PROVIDENCE, R.I. (WPRI) — Gov. Gina Raimondo says the Italian CEO of gaming company IGT warned her last winter he was considering moving most of the company’s roughly 1,000 Rhode Island jobs elsewhere unless its 20-year state contract was extended.
“I think people need to know there’s a risk,” Raimondo told WPRI 12 during an interview Monday in her State House office. “I don’t want any surprise or sadness six or 12 months from now if IGT says, ‘We’re winding down our operations in Rhode Island.'”
Raimondo is embarking on a midsummer media blitz to drum up support for her proposed 20-year extension of IGT’s state contract, which has been under fierce attack since it was announced. The chief critic is Twin River Worldwide Holdings, which has a separate contract to operate Rhode Island’s casinos but wants a cut of IGT’s gaming technology contract, too.
“I want people to know what’s at stake,” Raimondo said. “Most of the coverage of the deal hasn’t been about the substance, and there’s lobbyists crawling all over this.”
IGT’s presence in Rhode Island traces back to its days as what was then the locally grown gaming technology company GTECH.
In 2003, then-Gov. Don Carcieri gave GTECH a 20-year gaming services contract in exchange for maintaining employment in the state, which has protected the company’s local work force in the years since even as it has evolved into a global enterprise controlled by an Italian conglomerate.
With that contract entering its final years, IGT CEO Marco Sala and a group of company executives met with Raimondo in January. IGT Chairman Bob Vincent, who was in attendance, confirmed that they made clear the company would move its workforce out of Rhode Island if it did not get an extension.
“This is the only place in the world that we guarantee a level of employment, and if that guarantee, that commitment and that obligation were to go away, I would predict that it would be a substantially less amount of people,” Vincent said, adding that IGT could “easily” house most of the workers at its existing operating facilities in Nevada.
Raimondo called it “a great meeting,” but said Sala “was very clear.” She said he told her IGT would need only 40 to 50 jobs in Rhode Island to operate the state lottery, compared with the slightly more than 1,000 it has currently. “And they were thinking, evaluating, whether they were going to keep those jobs in Rhode Island,” she said.
Asked how she could be sure IGT’s leaders weren’t bluffing, Raimondo acknowledged, “You never know.” But, she said, “I wasn’t going to risk losing these jobs.” IGT says its average Rhode Island salary is about $100,000.
“There’s only three companies in the world that do what they do, and one of them’s a local company,” Raimondo said. “But it’s now an Italian-owned company — publicly traded, Italian-owned — and so there isn’t necessarily the attachment to Rhode Island that there was 20, 30 years ago, when it was just the local company.”
A top Raimondo aide, Kevin Gallagher, embarked on multimonth negotiations with IGT that led to the proposed 20-year extension announced in June. Under the deal’s terms, IGT would pay the state $25 million upfront, maintain at least 1,100 permanent jobs in Rhode Island and commit to a more aggressive cycle of upgrades for games on Twin River’s casino floors.
“This is a good deal,” Raimondo said. “I wouldn’t keep these jobs at all costs. I wouldn’t say, give ’em whatever they want. In fact, what I said to my team was, negotiate the best contract you can and make sure it’s better than the last contract in every possible way.” (She later clarified that it “isn’t a contract” but “an agreement in principle” for the Assembly to consider.)
Raimondo said legislative leaders were involved in the final weeks of negotiating, and both she and Vincent credited House Speaker Nicholas Mattiello with demanding changes to the proposed terms that sweetened the pot for Rhode Island taxpayers. She said she met with Mattiello and Senate President Dominick Ruggerio in her office the day before the deal was announced in June.
As Raimondo recalled it, “I said, ‘Is everybody comfortable with this? Are we all on the same page?’ ‘Yes.’ ‘Yes.'”
Almost immediately after the IGT deal was announced, however, Twin River executives – led by its new Rhode Island president, Marc Crisafulli, a lawyer who was a top GTECH executive when it struck its Carcieri-era deal – began savaging the proposed contract.
