UPDATED: Table Games: A Big Change for a Sliver of Improvement

In mid-April, I posted this chart, showing monetary impact for the state of three casino-related scenarios, based on a Christiansen Capital Advisors study that investigated the effects that Massachusetts casinos would have on Rhode Island gambling revenue with and without casino games at Twin River.

RI State Gambling Revenue Projections With and Without Casinos, 2011-2017


By way of explanation, the red area is what the state is looking at collecting from its existing video slot interests if it does nothing to challenge MA.  The green shows what the state expects if Massachusetts never gets around to entering the gambling business.  And the blue shows the additional state revenue projected from table games if the state takes 35% of the profits.

It’s important to note that the study did not consider the possibility of table games at the Newport Grand Slots site.  However, conversation with the analysts led me to conclude that they might make the blue line about $5 million (around one-sixth) thicker.

Legislation submitted yesterday (S3001) reveals that the state’s actual take has been negotiated to be 16%, plus 2% more that will last until revenue from video slot terminals goes down.  According to Christiansen, slot revenue will begin to go down in the second year of table game operation.  Modifying the chart for this arrangement results in this:

RI State Gambling Revenue Projections With and Without Casinos, 2011-2017 (Modified for Negotiated State Take)


As explained above, the blue sliver would be widened were Newport Grand to install casino games, but now it would only add about $2.5 million per year.  It should also be noted that the legislation includes some other minor adjustments that would shave down the new revenue.  For example, the cut of total revenue that goes to the City of Newport from video slots would increase slightly (from 1.01% to 1.45%). More significantly, Newport Grand’s portion of video slot terminal revenue would increase by 1.5%, which the Christiansen report’s numbers present as about three-quarters of a million dollars in 2013 and 2014 and decreasing from there.

These details are becoming increasingly insignificant, however.  While even $10-15 million per year is hardly revenue to spurn if it comes at no consequence, the people of Rhode Island may begin to wonder whether, in the context of the larger gambling trend, it’s worth changing the state’s entire relationship with the industry.

UPDATE (5/26/12):

Today’s Providence Journal has an article by Philip Marcelo reporting that representatives of the gambling facilities project the state’s take of gambling revenue going up by a yearly $26 million under their plan.  That is nearly as much as the $28 million projected by Christiansen, which assumed that the state would receive almost double the proposed percentage of table game profits.  The new projects accomplish this feat by assuming that table games will increase slot revenue, too:

Twin River says the state could see approximately $10.8 million in new revenue in the budget year starting July 1, 2013, assuming the legislature approves the proposed tax and the games generate overall revenues of about $60 million.

Added to that is a projected $12.3 million in new state revenue from the current 61.5 percent tax on revenue from Twin River’s 4,700 slot machines, assuming more patrons are drawn by casino games.

That assumption conflicts directly with the assumption of the Christiansen study, which adjusts slot revenue downward with the appearance of table games at Twin River.  The study presents one table projecting total revenue if nothing changes on the local gambling scene and another projecting revenue if Twin River introduces slots and Massachusetts does not move forward with casinos.  Christiansen expects that the addition of table games at Twin River would cause a loss of $5 million in slot revenue at the same facility, with that loss increasing to $10, 15, and 21 million in subsequent years.  Table games at Twin River would also pull slot revenue from Newport Grand.

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