Casino

Chief Sachem Matthew Thomas has appeared at countless pro-casino gatherings.

The Providence Journal / Kris Craig

Susan Dawson of Save Our State participates in one of the anti-casino rallies.

The Providence Journal / Connie Grosch

Q: What does Harrah’s propose to build?

A: Harrah’s is proposing a $1-billion project: a 12-story hotel with 500 rooms and 140,000 square feet of gambling space with 3,500 slot machines and 150 table games. The casino would offer a spa and pool, have 55,000 square feet of meeting space and offer several restaurants and shops. It would be built on on 86 acres of non-tribal land off Route 95 near Route 2.

Q: What does the constitutional amendment say?

A: “Notwithstanding sections 15 and 22 of this Article, and provided that a majority of the electors of the Town of West Warwick have voted to approve this amendment, the establishment of a resort casino and games located therein is authorized in the Town of West Warwick. The resort casino shall be privately owned and privately operated by a business entity established pursuant to Rhode Island law by the Narragansett Indian Tribe and its chosen partner, which entity shall be: (i) legally distinct and separate from the Narragansett Indian Tribe, (ii) subject to the laws of the state of Rhode Island, including regulation and taxation, and (iii) required in its organizing documents to expressly waive any sovereign immunity relating to any and all matters of the resort casino, including compliance with and enforcement of the laws of the state of Rhode Island, and the regulation and taxation thereof. The per annum tax rate shall be established by the General Assembly with all of such tax proceeds to be dedicated to property-tax relief, as prescribed by statute.”

Q: How many people a year would visit the casino?

A: Harrah’s says 5.1 million trips would be made to the casino, 82 percent from out-of-state residents. On average, Harrah’s says gamblers will lose $110 during each trip.

Q: What type of tax rate would Harrah’s pay the state?

A: Nobody knows. Lawmakers passed legislation setting up a tax rate in 2004. But this time around, there is no such measure. If the amendment passes, legislators would negotiate a tax structure with Harrah’s. In 2004, Harrah’s would have had to pay a $100-million licensing fee and about 25 percent of all gambling revenues.

Q: How much money would the state see from the casino?

A: Harrah’s estimates that its casino would generate $448 million in gambling revenue the first year, $504 million the second year and $560 million the third year. The state would get $113 million, $128 million and $144 million.

Q: Where would the money from the casino go?

A: The constitutional amendment calls for the casino “proceeds to be dedicated to property-tax relief.” It does not specify what that means. Lawmakers would decide how the money would be distributed, possibly to municipal governments, possibly directly to taxpayers. Casino opponents have questioned whether lawmakers might cut existing property tax relief, leaving residents essentially with no net gain.

Q: What tax rate do Lincoln Park and Newport Grand pay?

A: Both give the state a little more than 60 percent of revenues: $205.4 million from Lincoln Park and $49.2 million from Newport Grand last fiscal year.

Q: Would the state lose any money from Lincoln Park and Newport Grand if Harrah’s opens its casino?

A: All sides agree that competition from Harrah’s would cause business to drop at the two slot halls. Harrah’s says the impact will be minor and that both facilities would recover after a few years. Both facilities predict a 40-percent drop in revenue. Harrah’s says the new tax revenue would more than offset any losses at the existing facilities. Casino opponents note that because of the differing tax rates, for every $1 not gambled at Lincoln and Newport, $2.40 would have to be gambled at Harrah’s to make the state whole.

Q: What are slippage payments?

A: Last year, lawmakers promised Lincoln Park and Newport Grand that taxpayers would pay for any losses the two facilities incurred as a result of a casino. Casino opponents say that these payments would add to the potential state budget problems.

Q: How much money did Connecticut see from its casinos?

A: The two Indian casinos give the state 25 percent of all slot revenue and nothing from the table games. Foxwoods provided $204.5 million last year and Mohegan Sun $223 million.

Q: Have Connecticut’s two casinos solved that state’s budget problems?

A: No. When Gov. M. Jodi Rell presented her fiscal 2007 budget she said, “Connecticut is in the sixth consecutive year of difficult budget climates, and frankly it is not getting any easier.”