Twin River’s criticism has centered on the fact that Raimondo, like Carcieri before her, did not put it out to bid. It has since emerged that Twin River, which is not currently in the technology business, tried to get a cut of IGT’s deal or snag the no-bid contract for itself.
Raimondo argued her proposed agreement with IGT could not be matched through a bidding process, insisting demands for a jobs guarantee could not have been included in the bid requirements.
“If we had done that, then the economic development components wouldn’t be on the table,” she said.
“If you were just going to do an RFP, as you say, you would get the gaming contracts; there would be no jobs component to that,” she said. “I’m not going to apologize for preferring the local company. There’s only three companies in the world qualified to do this business. And only one of them is the local team.” (The other two are Scientific Games and Everi.)
Twin River spokesperson Patti Doyle disputed the governor’s assertion about the ability to demand jobs as part of the deal, saying, “Extraordinary effort seems to be going into trying to avoid bidding this contract. That certainly is questionable when you consider the state could include a job and revenue minimum in any bid process it chooses to undertake.”
Raimondo indicated she’s frustrated with Twin River.
“I think their ads were dishonest and in some cases deceitful, and it always makes me wonder what kind of an operation they are if they’re willing to go to these lengths and tell mistruths in order to get business they’re not qualified for,” she said. (Doyle said Twin River simply believes she “should follow the law and bid this contract in an open, transparent manner.”)
The public controversy appears to have given Mattiello second thoughts about the IGT deal. While Senate President Dominick Ruggerio has committed to holding hearings on it this fall, a spokesperson for Mattiello said Monday the House will not schedule hearings until the governor’s office puts out an entire draft contract with IGT.
“The legislation that he introduced in the final days of session was not the actual contract,” House spokesperson Larry Berman said. “He would like to see the contract released for the public and media to scrutinize.”
Raimondo’s office and IGT both said there is no draft contract to release yet.
“The full terms of the proposed extension were made public the day the legislation was introduced at the end of June,” said Raimondo spokesperson Josh Block. “The formal contract language memorializing these terms will be drafted if approval is granted by the General Assembly after public hearings have been held, following the exact same process that led to the current contract in 2003.”
Another source of controversy around the IGT deal is the fact that the company’s recently retired chairman, Don Sweitzer, is now treasurer of the Democratic Governors Association, which Raimondo chairs, and in that capacity is traveling the country raising money for the organization. Sweitzer also remains a legislative lobbyist for IGT.
The Rhode Island Republican Party recently filed an ethics complaint, saying their relationship in the context of the proposed IGT deal violates state law.
Asked whether she has discussed the proposed contract extension with Sweitzer, Raimondo said, “Obviously, we’ve discussed the fact that it’s happening, in the same way that you and I might. But I’ve never talked terms with him. He’s not been involved.”
Asked whether it was a mistake to make Sweitzer her DGA treasurer in light of the looming IGT contract talks, Raimondo said, “Maybe, but only because it allows this question to happen. He’s been in this role before. … He believes that the world’s a better place if you have Democratic governors. He’s been doing this long before me, he’s going to do it long after me.”
Both Raimondo and Vincent sought to increase the pressure on lawmakers to act on the IGT deal this year, with the governor arguing that they shouldn’t “dilly dally.”
Vincent said, “We’ve been very clear for everyone that the timing was very important to us. We initially started out with an understanding that something would be resolved during the legislative session. We understand that couldn’t take place — there was a lot going on.”
“But the timing pressure has not gone away, and our internal processes continue on,” he said. “At some point if it’s not dealt with, you’ve gotten your answer.”
Ted Nesi (email@example.com) is WPRI 12’s politics and business editor and a Target 12 investigative reporter. He is a weekly panelist on Newsmakers and hosts Executive Suite. Follow him on Twitter and Facebook