R.I. casino plan advances; governor critical of deal

Michael Mello

Wednesday, June 23, 2004 | 9:02 a.m.

PROVIDENCE, R.I. -- Voters would get to decide whether the state's first casino should be built in West Warwick, under bills approved Tuesday by House and Senate committees.

The bills were approved after Harrah's Entertainment sweetened its offer to the state. The company agreed to a higher maximum tax rate and to paying a $100 million licensing fee over three years, instead of 10.

This "is the best deal we could put forth for the state of Rhode Island," said Senate Committee on Constitutional & Gaming Issues Chairwoman Maryellen Goodwin, D-Providence. Her committee approved the bill 5-2. The House Finance Committee approved a similar bill by a vote of 13-4.

Both bills now move to the floors of their respective chambers.

Several House members voted for the bill not because they favor the project, but because they believe voters statewide should decide on it.

"The driver of this issue is that the people of Rhode Island should have the right to vote on this issue one way or the other," said House Finance Chairman Steven Costantino, D-Providence. Costantino hasn't decided whether he personally supports the casino initiative.

Under the revised proposal, Harrah's also agreed to pay for a program for problem gamblers and to help the state's hospitality industry pay for advertising.

The tax rate under a 10-year contract will be between 25 percent and 40 percent, depending on gross gaming revenues.

Harrah's says the state would collect $113 million in additional gambling revenue in the casino's first year of operation.

The state's two existing gambling parlors, in Lincoln and Newport, believe Harrah's has underestimated the negative effect a casino would have on their operations. If they lose money, they say the state would too since it collects 60 percent of the profits from video slots at Lincoln Park and Newport Grand.

Those facilities this year will pay about $220 million in revenue from video slots to the state. Harrah's has promised to cover any lost gaming revenue to the state for two years.

"We're very disappointed," Lincoln Park spokesman Mike Trainor said after the votes. "Make no mistake, this will be built on the backs of Rhode Island taxpayers."

Gov. Don Carcieri opposes the proposed casino and said he was "disappointed that this new deal ... was devised behind closed doors.

"A decision as momentous as this should not be cobbled together at the 11th hour, with no opportunity for the public comment," he said.

Last week, legislative leaders rescheduled a planned House vote on the casino project, to give time for more talks with Las Vegas-based Harrah's and its partner, the Narragansett Indian Tribe. Harrah's would own the casino.

The project calls for a $600 million resort-style casino to open by 2007, generating more than 3,200 direct jobs.

Harrah's lawyer David Satz couldn't say what effect the sweetened offer to the state will have on payments to the tribe and the town.

Rep. Tim Williamson, D-West Warwick, said payments to the town, estimated in the first year at about $14 million, are subject to negotiation with local officials.

Narragansett Chief Sachem Matthew Thomas expects the tribe's share of the revenue to remain about the same -- previously estimated at about $20 million in the first year.

But Satz said the first-year profit to be shared with the tribe is now estimated at about $18 million, meaning Harrah's might not make any money in the first year.

"We're in this for the long-term," he said.