PROVIDENCE, R.I. (WPRI) – Democratic Gov. Gina Raimondo on Tuesday defended a proposed 20-year, $1 billion contract extension for gaming technology company IGT, telling state lawmakers there’s a massive risk associated with switching to a new Lottery vendor.
House Finance Committee lawmakers took a turn scrutinizing the massive contract to operate the state’s gambling system, including its Lottery, which also marked the first time Raimondo has testified on the proposed deal she helped negotiate.
The second-term governor said extending the contract with IGT would provide stability for the state’s third-largest revenue source, and guarantee more than 1,000 jobs will remain in Rhode Island for another two decades.
Taking a chance with a new gaming technology company, she added, could put all of that in jeopardy.
“There are only three companies in the country capable of operating the lottery,” she said during the special hearing at the State House. “Only one of them was founded in Rhode Island, has 1,000 jobs in Rhode Island and is right outside this building.”
The proposed deal would allow IGT, formerly known as GTECH, to continue to operate the state Lottery and gambling technology contract for another two decades, extending an existing deal created in 2003.
The proposal for months has dominated discussions among lawmakers and political operatives, who have advocated for or against the complicated deal. But House Finance Chairman Marvin Abney, D-Newport, said the public hearings must help break down the proposal to help all Rhode Islanders understand the issue at hand.
“I hope we will have a well-informed vetting process to make sure that people can understand,” he said. “No matter what we do, we have to go back to our constituents and sell this.”
The deal, first proposed at the end of the regular session in June, has since come under fierce attack, led by Twin River Holdings Worldwide.
Twin River, operator of the two state-owned casinos in Lincoln and Tiverton, has called on lawmakers to reject the proposed deal, put it through a competitive bidding process and award it to them instead.
Raimondo on Tuesday pushed back on the idea of putting the contract out to bid, telling lawmakers it’s been standard to approve Lottery contracts this way for two decades. (She pointed to similar deals made with Twin River that also didn’t involve a competitive bidding process.)
Raimondo also said there is no guarantee of jobs with a public bidding process, even though Twin River and Camelot Lottery Solutions recently told lawmakers the two gaming companies were prepared to offer a competitive deal if the contract went out to bid.
“I want to be very clear: we are at risk of losing 1,000 high-paying jobs. That’s what’s at stake here,” Raimondo said.
Some lawmakers, including Republican Minority Leader Blake Fillipi, pushed back on some of the details related to the deal, including whether Rhode Island clearly understood the individualized costs of services provided by IGT.
“These jobs are important. I think IGT is an important corporate citizen in our state. It’s just difficult for me as a lawmaker to know what we’re paying for beyond those core services,” he said. “I think we need to understand that before we authorize this.”
Rep. Carolos Tobon, D-Pawtucket, raised questions about what guarantees will be in place should the company decide to not stand by its promises over the next two decades.
“How are we protecting ourselves if they don’t meet those job projections and everything that this deal entails?” he asked. “How are we going to guarantee those remote employees, who can work anywhere – anywhere in the world – belong to Rhode Island?”
Kevin Gallagher, who represented the governor in negotiations with IGT earlier this year, said the state has safeguards in place to penalize the company if they don’t meet the obligations of its contract.
He pointed to recent years when the company failed to meet the job requirements, noting the state has made the company pay penalties.
In addition to the governor, House lawmakers listened to a detailed breakdown from both its fiscal staff and state officials about how gambling revenue is generated and captured in the state budget. The nearly $400 million generated last fiscal year represented the third-largest source of revenue for the state.
The presentation was similar to what lawmakers heard last week when the Senate Finance Committee launched its own set of hearings. Marilyn McConaghy, head of legal services at the R.I. Department of Revenue, which oversees the state Lottery, said it’s prudent state lawmakers are involved in the process of awarding such a massive contract.
“My opinion would be that it would have been improper for the Lottery and state to make this decision without the General Assembly,” she said. “I can only imagine that if we had just gone through the process and issued an RFP for this gaming contract it would not be well-received.”
The House Finance Committee will host another public meeting focused on IGT next Thursday, which – unlike Tuesday’s meeting – will allow for public comment. The Senate Finance Committee will hold its next meeting on Tuesday.