Casinos and Government Non-Competitiveness


As more casinos open their doors in Massachusetts, Rhode Islanders are at least presented with an important lesson in government.

Insider Senator Frank Ciccone (D, North Providence, Providence) has demanded to know “How can we compete?”  The answer, in short, is to stop requiring an act of the General Assembly for Twin River to do so.

Rhode Island takes a high percentage of gambling revenue, reducing the incentive for private investors to be involved.  The state dictates details about how many of what games from what company should be on the premises, and the governor is even now seeking to lock in a restrictive contract with IGT for 20 whole years.  Read through the state’s laws pertaining the the casinos, and it is clear that Twin River is little more than a management company for a state-run casino.

How can we compete?  Change that around.

Steve Frias notes that Rhode Island has already been down this path with horse racing, writing that it declined and disappeared for three reason:

First, competition from horse race tracks located in other New England states caused Rhode Island horse race tracks to lose customers. …

Second, the number of horse racing gamblers shrank as the sport failed to attract younger fans. …

Third, the quality of Rhode Island horse racing became poor due in part to a high tax burden. Rhode Island politicians steadily increased the state’s share of horse racing revenues from 3.5 percent in 1934 to 9 percent by 1971. This caused race track owners to invest less money into their facilities and it reduced the quality of the horses they could attract for races since the prize money was smaller. By 1976, Rhode Island race tracks were being called “the most miserable race tracks in America” with “the most miserable horses in America.” In 1978, horse racing in Rhode Island came to an end.

This is a microcosm of the way Rhode Island operates.  Simply put, you can’t compete when you have to cut a state’s worth of insiders in on the deal.  As life becomes less and less dependent on where you live, the captive audience will shrink, and business (any kind of business) will shift to the best competitor.

Thus, mobile sports betting (or wind turbine production or whatever) is no answer for the long term.  Even if Rhode Island is first to market, we’ll never be able to compete until we change the way the state runs.

  • Joe Smith

    Yet, according to NewportRI earlier this summer – “The parent company of Twin River Casino Hotel and Tiverton Casino Hotel announced Tuesday an offer to buy back up to $75 million in shares of its common stock for cash.

    and while Twin River commented “it’s indicative of a very strong balance sheet, high levels of free cash flow, and a balanced approach to the allocation of capital between shareholders and growth initiatives” – one wonders whether the Twin River execs are thinking more “time to make share prices go up so we can cash out before the competition eats us”.

    Not surprisingly, Twin River stock crashed after recent earnings’ statement and now Twin River is buying back stock at cheaper prices so the execs and insiders get the opportunity to cash in twice.

    Just saying be careful when you throw the incentive point out there – MA takes 25% of the big casinos (and I think 50% of Plainfield) so perhaps there is room to “incentivize” Twin River more – but Twin River isn’t just some poor unfortunate hired “manager”.

    Let’s see – over $30 in June..then crashes to $20 with the recent earnings..and yet some “analysts” still giving TRWH a “buy” recommendation. I’d suggest the Twin River folks knew exactly what they were doing in their free cash allocation away from capital/improvements and into stock buybacks.

    Surprising though our GA members wouldn’t realize that the insiders in Twin River might want to tank for at least a quarter – you’d think insiders would catch on to other insiders…

  • Jimmy Adams

    Rhode Island has Turner’s Disease. Everything it touches turns to S%#t.

  • Rhett Hardwick

    “Rhode Island takes a high percentage of gambling revenue,”
    Many years ago, I was friendly with the now deceased President of a now defunct greyhound track in Massachusetts. Thinking it might discourage some people, I asked him why they charged for parking. His answer was that with the pari-mutual rules, and taxes, the only real money they made was from parking and the restaurant. I assumed this to be at least “mostly” true.