March 18th, 2013 at 8:55 am by Ted Nesi under Nesi's Notes, On the Main Site
By Dan McGowan
Lincoln, R.I. (WPRI) – Twin River casino is more dependent on Massachusetts residents than Rhode Island residents and could be staring at substantial revenue losses once the Bay State opens three resort-style casinos and a slot parlor, according to a poll released Monday by the Center for Policy Analysis at the University of Massachusetts Dartmouth.
November 27th, 2012 at 5:00 am by Ted Nesi under Nesi's Notes, On the Main Site
Wall Street thinks the election created more losers than winners for the local gaming industry.
The big winner, according to Moody’s Investors Service analyst Keith Foley, is Lincoln casino Twin River, which won voter approval to install table games as soon as next summer to get ahead of looming competition from Massachusetts and stay competitive against Connecticut’s Foxwoods and Mohegan Sun.
The losers include Newport Grand, which failed to get local voters’ permission to add table games; Mohegan Sun and Foxwoods, both of which depend on Rhode Island customers and are already losing revenue; and the regional gaming market in the Northeast, which will be further saturated.
“While certain casinos [including Twin River] stand to gain, the increase of gaming supply, in whatever form it takes, will not necessarily attract more gamblers,” Foley wrote in a research note. “Increased supply will increase pressure on existing operators in the Northeast, and possibly on the US gaming sector as a whole.” He said the sector needs a stronger recovery or an overall increase in gambling.
The picture is mixed for Massachusetts, which is expected to license up to three casinos and one slot facility by early next year. That expansion will likely “have a material negative impact on Twin River’s earnings and cash flow,” Foley said, but Rhode Island has gained “a first-mover advantage over Massachusetts,” where the earliest new casinos could open their doors is probably the first half of 2014.
Twin River’s revenue in the year ended Sept. 30 was $515 million, while Newport Grand’s was $55 million. Foley expects Twin River will gain market share over Newport Grand once table games begin.
• Related: Why RI is freaked about losing casino revenue, in two charts (June 12)
August 3rd, 2012 at 1:12 pm by Ted Nesi under Nesi's Notes, On the Main Site
When Rhode Islanders go to the polls in November, they’ll be asked for the second time in six years whether to allow casino gambling in the state. Surveys indicate they’re likely to say yes, clearing the way for Twin River and Newport Grand to become full-fledged casinos.
The New York Times’ Michael Cooper has an interesting article examining the gambling landscape up and down the East Coast, and raising questions about whether there’s enough demand to merit the industry’s continued expansion:
The rapid expansion of gambling, as recession-wracked states have searched for new sources of money, has transformed the industry. States that once enjoyed near-monopolies on gambling … have been suffering the most in the new casino-dotted national landscape. …
“The driving factor here is location,” said William R. Eadington, a professor of economics and director of the Institute for the Study of Gambling and Commercial Gaming at the University of Nevada, Reno. “Other things being equal, people will choose the most accessible or convenient casino outlets. People who used to travel some distance no longer do.” …
The endless one-upmanship among states has some analysts wondering at what point the market will become saturated, and whether the industry has reached a point of diminishing returns. …
Some fiscal analysts wonder about the long-term benefits of casinos for state finances. “Gambling legalization and expansion during tough times produces significant short-term revenue increases in some jurisdictions,” a report by the Rockefeller Institute of Government found last year. “But if experience is a guide, such growth will not continue over time.”
Cooper also notes a new law signed in Delaware last month that made it the first state to legalize Internet gambling, which the feds are now allowing. Rhode Island officials are open to online gambling, and Delaware reportedly wants to partner with Rhode Island and West Virginia on some sort of online poker offering.
June 12th, 2012 at 5:54 pm by Ted Nesi under Nesi's Notes, On the Main Site
Kicking off this evening’s House debate on table games at Rhode Island’s two gaming facilities – Twin River and the much smaller Newport Grand – House Finance Committee Chairman Helio Melo put the issue bluntly: “Remember, we are talking about our third-largest source of revenue in the state of Rhode Island.”
