PROVIDENCE — As concerns mount about the financial health of Rhode Island’s largest slot parlor, a Senate committee yesterday approved legislation to allow 24-hour gambling at Twin River and Newport Grand on weekends and the overnight hours before state and federal holidays that fall on a Monday.

A key House committee has scheduled a hearing — and potential vote — on its version of the bill today.

This first step toward round-the-clock gambling won the unanimous endorsement of the Senate Constitutional and Regulatory Issues Committee after Senate Fiscal Advisor Russell Dannecker told the lawmakers, struggling to get a massive budget deficit under control, that round-the-clock gambling on weekends and holidays could generate an additional $14.8 million annually for the state.

By Dannecker’s reckoning, the move could also generate an additional $5.9 million annually for the owners of the Lincoln dog track and slot parlor, an additional $752,866 for the owners of the former Newport jai alai fronton, an extra $266,270 for the Town of Lincoln, $29,246 for the City of Newport and millions more for the Rhode Island-based GTECH and other suppliers of the acres of Lottery-sponsored video-gambling machines at the two facilities.

The Senate bill would also allow the two slot parlors to remain open for gambling — though not for liquor sales — until 3 a.m. daily, which for Newport Grand is two hours later than its current closing time, and for Twin River, an hour later. The bill was sponsored by Sen. Paul Moura, D-East Providence, and cosponsored by Sen. Maryellen Goodwin, D-Providence, and Sen. Christopher Maselli, D-Johnston.

While Twin River’s owners led the push for overnight gambling, telling lawmakers two weeks ago that “we could be up and operating on that basis within four to six weeks from the date of your decision,” lobbyist Kevin Horan said Newport Grand’s owners are also “going to attempt it and see how it works for them and the state and all involved,” even though they view the chances of any net gain to them as “very iffy.”

An earlier version of the bill would have also allowed Twin River to offer free-play, also known as promotional points, as an attraction and reward for frequent players, but with wording intended to safeguard the state against losing money as a result. That was gone from the bill up for a vote last night, but not gone from the discussion.

Governor Carcieri’s spokesman Jeff Neal acknowledged, in response to inquiries earlier this week, that Carcieri “has stated that he is willing to consider authorizing a promotion points program administratively … with sufficient protections to insure that Rhode Island and Rhode Island taxpayers are protected if the program does not work as Twin River intends or is not as successful as Twin River hopes.”

In the weeks leading up to last night’s vote, there were a series of behind-the-scenes discussions between lawmakers, the governor’s office and the new Department of Revenue about the pros and cons of having the Lottery — instead of the General Assembly — authorize round-the-clock gambling on a test-basis initially to see if the additional hours, in fact, provided a net increase in revenue.

In the end, Senate President Joseph Montalbano, whose district includes portions of the town of Lincoln, decided the Senate should move forward on its own, while negotiating a number of unresolved issues as the bill winds its way through the legislative process. Among them: Lincoln’s bid for an increase in its share of the VLT revenue pie, presumably at the state’s expense.

During the 2007 budget year that ended last June 30, Lincoln received $4,312,186, and Newport, $753,069. If current trends hold, Lincoln will receive a potential $4,932,075 this year, and Newport, an estimated $721,229.

Lincoln voters overwhelmingly rejected any expansion of gambling at Twin River in a nonbinding November referendum, and Lincoln Town Council President Jeremiah O’Grady has argued the town needs to be compensated in some way if the state allows the expanded hours “despite local opposition.” At the very least, he said, the town would like “a significantly increased local revenue share for overnight hours, and the provision of local control over additional hours expansion by mandating binding local referendums for future proposals…”

Neither request is addressed by the bill that cleared the Senate committee last night.

Last night’s vote played out against a backdrop of increasing uncertainty about Twin River’s financial health.

Overall gambling revenues are up at Twin River but the holding company known as UTGR Inc. that owns the greyhound track, video-gambling parlor and entertainment venue, missed a loan payment this month, prompting negotiations with its lenders and collection efforts by contractors who worked on the building’s $225-million reconstruction.

The missed loan payment has already triggered two ratings downgrades by the Standard & Poor’s Corp. which also put the company on its “CreditWatch” list, citing concerns about “a potential bankruptcy filing.” Earlier this week, Neal said the governor’s office does not, “at this stage,” view bankruptcy as a “serious possibility,” but the state is “actively monitoring the situation.”

With reports from staff writer John Hill.

kgregg@projo.com