A Strange Disagreement Over No-Bid Slot Deal

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It’s strange to see the company with which the State of Rhode Island contracts to operate its state-run casinos objecting via a public-opinion campaign to the proposed contract for its electronic gambling machines:

If passed by lawmakers as proposed by Raimondo, the Lottery would be required to get 85 percent of its 5,000-plus electronic gambling machines from IGT, even though state law currently caps the number at 50 percent. The company would potentially get a bigger slice of the revenue pie.

And, as Twin River sees it, Rhode Island would lose the opportunity that other states — including Massachusetts — had to extract better deals from IGT by putting their contracts out to bid.

“We think R.I. taxpayers should be terrified by this deal,” Marc Crisafulli, the executive vice president of Twin River Worldwide Holdings — and president of the company’s Rhode Island casino operations — told The Journal on Friday as the opposition campaign was about to launch.

His argument: There’s a potential $10 billion in state gambling revenue riding “on the belief that the governor’s office did this 20-year secret deal entirely correctly. That’s a pretty big leap of faith when you consider the lack of 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. There’s no reason to do it now. The terms are very bad. … It undermines competition.”

A key point explained later in the article is that IGT’s machines are apparently the worst performers in terms of which games actually attract customers.   IGT machines average $258 per day, while machines by Everi average $303 and those by Scientific Games average $401.

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I expect that there are considerations that don’t come across in the article, but from a distance, this looks like a classic example of RI’s way of doing business.  Why not seek maximum flexibility?  Why not give the people actually operating the casino more of a say in what it provides to customers?



  • ShannonEntropy

    It’s strange to see the company with which the State of Rhode Island contracts to operate its state-run casinos objecting via a public-opinion campaign to the proposed contract for its electronic gambling machines:

    It may seem “strange” but is it really too hard to understand ??

    TRWH just wants to maximize profits which would be easier to achieve if contracts for the machines were put out to bid rather than grant a near monopoloy. This is just Supply / Demand Economics 101

    What at first seemed the most ‘strange’ to me is that there was an assumption in that article that drunken slot gamblers can somehow figure out which machines were the best or worst to play

    But it turns out there is an inherent “logic” in how these gamblers play, and it also turns out to be counter-intuitive — altho slot players seem to discover these principles on their own thru hours of playing

    The really weird thing tho is that the machines that end up paying the most to the players also end up making the most profit for the Casino**

    Chalk up yet another win for Ayn Rand !!

    ** This is cuz yer ‘hard-core’ high-limit slot players figure out which machines are the “loosest” and spend all their time & money playing on those machines

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