Governor Chaffee Plans to Protect Rhody’s Gambling Revenue – Online Gambling Close Behind?

RI 2      Ka -Ching!

Rhode Island is already feeling the impending pressure of cut gambling revenue  by almost 25% once the neighboring state of Massachusetts completes its brick and mortar casino expansion. The Bay State is on track to open three casinos and one slots parlor by 2016 that will undoubtedly siphon a good number of customers who currently patronize the Twin River and Newport Grand casinos in Rhode Island.

Governor Chafee, in his proposed $8.5 billion budget sent to the legislature, calls for maintaining the state’s share of revenues from casino table games such as blackjack and roulette at 18 percent in the long-term.  But he calls for granting both the casino and the town of Lincoln a temporary boost in their take in order to help them weather the initial financial impact of the new Massachusetts facilities.

  • For Twin River, Chafee’s proposal would mean a one percentage point increase, from the current 82 percent take from table game profits to 83 percent, for the same four-year period.  But, after four years, the casino’s take would increase to 84 percent permanently, leaving the state with only 16 percent of the profits.
  • For Lincoln, that would mean earning a one percent share of the table game profits for a four-year period, starting from when the casino sees a one year decline in net revenues.

The proposal would change a state law that permanently decreases the state’s share to 16 percent of profits if, as expected, the casino’s total profits decline with the opening of new gambling facilities in Massachusetts.image(19) - CopyBased on consistent declines in revenue from neighboring CT casinos, it is expected that the addition of table games, while giving a better expected boost, can only go so far if the pool of gamblers in New England doesn’t grow

Enter Online Gambling – is it a viable option for the Ocean State?  Rhode Island state officials may be forced to take a closer look at online poker and gambling to recoup some of those losses. Those officials have studied the possibility of adding online gambling action to the mix, but progress has not advanced beyond the stage of exploration for a number of reasons, but mainly fear that Internet gambling would cannibalize the current profits seen from land-based gaming operations, including the smaller businesses with lottery sales and keno.
Meanwhile, the threats to revenue continue to rise:  Among the proposals is a $750-million resort casino in nearby Fall River that Connecticut-based Foxwoods hopes will become a regional tourist destination.  And just last week, Massachusetts officials awarded Plainridge Racecourse in Plainville, MA with the state’s first and only slot parlor license.

That’s all for now.