Q: Would the casino bring jobs, and how much would they pay?

A: Harrah’s says the casino would create 3,500 construction jobs, 3,800 full-time jobs and an unspecified number of part-time jobs. Casino opponents, however, say local businesses would close and be forced to lay off workers. Harrah’s says its jobs would have an average base salary of $28,429.

Q: Who would own the casino?

A: A Harrah’s subsidiary would own the casino, but the Narragansett tribe would have an opportunity to purchase it after 15 years.

Q: Can anyone bid for the casino license?

A: No. Three years ago, a special House Commission to Study Gaming issued a report that said competitive bidding “would be needed to ensure the best agreement for Rhode Islanders.” But this year lawmakers decided to give Harrah’s and the tribe exclusive rights to a casino even though Donald Trump’s casino company was interested.

Q: Who is Harrah’s and isn’t it being sold?

A: The Las Vegas-based company (stock symbol HET) was founded in 1937 and is the world’s largest casino operator, with 39 casinos in three countries and $7.1 billion in revenue last year. Harrah’s acknowledged last month that two private-equity firms had offered to buy it for more than $15 billion.

Q: Could the tribe form a partnership with another casino company?

A: Nobody is quite sure. The chief sachem, Matthew Thomas, says if Harrah’s doesn’t live up to the tribe’s expectations, he would dump it. But the full agreement between the tribe and Harrah’s has never been made public, and it is unknown what financial penalties — if any — the tribe would face if it joined up with another casino company.

Q: Didn’t a Harrah’s casino in New Orleans go bankrupt?

A: Yes. A New Orleans casino with the Harrah’s name filed for Chapter 11 bankruptcy protection in 2001. It was the second time in five years that the casino had filed for bankruptcy. Harrah’s owned 49 percent of the casino company JCC Holding Co. After the second bankruptcy, Harrah’s bought the rest of JCC and paid creditors. Louisiana lowered the casino’s tax rate, and allowed it to operate restaurants and hotel rooms. It has since been profitable.

Q: How much money would the Narragansett Indian tribe get from the casino?

A: The tribe would get 5 percent of gambling revenues, after taxes are deducted, in the first few years. If revenues at the casino rise, the tribe’s share would climb to 6 percent. In the first year, that would mean $16.8 million for the tribe, $18.8 million in the second year and $20.8 million in the third year. There are 2,400 members of the tribe.

Q: How much does Harrah’s stand to make from the deal?

A: After taxes, the tribe’s share and operating expenses are deducted, Harrah’s would make $24.5 million in the first year, $25.3 million in the second year and $24.6 million in the third.

Q: What about the Town of West Warwick?

A: Under an agreement with the town, Harrah’s would pay at least $11.5 million a year in annual property taxesunder a property-tax freeze agreement. The town would also get an increasingly larger take of the gambling revenue — a half-percent in the first year to 2 percent in the 11th and later years. By the third year of casino operations, that payment would be about $4 million. Harrah’s would also make one-time payments of $5.3 million to the town in the first two years and make annual payments for additional police and fire personnel.

Q: Would the casino cause water shortages?

A: The Kent County Water Authority has already promised water to several developments that could lead to a 300,000-gallon-a-day shortage. The casino would probably use about 200,000 additional gallons a day, but Harrah’s has said it hopes the authority would find new water sources by 2010 when the casino would open. Harrah’s also would dig wells, collect storm water and install low-flow showerheads.

Q: Why can’t the tribe build a casino on its land in Charlestown?

A: Most federally recognized tribes are allowed certain types of gambling on their land as long as their state already has that form of gambling. But the late Sen. John H. Chafee pushed through Congress in 1996 an amendment that, in effect, took away the tribe’s ability to have gambling.

Q: Would smoking be allowed at the casino?

A: Nobody is sure, but Harrah’s says it would ask lawmakers to allow smoking so it could compete with the Connecticut casinos.

Q: Would the casino serve gamblers free alcohol?

A: Harrah’s says “complimentary beverage service is something destination resort customers expect.”