Parlors demand equal taxation

Michael Mello

Tuesday, May 18, 2004 | 8:51 a.m.

PROVIDENCE, R.I. -- If a casino were built in West Warwick it would steal business from existing gambling parlors in Newport and Lincoln, representatives from both operations said Monday.

But, Newport Grand and Lincoln Park said they'd take their chances competing against a casino, if all three were taxed at the same rate.

"A major destination resort casino in West Warwick would have a devastating impact on Newport Grand," Chief Executive Diane Hurley told the House Finance Committee.

Hurley said the state's agreement with Newport Grand and Lincoln Park is designed to ensure that the state collects as much of the profit as possible. She said Newport has consciously tried to coexist with businesses around it and with Lincoln Park.

Both gambling parlors give about 60 percent of their profit from video lottery terminals to the state. This year the operations together will contribute about $220 million to the state.

Harrah's Entertainment Inc. and the Narragansett Indian tribe have proposed a casino in West Warwick. Harrah's has offered to pay a gaming tax of 25 percent to 35 percent. Voters must approve any casino.

"A 25 percent tax versus 60 percent really places a tremendous burden, it allows them to advertise and market in ways we simply can't do," Hurley said.

Wembley PLC, the London-based owner of Lincoln Park, last week urged lawmakers to come up with a compromise tax rate that would be applied to all gambling operations in the state.

"We are not afraid of a casino, we are not afraid of competition," Lincoln spokesman Mike Trainor said. "What we are afraid of is a casino that comes in and (threatens) an essential revenue stream to the state."

Harrah's projects gaming revenue will decrease less than 10 percent at Lincoln and 25 percent at Newport Grand in 2007, the first year a casino would open.

By 2009, Newport would still earn less than in the year before a casino opened, but Lincoln would rebound to see a slight revenue increase, Harrah's says.

Lincoln Park and Newport Grand both doubt the casino company's projections.

Harrah's has sought to ease concerns about any negative effects a casino could have on Lincoln and Newport Grand by promising to make up, at least temporarily, for any drop in overall gaming revenue paid to the state after its casino opened.

The Las Vegas-based casino operator says it wants to compete with two Indian-run casinos in Connecticut, not the businesses in Lincoln and Newport. Harrah's believes many visitors to a West Warwick casino would come from Massachusetts, rather than taking customers from Lincoln and Newport.

But Lincoln Park officials said their own customer surveys show that nine in 10 patrons would gamble at a West Warwick casino.

"What if Harrah's is wrong?" Lincoln spokesman Craig Sculos asked. "We don't really know what will happen."

"All we are asking for is one tax structure," he said.

House Finance staff is looking over the data offered in testimony, said committee chairman Steven Costantino, D-Providence.

Costantino said he cannot decide on how to deal with the tax structure until that work is complete.

"It should go on the ballot with everyone on a level playing field," Rep. Paul Crowley, D-Newport, said.

"Under the current proposal, I feel Harrah's is asking the state to 100 percent finance the construction of their casino. Not a bad deal," Crowley said.