Casino

PROVIDENCE — A day after a national credit-rating firm warned of a “high probability of bankruptcy” for the owners of the Twin River slot parlor, Governor Carcieri said he would oppose any “bailout” bid that involved lowering the state’s potential $254-million share of the video-slot revenue at the refurbished dog track.

“This is a problem between BLB and their lenders. They borrowed too much money, like you and I buying a house with less down but you can’t afford the payment[s]. That’s what we’ve got here. They just didn’t put down enough equity. Now that is their problem as far as I am concerned, not ours,” Carcieri told reporters.

“But if the question is, right now, is the [state] going to … bail them out, if you will, by reducing our take? The answer is: no,” said Carcieri, repeating the word “no.”

But the governor said he doesn’t care whether the Lincoln greyhound track-and-slot parlor continues to have dog-racing, an expensive holdover from bygone days that reportedly cost the current owners upwards of $10 million in annual subsidies, while generating $980,000 for the state last year.

State law currently requires the operation of greyhound racing as a condition for Twin River to offer the acres of video-slots that bring in most of their gambling dollars.

But state lawmakers, at the owners’ request, freed Newport Grand in 2003 from having to operate Jai Alai, and Carcieri said yesterday that at a time when Twin River’s owners are clearly having trouble paying their lenders: “I don’t think [the greyhound racing] contributes a whole lot.” He said no one has posed the question yet, but if the owners asked to drop dog-racing “and everybody else agreed to it, I’d support that.”

There was no immediate comment by the key players in the Rhode Island greyhound industry, which includes the kennel owners and about 63 trainers, kennel staff and dog-walkers at the track. But Karen Keelan, president of the American Greyhound Track Operators Association, said any time there is talk about “elimination of the sport, it’s a serious and hard situation for everyone involved in the industry.”

Carcieri made his comments in response to reporters’ questions at the tail end of an unrelated news conference, on a day the increasing seriousness of Twin River’s financial troubles made front-page news.

Twin River is owned and operated by UTGR Inc., a subsidiary of BLB Investors — the holding company comprising Kerzner International Limited, Starwood Capital Group and Waterford Group LLC. The company bought the aging Lincoln Park dog track in 2005, along with three greyhound racetracks and a horse track in Colorado, and then embarked on a $225-million renovation and expansion in Lincoln.

On Monday, Moody’s Investors Service downgraded the company, citing “the high probability that the company may be forced to seek bankruptcy protection in the near term.” The previous Friday, Standard & Poors lowered its rating of the company after Twin River skipped interests payments due on Sept. 2 on a $145-million piece of the $565-million loan package it acquired in 2005-06 to buy and expand the facility.

The video-slots are still making money for Twin River and, by extension, for the state Lottery which effectively owns the 1,751 electronic gambling machines housed there. Out of every dollar lost into one of these machines, the state gets 61.08 cents. If expectations for this year pan out, the state will get $254 million.

During a good week last month, cash-in was $41.5 million; cash-out in the form of payouts to the players was $33.3 million. That left $8.1 million in the till to be divided among the state, Twin River’s owners, the Town of Lincoln, GTECH as both the central-system operator and one of the gambling machine suppliers, the other machine suppliers and the Narragansett Indian tribe.

Compared with the same week in August a year earlier, revenue was up 6.49 percent. A week later, however, Twin River took in 0.29 percent less than it had during a comparable period a year earlier. The facility ended the month of August up, not down. But it has seesawed ever since — up, down, up, down — ending last week with the slimmest of gains: $66,109 or 0.91 percent.

The first sign that Twin River’s owners were in financial trouble came in March, when they missed a loan payment. The lenders gave the owners a reprieve until Aug. 29. That was extended recently until Jan. 31, 2009, under the terms of a forbearance agreement that allows the company to suspend payments to some lenders, but also requires the company to meet a series of undisclosed monthly benchmarks.

When asked this week if the downgrade reflected concern that Twin River would not produce enough earnings to meet those benchmarks, Moody’s vice president and senior credit officer Peggy Holloway said, “Yes.”

Her overriding question: “Is it just a function of the economy or is it more than that [that] a property of that size and scope can’t be supported by the demographics of that particular location?” While hard to answer, she said: “I think the original assumption given the population density and that the property was convenient and had a loyal following was that it had a greater earnings potential than it is demonstrating.”

Carcieri said he has not yet been briefed on concessions Twin River’s owners are currently seeking from the state. Their bid for a lower payment rate was rejected by the governor and lawmakers in June; their request for permission to stay open all-night on weekends was approved. But Carcieri said he does not foresee an imminent bankruptcy because he does not believe it is in the lenders’ interest, and he isn’t concerned about the state losing money because “right now, we control the cash-flow … We get all of the money, then we distribute it back out.”

Asked if the state has a contingency plan to keep the doors open if Twin River’s owners end up in bankruptcy court, he said: “The doors will stay open because everybody’s incentive is to keep the doors open. That is the lenders, and the state and the owners.”

kgregg@projo.com