State officials reveal Rhode Island pays more for lottery services than other states

October 22, 2019 11:44 pm

By: Ellie Romano

Email: ERomano@ABC6.com

Twitter: @ERomanoABC6

RHODE ISLAND (WLNE) – New information presented at the State House Tuesday night revealed Rhode Island could save millions of dollars by moving on from IGT.

The state is currently considering extending its 20-year, no-bid contract with IGT to run the state’s lottery. The contract is worth $1 billion.

In the past, the Governor’s team has said putting the contract out to bid would be a lengthy and expensive process. But at Tuesday night’s Senate Finance Committee hearing, other representatives with the state said Rhode Island could save millions if the contract is opened up to a bidding process.

At the request of the Senate Finance Committee, representatives from the state’s Office of Revenue Analysis looked into what could happen if the state puts the lucrative lottery contract out to bid. The results revealed Rhode Island is paying much more for its lottery services than other comparable states.

“You could model a competitive bid scenario where IGT exits the state economy and the state retains more revenue, however, because of the competitive bid contract that’s presumably less costly,” said Paul Dion the state’s chief of Revenue Analysis.

Dion’s team found Rhode Island is paying higher than average fees for the lottery.

Dion compared Rhode Island’s lottery to West Virginia’s lottery and concluded Rhode Island pays IGT $2.7 million more than average annually to operate the traditional scratch-ticket Lottery.

When Dion compared Rhode Island’s lottery to Delaware’s, he found Rhode Island pays $5.7 million more than average annually on the system IGT provides to track spending and payouts on video-slots at the casinos.

Dion also confirmed IGT’s video-slot machines are the “lowest-performing” of the state’s three machine providers, netting $260.24 per day compared to the $302.73 and the $414.38 a day netted by the machines provided at the two Rhode Island casinos by its competitors. This is a complaint the head of Twin River has been voicing for months.

“When you look at the performance of IGT on the machine side, they’re about 50% worse than the competition on the floor,” said Marc Crisafulli, the Exec. VP of Twin River.

Currently, IGT’s machines make up 84% of the machines on the playing floors. If the state extends its contract with IGT, the company will be able to have up to 85% of the machines on the flood.

Dion told lawmakers Rhode Island could save an additional $6.1 million annually if some of the IGT machines were swapped out for other company’s higher-performing machines.

Overall, Dion said the state could save $14.5 million if the contract is awarded to another company.

In response, a spokesperson from IGT released the following statement:

IGT manufactures some of the best machines in the industry and our fees in Rhode Island are market driven. IGT operates in over 40 states, but we locate over 1000 jobs here in Providence. IGT operations provide over $320 in economic output annually. IGT also provides over $110 million in payroll. To suggest these impacts can easily be replaced does not comport with reality.

The revenue analysis team did warn lawmakers that there would be a shock to the state’s economy that could last for several years if IGT did leave Rhode Island and took 1,000 jobs with it.