As Rhode Island moves closer to banning smoking in its two casinos, the two casinos are pushing for the government to subsidize any losses stemming from said ban.
Last week, casino workers protested at the Rhode Island Senate, urging lawmakers to support legislation enacting the ban. There are bills in both chambers of the legislature aiming at ending the casinos’ exemption to the indoor smoking ban.
In response, Bally’s is pushing for legislation in its own best interest. They lobbied for a bill that would change the current deal with the state. It would give the company more money for increased marketing efforts to offset losses from a potential ban.
Given their influence with legislators, Bally’s should have the inside track for a license if Rhode Island legalized online casinos.
Bally’s, which owns the two casinos in Lincoln and Tiverton, supports S1112.
Under the current legal landscape, the government already reimburses the company for marketing expenses between certain thresholds. The recently-filed bill would increase the amount Bally’s receives from the state if a smoking ban is enacted.
Bally’s Believes Lost Revenue Justifies Revenue Adjustment
The new bill is meant to help offset anticipated revenue losses from a smoking ban. The two-tier structure under current law would also be combined into one tier for both properties.
“If the smoking ban prevails in the General Assembly, it will be critically important for Bally’s to explore every possible avenue to restore lost revenue to the state – some $20 million annually,” Bally’s spokeswoman Patti Doyle told The Rhode Island Journal. “When the Tiverton casino was built six years ago, Bally’s simply inherited the considerably smaller Newport Grand tier structure. This bill, if passed, would more accurately reflect current ownership and market conditions.”
Lottery Officials Oppose Bally’s Plan
Changing the two-tier approach has Lottery Director Mark Furcolo concerned. He believes adjusting the agreement could result in major revenue losses for the state.
Currently the lottery reimburses Bally’s 60.5% of marketing expenditures above $4 million, but not the amount between $10 million and $14 million.
The state then kicks in another 60.5% for expenses between $14 million and $17 million, but caps the reimbursement at $17 million. The bill would have the state reimbursing at that 60.5% amount from zero to $27.25 million. Additionally, the total would increase annually with inflation.
During the current fiscal year, Bally’s Lincoln will receive $3.6 million and the Tiverton property would receive $506,890. Those figures would increase to $6.1 million and $844,816 under the new proposal.
“With respect to the marketing program consolidation, the Rhode Island Lottery does not oppose combining the two programs from an administrative standpoint,” Furcolo noted. “However, the Rhode Island Lottery does not support the proposed substantive changes, which would increase the state’s reimbursement requirement by millions of dollars.”
Despite the lottery director’s misgivings, the bill passed the state senate committee on labor and gaming on May 28. The General Assembly should discuss it in the coming days.
