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PROVIDENCE -- Harrah's Entertainment executives today guaranteed to
lawmakers that a West Warwick casino proposal would not lead to a
decrease in state gaming revenues.
The Las Vegas-based casino operator said it would make up the difference
between what the state collects from existing gambling facilities in
Lincoln and Newport in the year before a casino would open and any
lesser amount collected from the two and a casino after that. The offer
would also cover the possibility that one or both of those existing
facilities would close.
But Harrah's President Gary Loveman told House Finance Committee members
it is "almost inconceivable there would be a reduction (in state gaming
revenues) after the arrival of casino."
The company also is willing to pay a minimum 25 percent gaming tax that
could increase to 35 percent, depending on revenues generated by the
casino. In addition, it proposed paying a $100 million licensing fee to
the state over a decade.
Loveman said the offer to make up any loss in state gaming tax revenues
would expire after those revenues meet a targeted amount for two years.
It is designed to allay fears the project will reduce state tax payments
from Lincoln Park and Newport Grand, which have video lottery terminals.
The state expects to collect more than $200 million from those two
facilities this year.
Harrah's, which is working with the Narragansett Indians to build a West
Warwick casino, projects gaming revenues 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.
The company projects annual state gaming tax revenues would increase by
42 percent, to $412 million, between 2006, the year before a casino
would open, and 2009, the casino's third year of operation.
Harrah's officials testified today at the year's first legislative
hearings on gambling bills. The committee was not expected to vote on
any of the bills.
The company proposes to spend up to $600 million to build a casino in
West Warwick, with 3,000 slot machines, 100 table games and a 500-room
hotel. The project also promises 3,200 direct casino jobs.
Committee members grilled the company on its revenue projections, which
show a $43 million profit in the casino's third year for Harrah's and
the tribe.
"I think you are going to make more than you are telling us," said Rep
John Shanley, D-South Kingstown.
Loveman said the revenue projections are conservative.
He was also questioned about other bills before the committee, including
one that would require any casino to make the same percentage tax
payments to the state as do Lincoln Park and Newport Grand, which
currently are at 60 percent.
Loveman said a Rhode Island casino could not compete with the two
existing Indian-run casinos in eastern Connecticut at a 60-percent tax
rate.
Another bill would ensure competitive bidding for any casino license.
Isle of Capri Casinos Inc. bid $518 million for an unused Illinois
casino license. The Illinois Gaming Board in March accepted the
Mississippi-based company's bid, but Illinois' attorney general is
moving to block the sale due to concerns about mob influence.
Loveman said a Rhode Island casino faces greater competition than exists
for that Illinois project.
Bills before the House panel include several asking voters whether they
support having a casino in West Warwick. One proposal specifies the
Narragansett Indians' proposal in that town and calls for local and
statewide referendums in November. Other bills name only the town as the
location for a casino without specifying the developer.
The hearing began with testimony on the dangers of compulsive gambling.
"I am the dark side of gambling," said John Cipolla, a former Providence
official who spent two years in prison for stealing from a city agency.
Cipolla, the former deputy director of the Mayor's Council on Drug and
Alcohol Abuse, was sentenced in 2002 to three years in prison for
stealing more than $240,000.
He said a gambling addiction drove him to steal the money.
Cipolla now works for a Pawtucket-based center that helps people
suffering from addictions.
"I am begging someone to step to the forefront and start discussing how
we mandate prevention and treatment programs," he said.
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