Melo is correct. In the years since video lottery terminals started operating in 1994, Rhode Island’s state government has become extremely reliant on the money that flows from them.
The cash thrown off by Twin River and Newport Grand now contributes more than 10% of the state’s general revenue (excluding federal funds and restricted fees), as this chart shows:
And this chart shows state revenue from gaming has spiked over the past decade:
Update: Make that three charts. (How could I resist?) Here’s the estimated impact on Rhode Island’s gaming revenue over the coming years if Massachusetts adds casinos:
(charts: House and Senate fiscal offices)
March 21st, 2012 at 9:41 am by Ted Nesi under Nesi's Notes, On the Main Site
By Ted Nesi
PROVIDENCE, R.I. (WPRI) – State officials want a tentative deal with Twin River laying out how much tax revenue Rhode Island will collect from expanded gambling to be in place before November, when voters will decide whether to allow table games at the facility.
Negotiations between the state and Twin River are still “in the very early stages,” John Taylor, chairman of the Lincoln facility’s board of directors, told a Greater Providence Chamber of Commerce forum on Tuesday. Twin River wants voters to know how much the state would receive prior to the November general election.
Richard Licht, the Chafee administration’s director of administration, said he’s “relatively optimistic” that voters will approve the referendum question allowing table games despite voting similar proposals down in 1994 and 2006. “I don’t think you’re going to see the same political atmosphere,” Licht said.
Licht declined to say what percentage of table-game revenue he thinks the state should get, noting legislative leaders will also play a role in the final agreement. Rhode Island gets 61% of the money put into video lottery terminals at Twin River and Newport Grand, and all forms of gambling are projected to contribute $377 million to the state budget in 2012-13, the third-biggest source of revenue.
(photo: Waterford Group)
March 19th, 2012 at 6:00 am by Ted Nesi under General Talk, Nesi's Notes, On the Main Site
The 20-year-old Foxwoods Resort Casino in Connecticut is often cited as a key reason Rhode Islanders should approve a constitutional amendment in November allowing full-fledged casinos in the state. Why let Connecticut collect all that tax revenue from Rhode Island gamblers?
Our WPRI 12 poll last month showed a majority of voters are inclined to agree. This weekend, though, The New York Times Magazine reported that all is not well at the Pequot Tribe’s goldmine over the border. Foxwoods, which employs 10,000 people and has 6,300 slot machines, is faltering under the weight of $2.3 billion in debt:
It would be easy to look at what has occurred at Foxwoods and think, Here are people who fell into money and didn’t know how to handle it. Which happens to be true. But how the casino reached this point, and the challenges its owners and operators now confront, is part of a much larger story — one involving the gradual relaxation of moral prohibitions against gambling, a desperate search for new revenue by state governments and the proliferation of new casinos across America. Casino gambling has become a commodity, available within a day’s drive to the vast majority of U.S. residents. Some in the industry talk of there being an oversupply, as if their product were lumber or soybeans.
It’s this passage, however, that should concern Rhode Islanders as they consider the landscape to the south (Foxwoods) and north (Foxboro):
The big buzzword in the business right now is “cannibalization.” It refers, in this context, to casinos’ gobbling up one anothers’ customers, which for some of them may be the only route to survival. Fahrenkopf, the A.G.A. president, said he was not worried. “What about Starbucks?” he said as I sat in his Washington office. “A block east of here, a block west, a block north is a Starbucks. How much is too much? The market will decide.”
For more on the debate over casinos in New England, check out this Boston Globe op-ed that Ian Donnis penned back in 2010.
(image credit: Wikipedia)
March 14th, 2012 at 11:02 am by Ted Nesi under Nesi's Notes, On the Main Site
Lady luck has been smiling on lottery players in Rhode Island lately, but a new study says local wagerers are among the biggest suckers in the United States.
Rhode Island was 12th in the nation on the new “Sucker Index” created by Bloomberg Rankings, scoring a 20.2, meaning Rhode Islanders are doing more “damage to their personal finances compared with lottery-playing habits” in all but 11 other states.
