Target 12 on WPRI.com

IGT says Twin River sought cut of new gaming deal

Target 12

PROVIDENCE, R.I. (WPRI) – The gloves have come off in an escalating fight between Rhode Island’s titans of gambling.

Lawmakers this fall will consider whether to approve a proposed 20-year contract extension with IGT, formerly named GTECH, which would give the company continued control over much of the state’s gaming operations while ensuring at least 1,100 jobs remain at its prominent Providence headquarters until 2043.

But the deal, first introduced in the final days of the legislative session, has been heavily criticized by Twin River Worldwide Holdings, which operates Rhode Island’s two casinos, in Lincoln and Tiverton, under a long-term agreement with the state lottery.

IGT Chairman Robert Vincent is now pushing back on the criticism, telling Target 12 on Wednesday that the casino operator approached IGT in May asking for a piece of their business in exchange for supporting the extension. IGT had already been in private negotiations with Democratic Gov. Gina Raimondo’s administration since January.

“They suggested to us that we should walk away from tens of millions of dollars in revenue we currently have and cut them in, so they would go to the State House and this would be a joint deal,” Vincent said. “What they were clearly implying was that, ‘You’re not going to get this without us.’”

He added, “Listen, when someone comes to you and says you should forego tens of millions of dollars a year and include us in your operation, you have to ask yourself why.”

Target 12 obtained a copy of the confidential proposal IGT says it was given by Twin River at the May 20 meeting between former IGT Chairman Don Sweitzer, IGT Chief Operating Officer Jay Gendron, and Twin River executive Marc Crisafulli. (Crisafulli, who joined Twin River just a few months ago, was himself previously a senior executive at IGT.)

The document proposes that Twin River be given control of half of the Video Lottery Terminals, including slot machines, at the two casinos. Twin River currently controls no games, while IGT controls 85%, an amount that would be enshrined into law under the proposed contract extension. (Twin River makes most of its money from food and other services at the venues.)

Twin River spokesperson Patti Doyle didn’t respond Tuesday to questions specifically about the May 20 proposal. But the casino operator has been vocal in opposing the IGT deal since it was announced, including a full-page ad in The Providence Journal labeling it a “secret, no-bid contract.”

“To give one gaming company monopoly control of the machines on the casino floor is unprecedented in the industry and is significantly harming Rhode Island taxpayers,” Doyle said in a statement last month. She also suggested the state could be getting an upfront payment of over $100 million, rather than the $25 million offered by IGT, if it went out to bid.

“Without a doubt, this contract strays far beyond industry norms,” Doyle said. “As the state’s operating partner in gaming, Twin River owes the people of Rhode Island its best performance and its best advice.”

GTECH initially won a bid in 2001 to provide gaming technology to the state for five years. Two years later, in 2003, then-Gov. Don Carcieri and lawmakers agreed to the company’s current 20-year deal. In the years since GTECH has gone through multiple mergers, eventually transforming into IGT, which is controlled by the Italian conglomerate De Agostini.

Twin River — which booked a $72 million profit last year, and recently became a publicly traded company — argues IGT games are inefficient, costing Rhode Island taxpayers revenue that would be generated by more popular games. The state’s cut of casino and lottery gambling is currently the third largest revenue source for Rhode Island.

In the May 20 proposal, Twin River showed a January-to-April snapshot of game efficiency comparing IGT games to those provided by competitors SGI and Everi at the two Rhode Island casinos. IGT games – for the most part – performed worse during that time period, according to the proposal.

Vincent insisted Twin River’s argument is “simply not true” because spending at the casinos has only increased marginally each year, meaning dollars are consistently redistributed across the floor, and total revenue for the state has little to do with game efficiency.

In addition, Vincent suggested there was no reason for the state to put the contract for gaming services out to bid since it was an extension of a current deal that both sides view as successful. IGT currently makes about $50 million from its Rhode Island contract, he said.

The proposed deal has also raised eyebrows among political observers given the tight relationship between Raimondo and Sweitzer, the former IGT chairman, who has long been a close political ally of the governor.

Sweitzer, who stepped down at IGT in December, currently serves as treasurer of the Democratic Governors Association, chaired by Raimondo. The pair have helped raise money for the party across the country, with Sweitzer helping by tapping his years of contacts in Democratic politics.

Both the governor’s office and Vincent, however, insist that Sweitzer – also a registered IGT lobbyist – had nothing to do with negotiating the actual terms of the proposed contract extension.

“Don was not part of it – that was a conscious part of the decision,” Vincent said, adding that he could not speak to whether Sweitzer had spoken with Raimondo in general about IGT’s future in the state.

Vincent said Gendron and IGT’s in-house lobbyist Michael Mello negotiated the proposed contract with top Raimondo aide Kevin Gallagher, along with R.I. Department of Revenue Director Mark Furcolo and state lottery chief Gerry Aubin.

After a blueprint was reached with Raimondo’s team, the deal was then pitched to leaders in the House and Senate, who have agreed to bring it up in a special legislative session after Labor Day.

In the meantime, both sides are hiring high-powered lobbyists and other consultants to make their case. In addition to Crisafulli, Twin River’s team now includes Mark Ryan, an influential lobbyist, as well as Doyle, its veteran spokesperson. IGT has Sweitzer, Vincent and Mello, plus veteran lobbyist Robert Goldberg and newly hired spokesperson Bill Fischer.

The campaigning over the deal is expected to escalate throughout the remainder of the summer, but Vincent feels confident state lawmakers will ultimately look favorably on IGT’s continued presence in Rhode Island.

“We’re confident that once the merits are discussed and understood it will be passed,” he said.

Vincent characterizes Rhode Island’s contract with IGT as “an economic development partnership” that gives the London-based global corporation a much larger footprint in the state than it would otherwise maintain.

IGT says it currently has about 1,100 of its 12,000 employees in Rhode Island, earning an average salary of $100,000. Vincent warned many of those positions could move out of state after its current agreement ends in 2023 if an extension is not approved. He said only about 65 employees are needed specifically to serve operations in Rhode Island.

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

Ted Nesi (tnesi@wpri.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

Copyright 2019 Nexstar Broadcasting, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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