxford Economics report commissioned by the American Gaming Association,” said Paul Grimaldi of the Rhode Island Department of Revenue in an email to GoLocal on Friday.

Raimondo has enjoyed a close relationship with the gambling industry. She has raised hundreds of thousands of dollars from gambling companies for the National Governors Association, her campaign, and her own inaugural festivities.  

IGT donated $250,000 and Twin River another $75,000 to underwrite Raimondo's National Governors Association meeting in Rhode Island.

Both IGT and Twin River -- winners in sports betting -- donated $15,000 each to Raimondo's inauguration just a few months after the provision was adopted as part of the state's budget.

In December, Raimondo named top gambling industry executive Don Sweitzer to a premium political position.

“I am pleased to announce Don Sweitzer as the new DGA Treasurer. Don has been a trusted advisor to Democrats for decades, and I’m lucky to have him as a friend, supporter and constituent,” said DGA Chair Raimondo in December. “Don brings decades of experience from the private sector and Democratic politics to the DGA."

Sweitzer announced his retirement from IGT earlier in the month. Prior to his role as Chairman of the gambling giant IGT Global Solutions Corporation -- formerly GTech -- Sweitzer was Senior Vice President of Global Business Development and Public Affairs. 

Hype and Bad Numbers

The General Assembly bought into the hype. The sports betting number was booked in the budget, but the numbers weren’t close.

Then, Rhode Island-linked gambling companies, who were to implement the sports betting program, missed deadline after deadline.

GoLocal unveiled in September that the delay would significantly diminish revenue.

Experts in Las Vegas told GoLocal that the Rhode Island numbers were flawed.

But Rhode Island officials continued to claim they would hit their numbers. "We're maintaining our fiscal year 2019 revenue projection of $23.5 million at this time," said Grimaldi in Septem ber. Data from Nevada showed that Rhode Island would lose millions by missing the October 1 launch date and will adversely impact the Rhode Island state budget.

During September and October of 2017, statewide reports from the Nevada Gaming Control Board and Gaming Commission showed 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.

Even as numbers were continuing to miss projections, state officials continued to defend the projections. “If there's another big year and the Patriots make it to the Super Bowl, we could more than make up any lost revenue on that day,” Grimaldi told GoLocal.

The Patriots did go to the Super Bowl, and Rhode Island lost more than $890,000 that month.

Editor's Note: The article has been updated to reflect that the state's take of the $300,000 in book revenue to dates is 51% -- or just over $150,000.

Updated Tuesday 12:15 p.m.