Newport Grand Casino Legislation Quietly Amended Based on Twin River Study

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In a matter of three minutes upon the appearance of Chairman Walter Felag (D, Bristol, Tiverton, Warren), the Senate Committee on Special Legislation and Veterans Affairs had replaced with amendments and approved the Senate and House versions of high-profile legislation. The bills (S2695 and H7543) would grant the Division of State Lottery and the Department of Business Regulation authority to operate a casino, including table games, within the Newport Grand facility right off the bridge in Newport.  The following video shows the pace at which those three minutes moved:

The committee’s published agenda for the Wednesday afternoon meeting made no mention of amendments, and until the following morning (subsequent to the Current’s inquiries), they did not appear on any online legislative listings.  However, a text search of the General Assembly’s Web site performed before the start of business Thursday showed them to have been uploaded to the site between the hours of 1:00 and 2:00 p.m., prior to the meeting (S2695A and H7543A).

Pending a vote of the general electorate, the legislation would give the state intimate control over expanded gambling activities at the facility — from determining “the number, type, placement, and arrangement” of games to approving “matters relating to the employment of individuals to be involved, directly or indirectly” with the “casino gaming.”  Effectively, Newport Grand’s future casino operation would become a quasi-governmental agency.

No changes were made, yesterday, to the nature of the state’s control.  But it declared one hurdle to implementing the plan to have been accomplished.  Prior to the amendment, the legislation called for a comprehensive study, as follows:

It is in the best interest of the state to conduct an extensive analysis and evaluation of competitive casino-gaming operations and thereafter for the general assembly to enact comprehensive legislation during the 2012 legislative session to determine the terms and conditions pursuant to which casino gaming would be operated in the state if it is authorized as set forth herein.

That language was drawn verbatim from identical legislation concerning Twin River, which passed as an article to last year’s budget bill. The amended bill now reads as follows:

Pursuant to the provisions of subdivision 42-61.2-2.1(b)(4), and by action of the governor, an extensive analysis and evaluation of competitive casino-gaming operations was completed, which concluded that the viability of Newport Grand as a video lottery terminal facility is threatened by the location of casino gaming in Southeast Massachusetts.

The legislature shall, by enactment of comprehensive legislation during the 2012 session, determine the terms and conditions pursuant to which casino gaming would be operated in the state if it is authorized as set forth herein.

Senate Director of Communications Greg Paré confirms that the analysis cited is a report issued by Christiansen Capital Advisors.  That document, “Gaming Study and Economic Impact Analysis,” examines various scenarios in which Massachusetts pursues casino operations and Rhode Island does or does not allow casino games at Twin River, in Lincoln.  It addresses the effect on Newport Grand of table games elsewhere, but it does not consider the possibility of expanding the facility’s own operations.

The only scenario in which Newport Grand’s revenue would not decrease is the status quo, in which neither Twin River nor Massachusetts implement table games.  In the event that both Twin River and Massachusetts expand their casino offerings, the “likely case” scenario would see Newport Grand’s gaming revenue decrease from $50.2 million in 2011 to $29.2 million in 2017, with the corresponding state revenue decreasing from $31.0 million to $17.9 million.

The report makes no attempt to determine whether that loss in revenue would threaten the facility’s viability.  It also does not speculate about the degree to which table games would mitigate its losses, or whether other non-gambling adjustments to the business would do the same.

According to Paré, the Senate bill should appear on the floor for a vote early next week.  Thereafter, both bills will return to the House for review of the amendment and final passage.

If the governor signs the final legislation, voters in this autumn’s elections will be asked the following question, both at the state level and locally in Newport and Lincoln:

Shall an act be approved which would authorize the facility known as [“Twin River” and/or “Newport Grand”] in the town of [Lincoln and/or Newport] to add state-operated casino gaming, such as table games, to the types of gambling it offers?

The amount of information that voters have with regard to the extent of the state’s involvement in the business and the amount of research deemed necessary will depend on the public debate prior to the election.

 

Addendum (03/29/12 1:23 p.m.):

Sebastian Sinclair, of Christiansen Capital Advisors, confirmed for the Current that the possibility of implementing table games at Newport Grand was not considered.  He cautioned against extrapolating rough estimates, because there are so many variables, including the locations chosen for Massachusetts casinos, but said that a rough idea could fairly be derived from a proportional calculation using the Twin River data.  Newport Grand would experience “a similar uptick” in revenue.

In the “likely case” scenario described above, Twin River’s slot revenue would be 74.2% lower in 2017 than 2011, and its tables revenue would be 18.6% the size of its slot revenue.  If those percentages are applied to Newport Grand, the currently projected slot revenue of $29.2 million would change to $37.2 million (compared with 2011 revenue of $50.2 million), and its tables revenue would be an additional $6.9 million.

Sinclair also clarified the extent of the economic analysis.  Although Christiansen Capital Advisors estimated the increase in employment and its effects on the local economy, the research did not attempt to quantify other effects on the local economy.  An example would be whether a diner down the street would experience greater or lesser traffic based on the casino’s presence or, more intangibly, the marketing and business mix of the city and its surrounding area.



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