Senators scrutinize state’s proposed $1B deal with IGT

Business News

PROVIDENCE, R.I. (WPRI) – State lawmakers on Tuesday challenged parts of the proposed 20-year, $1 billion deal with IGT, calling on the Raimondo administration to make sure the Lottery technology contract has clear-cut requirements surrounding jobs and other obligations.

The Senate Finance Committee held its second public hearing on the proposal, which would give IGT the authority to run the state’s gambling technology system and the Rhode Island Lottery for another two decades.

Democratic Gov. Gina Raimondo, who helped craft the new deal, testified at the beginning of the hours-long meeting and urged senators to support the contract extension.

“If you choose not to do that, we’re going to lose a lot of jobs and a lot of good economic momentum,” Raimondo warned.  

Raimondo administration officials subsequently provided the committee members with an almost identical presentation to the one they gave the House Finance Committee last week.

Kevin Gallagher, one of Raimondo’s top aides, led the presentation and offered a detailed explanation of the state’s current contract with IGT – signed in 2003 under Gov. Don Carcieri – including how it compares to some other states, and what the new deal would look like over the next two decades.

“It’s an incredible thing to look back after 20 years and see where we’ve come,” he said. “We don’t want to be the state where IGT used to be.”

The current contract does not expire until 2023, but Gallagher said a decision is needed soon because if lawmakers decide against the extension, the process of unraveling IGT from the state Lottery system would take a long time.

“The transition to a new technology provider includes a tremendous amount of risk and will take years,” Gallagher said.

The senators didn’t express any explicit support or opposition to the proposed deal, but many asked specific questions surrounding its benefits, and inquired whether a better deal could be made if the state chose not to extend the contract with IGT.

Senate Finance Chairman William Conley, D-East Providence, was among those who raised concerns about the salaries of the 1,100 jobs that IGT promises it would keep in Rhode Island under the new deal.

“A lot of the public discussion before this hearing has been discussion about jobs,” Conley said, adding he thinks all the jobs should offer a salary at or above 150% of minimum wage.

The current deal requires the company provide 1,000 jobs, which IGT has repeatedly been penalized for missing over the years.

“I hope you and those of you participating in this are hearing this message, and I hope we have further discussions about this,” Conley said.

Sen. Louis DiPalma, D-Middletown, raised separate questions about equipment and software update requirements, adding he found it concerning that the company’s offering of regular cybersecurity testing was touted as a benefit.

“If that’s not happening already, that’s a challenge,” he said.  

Sen. Walter Felag, D-Warren, pointed to several adjustments and letters of agreement made with IGT over the last two decades, asking whether the state is giving up too much leverage in future negotiations by entering into such a long contract.

Felag also said he received an email from a constituent who wrote, “I’m going to lose my job if this doesn’t go out to bid.” The email made him wonder whether Twin River Worldwide Holdings, which has mounted a campaign against the proposed deal, would be negatively impacted by the IGT deal.

Gallagher responded to the concern, saying Twin River – which operates the state’s two casinos in Lincoln and Tiverton – is not directly involved in the proposed deal.

“There is no direct impact to Twin River, and they are not a party to the deal,” he said pointedly.

Twin River for months has criticized the proposals, calling on lawmakers to put it through a competitive bidding process and ultimately award it to them instead. The company last month offered an alternative deal in partnership with Camelot Lottery Services.

Raimondo, who addressed the issue without naming Twin River specifically, said lottery contracts have gone through the legislative process each time a deal has come up over the last two decades.

The deals include the ones awarded to Twin River, she added, which does not provide gaming technology services. Camelot, which runs lotteries in Europe and Illinois and has a history with IGT, also does not provide gaming technology.

Raimondo urged lawmakers to take IGT’s expertise into consideration.

“I think it would be terrible to give it to a company that has no record doing this,” Raimondo said.  

Senate Finance will host its next public meeting related to the IGT deal on Oct. 22. The House Finance Committee has its next hearing scheduled for Thursday.

Eli Sherman (esherman@wpri.com) is a Target 12 investigative reporter for WPRI 12. Follow him on Twitter and on Facebook.

Copyright 2020 Nexstar Broadcasting, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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