Full House in Tiverton

Voters will decide in November if a new casino should be built in the town.

On June 21, Twin River Management Group kicked off its campaign to bring casino gambling to Tiverton with a rally and a message mailed out to more than 200,000 Rhode Islanders: Vote Yes on Question One. The sunny yellow stripe across the four-fold brochure’s cover promised to grow Rhode Island’s economy. The photos of smiling workers — a chef, a truck driver, a food vendor — pledged 330 construction and 600 casino jobs. The proposed facility itself — an 85,000-square-foot casino and hotel complex hard by the Fall River line — was rendered to resemble the Tiverton town library.

A year ago, the Tiverton Town Council voted six to one to request that the General Assembly include a casino referendum on the 2016 ballot. In more than forty meetings with townspeople, Twin River, which owns the state’s only casino in Lincoln and the slot parlor in Newport, wooed town voters with promises of $4 million in property taxes and casino revenue, a roundabout to mitigate traffic, and environmental sensitivity to the parcel’s twenty-two acres of wetlands.

The proposal counts labor and the hospitality industry among its stalwart supporters. Dale Venturini, president and CEO of the Rhode Island Hospitality Association, says that a Tiverton convenience casino will fit into the state’s entertainment profile nicely.

“It’s an economic engine within the hospitality sector, and we want to support something that is going to bring people here and keep people here,” she says.

Rhode Island AFL-CIO President George Nee relishes the prospect of adding 300 union jobs. (Twin River workers are currently represented by several different unions.)
“You don’t get too many opportunities to vote to protect revenue and maybe expand the labor movement,” he says. “When you wrap it all up, this is one of the easiest decisions we ever get to make.”

But Roger Belanger, a fifty-eight-year-old IT manager who lives in a pale yellow ranch “a Tom-Brady, Hail-Mary pass” away from the casino property, is not impressed.

“Anybody who would say it’s a good idea, put it in your backyard,” he says. “It goes against everything Tiverton is about. The identity of the town is not Vegas. It’s not a gambling town.”

If recent history is any guide, it may become one.

Between 1994 and 2012, voters have weighed eight casino proposals, and the percentage statewide of those casting votes on casino ballot questions has grown by 20 percent. Meanwhile, the percentage of those approving a casino proposal has skyrocketed from 44 percent in 1994 to 70 percent in 2012.

No doubt, factors such as the type of casino and the proposed location have influenced these outcomes. In 1994, Rhode Island rejected a resort casino in West Greenwich, to be built in partnership with the Narragansett tribe and compete with then-two-year-old Foxwoods Casino in Connecticut. In 2012, they approved by large margins the addition of table games at smaller existing facilities in Lincoln and Newport. (The latter plan did not advance because city voters narrowly rejected the proposal and struggling jai alai remains.) But it’s also clear that voters’ abstract fears of moral hazards have been fully supplanted by more concrete fears of revenue loss.

Gaming continues to provide the third largest single source of state revenues. In fiscal 2015, the Rhode Island Lottery transferred $381,935,511 — the state’s share of revenue from lottery, video lottery terminal and table games — to the General Fund. The more salient question for policymakers is: Will a small Tiverton casino keep the money flowing?

Nationally, commercial casinos generated more than $40 billion in 2015. According to the Center for Gaming Research at the University of Nevada Las Vegas, all regions have grown since 2001, with the Northeast showing the most impressive revenue growth of nearly 50 percent.

“Across the country, gambling revenues are more up than down across the country,” says David G. Schwartz, center director. “The total growth is 3 percent year over year, as more states legalize casino gambling and those markets that already have it mature. The whole pie is growing.”

The introduction of casino gambling in Massachusetts is expected to grow the pie a little more. In June 2015, the Plainridge Park Casino, a slots and harness-racing facility, opened in Plainville, Massachusetts, on the Cumberland border. It is only the first of a possible four competitors to be built in Massachusetts.

By the end of 2018, two resort-style casinos are scheduled to go online: the $2.1 billion Boston-area Wynn casino and the $950 million Springfield MGM in western Massachusetts. Last spring, the Massachusetts Gaming Authority rejected a casino bid for Brockton, but the Mashpee Wampanoag tribe is currently battling it out in federal court for the right to build a $1 billion casino in Taunton.
 

In October 2015, Christiansen Capital Advisors issued some dire warnings about the effect of these new casinos on Rhode Island’s slender slice. One scenario assumed that if Twin River and Newport Grand continued with no significant changes while three casinos and a racino opened in Massachusetts, the state’s gross gaming revenue from video lottery terminals and table games would drop by approximately $72.8 million, or 12.9 percent, and the state’s take by $40.8 million over the next five years. In the worst-case — a fourth casino in Brockton with a hotel at Twin River’s Lincoln facility — total gaming revenue would decline by $97 million and the state’s share by about $50 million.

“Analysts are unanimous in their assessment that competition from casinos in Massachusetts poses a threat to Rhode Island’s casinos. I’ve seen nothing that would dispel that view,” Department of Revenue Director Robert S. Hull says in an email. “The opening of Plainridge Park Casino has had a modest effect on video lottery terminal revenues, however the impact has been less than predicted.” (The drop from fiscal 2015 to 2016 is just shy of $19.2 million.)

In the consultant’s best case scenario — Twin River adds a 200-room hotel, closes Newport Grand and opens a Tiverton facility — total gaming revenue will increase 7.3 percent to $615.5 million by 2021; the state’s share would grow 6.4 percent to $313.9 million.

John E. Taylor Jr., chairman of Twin River Management Group, insists that a Tiverton facility can more than hold its own. The proposal would shutter Newport Grand and replace it with a casino with 1,000 slot machines, thirty-two table games and new restaurants. The adjacent three-story hotel would feature eighty-four guest rooms, meeting rooms and a fitness center.

“People don’t realize we have been competing successfully against Foxwoods and Mohegan for many years. In four out of the last five months, our slot business is bigger than theirs,” Taylor says. And, he says, sister facilities in the same market give Twin River “an enormous amount of leverage from a marketing standpoint and the cost synergies of managing two facilities.”

Father Richard McGowan, a Boston College finance professor who has written three books on the gaming industry, is skeptical that a Tiverton convenience
casino could survive in proximity to resort casinos in Massachusetts. Increasingly, casino revenues are coming from the amenities around the slot machines and the blackjack tables.     

“In the short run, you will get people to show up at a slot parlor, but eventually people get bored with them,” he says. “The name of the game here is entertainment: you have to have shows and restaurants. Casino customers want to go shopping; they want to be fully entertained. If Rhode Island is going to compete, they will have to build something that is going to compete with all of that.”