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Gambling Expansion In Rhode Island Could Be Done Without Constitutional Amendment

Posted on May 23rd, 2010

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The Rhode Island House Committee on Finance held a public hearing Thursday on a bill introduced by state Rep. William San Bento, a Democrat from Pawtucket, calling for a referendum to amend the state constitution to allow an expansion of gambling at Twin River and Newport Grand.

The constitutional amendment would have to be endorsed by voters statewide and by voters in Lincoln and Newport. Only video-slots and simulcast dog and horse racing are currently offered at the racinos, and San Bento proposes to add a complete range of table games to convert them into full casinos.

The president and chief operating officer of UTGR, the company that owns Twin River, spoke at the hearing, which was attended by only a few people. George Papanier said there is no need for a constitutional amendment in order to expand gambling in the state as required by San Bento’s bill, which declares that the Rhode Island Supreme Court has decided that “without an amendment to the Constitution, a casino in Rhode Island cannot be privately owned and privately operated.” Papanier said the state has essentially been operating Twin River and Newport Grand and would continue in this manner should gaming be expanded. “We have been successful as a state-operated entity regulated by the Rhode Island Division of Lotteries and remain confident that we can continue to produce revenue for the state while operating under the existing state constitution,” he told the panel.

He further said that without full gaming, the over $300 million in annual revenue to the state would be put at risk, as well as the jobs of many residents. Papanier assured committee members that Twin River is capable of competing with gaming facilities in Connecticut and those that could possibly be established in Massachusetts, if the racinos are provided the “necessary tools” to compete. Last June, Twin River owners filed for bankruptcy protection because of heavy debts, but in the past months the racino has reasonably recovered, showing slight increases in revenue that seemed to resist the industry’s downward movement.

Massachusetts lawmakers are in the process of passing legislation to authorize casinos and allow slot machines at their race tracks, a move that consequently set off an announcement from the Mashpee Wampanoag Tribe of their plan to put up a casino in Fall River.

The tribe originally intended to build its gaming facility in Middleboro, but decided to move the proposed project to a site in Fall River. Papanier, after being queried by committee chairman Rep. Steven Costantino, D-Providence, said that in his view, a casino in Fall River would cause Twin River to lose at least a fourth of its earnings, since almost fifty percent of Twin River’s patrons come from Massachusetts. He also said Newport Grand would even suffer more from the adverse effect of a Fall River casino.

Rep. John Savage, a Republican from East Providence, who took in Papanier’s observation that the gambling expansion proposal could be done without a voters’ referendum, voiced his concern over legal disputes on the issue that are likely to ensue.

The general counsel of UTGR, Craig Eaton, said the state’s gambling law allows lotteries as long as they are operated by the state, and table games are considered lottery by court rulings because they are games of chance. He said the constitutional amendment that called for a casino in West Warwick that was disapproved by voters in a 2006 referendum prescribed a privately owned facility.

Matthew Thomas, leader of the Narragansett Indian Tribe which partnered with Harrah’s Entertainment for a casino bid in West Warwick in 2006, and Mike Levesque, ex-mayor of West Warwick who acted as a consultant for Harrah’s in the failed project expressed their backing for gambling expansion.

There were also those who stood firm against the bill, like those belonging to the Newport-based group Citizens Concerned About Casino Gambling, whose president is the Rev. Eugene McKenna, a retired pastor from Middletown, Rhode Island. Committee Chairman Costantino said the developments in Massachusetts and their possible repercussions on Rhode Island’s revenue are a cause for “serious concern,” but added that he still has to assess the sentiments of his colleagues on the matter of the referendum.