Rhode Island has decided that gambling machine manufacturer International Game Technology (IGT) is a perfect fit for the state’s lottery, as well as its gambling machine market. It has signed a 20-year agreement with the company that is reportedly worth $1 billion, but there’s a problem. It was signed by Rhode Island Governor Gina Raimondo in June without any formal bidding competition, and Twin River Worldwide Holdings isn’t pleased.
According to the Providence Journal, the deal allows IGT to exclusively control the state’s lottery, as well as 85% of the gambling machines at two casinos in Lincoln and Tiverton, both of which are owned by Twin River. In exchange, IGT will pay Rhode Island $25 million and hire around 1,100 employees over the course of the contract. It will also have to invest $150 million into the state over the same 20-year period. Rhode Island gets a new digital lottery system, upgraded slot machines and updates in return.
Twin River is very skeptical of the deal and believes that Rhode Island residents should be very afraid. The company’s executive VP, Marc Crisafulli, said last week that the state is looking at the possible loss of up to $10 billion in gambling revenue as a result of the “lack of [a bidding] process, the absence of any competition, the rushed nature of the deal… and the fact that the deal doesn’t seem to make any business sense.”
Having a virtual monopoly is never good for consumers and Crisafulli explains that IGT’s machines are the worst-operating machines for the company. Twin River currently has three suppliers—Scientific Games (SG), Everi and IGT—and the first two give the casinos more revenue than does IGT. SG machines earn a daily average of $401 per machine—$146,000 annually—of which the state gets $87,000 per machine each year. Everi machines average around $303 apiece each day for $110,000 a year and the state takes $66,000 of that.
However, IGT machines, over the past year, only contributed $258 per machine each day for $94,000 on the year. These gave the state just $56,000 each. As a result, Twin River believes Rhode Island is about to set itself on the path of extreme budget shortcomings.
The company adds, “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. We believe that this agreement is not in the interest of the Rhode Island taxpayers. Over the next weeks, we will share with you our concerns and further explain why this is a bad idea.”
Twin River has some time to convince citizens and lawmakers that it’s in the right. Raimondo signed the deal just as the legislative session was ending and it still has to be signed by the House and Senate. They won’t be able to discuss the issue formally until this fall.