Twin River Believes Raimondo’s Backing IGT is Anti-Competitive, Could Cost Rhode Island Taxpayers Hundreds of Millions of Dollars

Posted on: July 8, 2019, 02:01h. 

Last updated on: July 8, 2019, 03:05h.

Todd Shriber @etfgodfather Read More

Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Twin River Worldwide Holdings, Inc. (NYSE: TRWH), the owner of two casinos in Rhode Island, is launching a public relations offensive to persuade politicians there that Gov. Gina Raimondo’s effort to award a $1 billion gaming machine contract to International Game Technology Plc (NYSE: IGT) is bad for business and for taxpayers.

On Sunday, the company took out a full-page advertisement in the Providence Journal, the state’s most read daily newspaper, blasting Raimondo’s preference for a $1 billion, 20-year contract that would pave the way for IGT to solidify its position as the dominant provider of gaming machines at Rhode Island casinos.

The pact is being described as “no bid,” meaning the procurement process was not open to IGT competitors.

The Governor cannot side step Rhode Island’s purchasing law. She cannot enter into a no-bid contract without a vote of the Rhode Island House and Senate,” according to TRWH’s ad in the Providence Journal. “We believe that this agreement is not in the interest of the Rhode Island tax payers. Over the next weeks, we will share with you our concerns and further explain why this is a bad idea.”

Twin River owns the Tiverton Casino Hotel and Twin River Casino Hotel in the Ocean State.

The crux of the matter is how much control over gaming machines in Rhode Island IGT will have. State law mandates that a single manufacturer can control up 50 percent of the gaming contraptions there, but by way of the 2015 merger with Gtech, IGT runs well over half the Ocean State’s legal gambling devices.

Twin River contends that the state’s lottery regulator has essentially ignored IGT’s dominant position in the gaming machine market.

Dominance Not Helping Taxpayers

If policymakers do not oppose Raimondo’s IGT accord, the company could maintain a stranglehold on Rhode Island gaming machines. IGT currently accounts for 84 percent of the contraptions at the Tiverton and Twin River properties, or the equivalent of 4,364 machines. IGT competitors Everi and Scientific Games have just 195 and 616 machines, respectively, at the two TRWH casinos, according to the Providence Journal.

TRWH asserts the math is on its side in its effort to thwart Raimondo’s IGT pact. The Rhode Island-based gaming company claims a single IGT video slot at its casinos nets $258 per day, good for a net yield of $94,000 annually, of which the state keeps $56,000, reports the Providence Journal.

However, a competing device from Scientific Games brings in $401 a day, resulting in a net yield of $146,000 and a payday of $87,000 per year per machine to Rhode Island coffers.

Looked at differently, TRWH believes lack of competition on its gaming floors is not only harmful to the company, but to the state and the taxpayers.

Evolving Landscape

One reason Twin River is fighting to stymie IGT’s Rhode Island market share is the increasingly competitive New England gaming landscape. Wynn Resorts recently opened the Encore Boston Harbor and MGM Springfield is just weeks away from its first anniversary. Neighboring Connecticut is home to two tribal casinos and could open a third in the future.

While she could not give specific percentages, Doyle told Casino.org indicated that properties such as Encore Boston Harbor or MGM Springfield feature a wider breadth of gaming machine manufacturers on their floors, meaning none are able to dominate the market in Massachusetts.