Rhode Island residents spent an average $283.15 on state-run lottery games in 2010, or 0.52% of their personal income, the 10th-highest share in the nation. The state offered the 11th-highest prize payouts in the country, 61.5 cents for each dollar spent.
March 8th, 2012 at 4:46 pm by Ted Nesi under Nesi's Notes, On the Main Site
The Chafee administration has found a highly lucrative new source of state revenue: selling winning Powerball tickets in Rhode Island.
The state treasury will get a one-time tax payment of roughly $2.6 million if the winner of the $60 million Powerball ticket sold Wednesday in Smithfield takes his or her money in a lump sum of $37.1 million.
Add that $2.6 million to the roughly $14.7 million the state will get from Louise White’s jackpot last month and the state budget would have $17.3 million in unexpected revenue this year. It’s no Facebook IPO, but with a $117 million deficit, we’ll take it.
It’s worth noting that one-time revenue sources often lead to bad budgeting, since the same money won’t be coming in again in 12 months to fund whatever programs it pays for this year. And Ian “Debbie Downer” Donnis reports that The Tax Foundation thinks lotteries are a tax on the poor.
• Related: Powerball jackpot for RI’s state budget depends on the winner (March 6)
March 6th, 2012 at 5:45 pm by Ted Nesi under Nesi's Notes
By Tim White
CRANSTON, R.I. (WPRI) – Powerball winner Louise White bought her ticket in Newport, but according to financial data from the Rhode Island Lottery, the City by the Sea lags much of the state in lottery sales.
Rhode Islanders and visitors shelled out $236 million on lottery tickets, Keno and scratch tickets in 2010. Unsurprisingly, larger municipalities saw a bigger chunk of the action. The top three cities in lottery sales in 2010 were:
WPRI 12 compared lottery sales to population and discovered the small coastal community of Tiverton topped the list in lottery sales per capita. Those figures show the $1,135 was spent per person in Tiverton. The next closest community was Johnston at $475 per person, followed by West Warwick at $351 per person.
March 6th, 2012 at 6:00 am by Ted Nesi under Nesi's Notes, On the Main Site
• New: Newport woman, 81, is the winner (March 6)
Just how much will Rhode Island’s state government get in taxes from the winner of that $336 million Powerball ticket? It all depends on how the lucky individual, whose identity will be revealed this morning, decides to collect the money.
Once the individual – we’ll call him “Ned” – claims the winning ticket, Ned must decide whether to take the money as a one-time cash payout – estimated at $210 million – or an annuitized stream of payments over the next 30 years.
If Ned opts for the one-time payout the state will withhold 5.99% of the $210 million lump sum in taxes, so roughly $12.58 million would go to the treasury, according to the governor’s office. (Some will be quick to point out the amount would be $20.98 million if the top income-tax rate were still 9.99%.)
If, on the other hand, Ned opts to collect his money in a series of payments, the state estimates it would collect $672,000 a year in taxes for the next three decades. Thus, Ned will actually have a fairly significant impact on state revenue depending on what he decides.
February 12th, 2012 at 10:43 am by Ted Nesi under Nesi's Notes, On the Main Site
• New: Newport woman, 81, is the winner (March 6)
As you may have heard, the winning ticket for last night’s $336 million Powerball drawing was sold in Rhode Island. We don’t know who bought it yet, but as people are pointing out on Twitter this morning, this could mean quite a windfall for the state Treasury.
“The profits from PowerBall and Mega Millions tickets sold in Rhode Island stay in Rhode Island,” the Rhode Island Lottery says. My rough guesstimate is that the state government’s bounty from the winning ticket could be $18 million to $20 million.
The winner will have the option of taking his prize as either a one-time cash payout (estimated at $210 million after taxes) or a series of annual payments over the next 30 years that will grow by about 4% annually. (Powerball says it invests the money in a “wide variety of securities” on behalf of the winner if they chose an annuity.)
