Casino

QUESTION ONE Part of a series on statewide ballot questions

Building a casino in Rhode Island is either going to jump-start the state’s economy or drive it into financial ruin, if you listen to the advocates and opponents.

Millions of dollars have been spent as both sides try to convince voters why they should or should not amend the state’s Constitution to allow Harrah’s Entertainment and the Narragansett Indian Tribe to build a casino in West Warwick.

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, 50 poker tables and 100 other table games. It would sit on 86 acres of non-tribal land off Route 95 near Route 2, in a West Warwick industrial park.

The Las Vegas-based company says the casino would create 3,500 construction jobs, 3,800 full-time jobs and an unspecified number of part-time jobs. Taxes generated by the casino, Harrah’s says, would provide $144 million in annual tax relief — about $318 per taxpayer, according to one study paid for by supporters. That money, they argue, is now being spent in Connecticut casinos.

Opponents say that while the casino would bring in new tax revenue, it would also devastate business at the state’s two existing slot halls: Lincoln Park and Newport Grand — the state’s third-largest source of revenue.

The state taxes the two facilities at a rate of slightly more than 60 percent. No tax rate has been set yet for the casino, but two years ago lawmakers proposed 25 percent.

The anti-casino Rhode Island Public Expenditure Council says lost revenue from Lincoln Park and Newport Grand would not only erase the $144 million from the casino but would put the state another $110 million a year in the hole, since taxpayers would have to pay Lincoln Park and Newport Grand back for any losses incurred as a result of a casino.

The ballot question asks voters to change the Constitution to allow a “resort casino” that “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.”

In the past, the tribe was partnered with Capital Gaming and then Boyd Gaming Corp. The tribe and current partner Harrah’s have never disclosed the full terms of their arrangement and it is unclear how easily the tribe could choose a new partner. Meanwhile, private equity companies have offered to buy Harrah’s for $15.1-billion.

The casino, built on non-tribal land, would be subject to all the laws of Rhode Island, and the company would have to "expressly waive any sovereign immunity relating to any and all matters of the resort casino."

In addition to setting a tax rate for the casino, lawmakers would need to create enforcement regulations and other rules for the complex. Such details would be worked out in the upcoming legislative session if voters approve the constitutional amendment.

In order to be approved, a majority of voters statewide and a majority of voters in West Warwick must vote for the change.

If approved, the Constitution would say that proceeds from the casino "be dedicated to property-tax relief" but would not spell out what that relief is and if it could supplant current tax relief or would be in addition to existing relief.

Casino opponents have attacked the idea of amending the Constitution.

"Harrah’s casino wants a special deal from Rhode Island. They want us to rewrite our Constitution," says one of their ads.

Casino supporters point out that amending the Constitution is not that unusual. There have been 60 amendments since the Constitution was drafted in 1842. One of those, in 1973, allowed for the creation of the state lottery. Another, in 1994, required voter approval before any new forms of gambling were established.

In the last two years, the state Supreme Court advised that casino ballot questions would be unconstitutional because Rhode Island’s Constitution says that only the state can run a lottery — and the court considered a casino to be a lottery.

This year, lawmakers decided to try to amend the Constitution specifically for the tribe’s and Harrah’s project in West Warwick. The state court refused to weigh in on the issue before a vote.

A challenge was also made in federal court. U.S. District Judge William E. Smith refused to strip the question from the ballot, but said there are "serious constitutional questions" about the proposal and that he could still deem it unconstitutional if voters approve the change on Nov. 7.