Rhode Island gave International Game Technology (IGT) the green light earlier this month to run the state’s lottery. A 20-year agreement is in the works that is said to be worth $1 billion and caused some backlash since no competitive bidding process had been held to determine the lottery’s new administrator. Twin River Worldwide Holdings, which operates two casinos in the state, argued against the decision and offered to pay $125 million in cash to the state in order to take over the lottery. Rhode Island Governor Gina Raimondo considered the idea for perhaps all of two seconds before replying with thanks, but no thanks.
Rhode Island’s lottery is the third-largest revenue generator in the state and Raimondo wants to make sure that an experienced company manages it. She said in an interview with the Providence Journal, “This isn’t the business [Twin River is] in. And this is the third biggest source of revenue for Rhode Island. I think it would be incredibly risky to turn over this to a business that has zero track record in it.”
Twin River had argued that IGT has a poor revenue track record as one of the company’s gaming machine suppliers. It took out a full-page ad protesting the deal and asserted that Raimondo was wrong in giving IGT the contract without accepting bids from other companies. There is still a chance that the deal will fall through, as it has to be approved by state legislators. Nicholas Mattiello, the Rhode Island House Speaker, has also expressed some concern over the deal and says that Raimondo will need to demonstrate that the decision can survive “legislative scrutiny.”
Why Raimondo has sided with IGT isn’t clear, especially if there are other alternatives that should have been considered equally. While there’s no reason to believe that this could be another Washington, D.C., incident, certain comments made by the governor have raised red flags.
Raimondo was quoted by the Providence Journal as having said that Twin River is “owned by a hedge fund out of, I think, New York City,” and that the fact that it is a publicly-traded company is of some concern to her. However, just because some hedge funds own shares of a company doesn’t mean the company is owned by a hedge fund—hedge funds are found in virtually every major company and there are also plenty of other professional investors involved in Twin River.
Raimondo is a former venture capitalist, so attacking a company for being publicly trade seems a little strange. Especially considering the fact that, although she neglected to mention it, IGT is a public company, as well. Additionally, and not surprisingly, IGT is backed by several hedge funds, including HG Vora Capital Management.