The winner will get a W-2 tax form, and state law requires the Rhode Island Lottery to withhold 25% of the payout for federal taxes and 7% for Rhode Island state taxes, according to the Lottery’s website. Here’s what happens to the money:
In general, revenues from all Rhode Island Lottery games are divided as follows: 67.9% prize awards; 18.3% General Fund; 13.2% commissions; 0.6% lottery operations and other costs. Of the money that is placed into the state’s General Fund, it is distributed among the state’s 39 communities for programs in Human Services, Education, General Government, Public Safety and Natural Resources. Additionally, certain funds are allocated to the Distressed Communities Relief Fund.
Update: A clerk at Eastside Marketplace in Providence tells WPRI 12 the winning Powerball ticket was sold there, but management isn’t talking. The Lottery hasn’t released anything official yet.
Update #2: The clerk who told us that was, obviously, wrong. Mea culpa on my part for publishing the information. The Lottery said Monday the ticket was sold at the Stop & Shop on Bellevue Avenue in Newport.
Update #3: Lottery Director Gerald Aubin says Rhode Island’s state government will get more than $12 million as its share of the winning ticket jackpot.
Update #4: The winner took the $210 million lump sum, so Rhode Island will get an estimated $12.58 million.
• Related: Thank the Mafia when you buy a Powerball ticket in Rhode Island (Dec. 13, 2010)
August 15th, 2011 at 10:17 am by Ted Nesi under Nesi's Notes
Foxwoods Resort Casino in Connecticut has been in rough financial shape for a good long time now. UMass Dartmouth estimates the 19-year-old venue’s revenue fell from a high of $1.5 billion in 2006 down to $1.2 billion last year – leaving the Mashantucket Pequot tribe unable to service its more than $2 billion in debt.
The Wall Street Journal reports today that the Pequots are inching closer to a deal that would restructure its debt payments – and the deal could impact the prospects for tribal casinos in other places like Rhode Island and Massachusetts:
The Pequots are a sovereign nation under federal law, a recognition they received from the government in 1983. That status prevents them from being forced into bankruptcy protection, many experts say.
And only tribes can operate casinos on Indian reservations under federal law, preventing creditors from seizing Foxwoods’s assets and selling them off as they might with other defaulting borrowers.
Those peculiarities have made the Pequots’ debt restructuring a significant test case of investors’ future willingness to lend to tribes, a market that grew to an estimated $20 billion in outstanding debt over time. Some on Wall Street and elsewhere were concerned the tribe’s sovereign status could force creditors to take huge hits, given their murky legal rights.
(photo: Wikipedia)
December 31st, 2010 at 3:04 pm by Ted Nesi under General Talk
Well, nobody ever says he wants to raise taxes. The question is whether you do despite that.
The Pawtucket Times’ Jim Baron has a lengthy interview with House Speaker Gordon Fox that’s well worth a read. Here’s what Fox has to say about Gov.-elect Lincoln Chafee and his proposal to levy a new 1% sales tax on items that are currently exempt from the 7% sales tax as a way to help close next year’s $295 million budget deficit:
Fox says he sees Chafee as someone he can deal with.
“I can already say I like the guy,” Fox said of the incoming governor. “I find him to be a straight shooter and he shows compassion for folks. You can’t always say that about people in this building.” …
The Speaker said he is ready to sit down and talk budget with Chafee when he gets his fiscal team in place.
Nonetheless, he repeats: “I don’t want to raise taxes on anyone, especially the sales tax, because that can hurt the lower and middle income people. I won’t say no, but it may take a lot of convincing,” for him to embrace Chafee’s 1 percent plan. There may be room to maneuver, however, because Fox says, “We have gone from having an economy based on goods to a service-based economy and our sales tax has never reflected that.”
Fox’s warm comments about Chafee personally and as a colleague fit with what most observers have suggested – the General Assembly’s leadership will likely find it easier to deal with the governor-elect than with Carcieri because Chafee’s policy views are more in line with their own. But that doesn’t make them any more enthusiastic about the idea of enacting a new broad-based tax on their constituents, budget deficit or not.
Among other highlights, Fox told Baron he wants the General Assembly to take an active role in implementing President Obama’s Affordable Care Act; hopes to use Central Falls to create a template for how to aid ailing cities and towns; thinks the time may be right to legalize gay marriage here; and he plans to keep a close eye on Massachusetts’ next moves when it comes to casinos.