If a West Warwick casino deal comes to pass, the owners of Lincoln Park and Newport Grand will want similar deals, the governor tells the House Finance Committee.

09:00 AM EDT on Friday, May 14, 2004

BY KATHERINE GREGG and SCOTT MAYEROWITZ
Journal State House Bureau

Journal photo / Connie Grosch Governor Carcieri greets House Finance Committee members, including Rep. Jan Malik, D-Warren, left, before he testified last night against casino gambling.

PROVIDENCE -- Governor Carcieri warned legislators yesterday that opening the door to the proposed West Warwick casino would "open a Pandora's box" that would force the state into having "three full-blown casinos."

Appearing before the House Finance Committee, Carcieri said he was "greatly fearful . . . that if we get on the path with this casino proposal in West Warwick, it is virtually inevitable we are not going to have one casino, we are going to end up with three."

Looking ahead to what that would mean when -- not if -- the state's two existing video-slot emporiums, Lincoln Park and Newport Grand, come to the legislature seeking the same tax deal the casino promoters are seeking, Carcieri said the state could end up with a "worse deal" than it has now.

"If any of us were the owners of Lincoln or Newport and were faced with a casino," Carcieri said, "I would be in here the next day, if not before, saying, 'You've got to help me compete. I've been living here. I've been giving you a lot of money for a long period of time as a good citizen. You can't let me sit here with both hands tied behind my back while somebody's opened up down the street, a newcomer to the state, and I can't compete.' "

Sounding like a worried CEO one moment and in the next a preacher, warning his congregation of the dangers of gambling, the governor spoke on the night reserved for "public" comment on the bid by the Narragansett Indians and Harrah's Entertainment for a referendum on the 24-hour casino -- with blackjack, craps, roulette and the like -- they want to put in West Warwick.

After listening to the governor's comments, Narragansett Chief Sachem Matthew Thomas said he felt like he was in church. Added Jack Killoy, one of the tribe's lawyers: "I think what he [Carcieri] said was the voters aren't capable of making complicated decisions with respect to voting on this very simple questions."

House Finance Chairman Steven M. Costantino, D-Providence, later said: "The conflict for us is that we have a constituency that wants to vote on this issue. To me, that is the ultimate question."

But Carcieri said it is a very "complicated issue," with enormous ramifications. When asked why the voters shouldn't decide, he told the lawmakers: "That's your job."

He didn't try to win the committee over with a lot of numbers. But his argument went like this: The state expects $250 million next year from state-sponsored gambling on the 3,513 video-slot machines at Lincoln Park and Newport Grand, under terms in which the state gets about 60 cents of every $1 left in each machine at the end of each day.

The casino promoters are proposing to pay the state less than half that in gaming taxes -- 25 percent on their first $400 million in earnings -- and suggesting that could produce anywhere from $114 million to $128 million in casino taxes for the state.

The problem: If Lincoln Park and Newport Grand paid the same rate, the state's draw from them could potentially drop from $250 million to $106 million.

Lobbyists for Wembley PLC, the British company that owns Lincoln Park, circulated copies of an Iowa Supreme Court decision that found the Iowa legislature in violation of state and federal equal protection clauses when it required racetrack casinos to pay a higher tax rate than riverboat casinos. That case is now before the U.S. Supreme Court for the second time.

"Wembley PLC has a fiduciary responsibility to its shareholders to similarly challenge any unequal tax rate imposed by the State of Rhode Island and can be expected to take all available legal actions should a compromise be unattainable," a company statement said.

But the governor told the lawmakers that money wasn't his only "grave" fear: "This issue really goes to what our quality of life is about in this state. It almost goes to our soul," he said.

"If we go down this path, I am really worried that we are just going to be consumed as a little state. It's one thing Foxwoods and Mohegan Sun are out in the middle of the woods in Connecticut. . . . We are 48 miles long, 30 miles wide, with a million people densely packed in here with a robust economy and a robust travel and tourism industry. The impacts this thing is going to have, I think, are far beyond what any of these studies are giving it credit for," the governor said.

Comparing the legion of casino lobbyists to "snake-oil" salesmen, he said: "I know Harrah's. They've got all the high-powered lobbyists, all the PR, the hired guns. . . . Do you think they care about our state? Do you think they care one whit about our state? I don't.

"They can't. They're business people. They are in business to do one thing: maximize the profit out of that place. They could care less if they drove out of business every hotel and restaurant . . . in a radius of 10 to 15 miles. They'd be happy," said Carcieri, citing the demise of the Warwick Musical Theater after Foxwoods essentially elbowed it out of business.

"The dirty little secret about a casino is, they want all of us to be no place but inside the casino," the governor said. "Really, it's snake oil perpetrated as far as I am concerned by people out . . . [to] suck the lifeblood out of us."

Others also warned of the dangers of allowing the referendum, among them former state Sen. Robin Porter, chairman of the anti-gambling Kay Coalition. He said he fears the "campaign casino promoters will wage for the hearts and minds of our people."

"It will not clarify the issues, but rather distort and obscure them. We can expect a circus dominated by Harrah's millions. . . . If you repeat the message enough . . . the truth can sometimes be overwhelmed by hype and money," Porter said.

A parade of people from the hospitality and tourism industries talked about how a casino could kill their businesses. Some said expansion plans were on hold until the casino's fate is decided.

J. Rudi Heater, general manager of the Crowne Plaza in Warwick, said hotels such as his cannot compete with a casino offering free or deeply discounted rooms. "They give away rooms faster than I can check people in," Heater said.

Echoed Richard Mignanelli, owner of Richard's Pub in East Greenwich: "I know there will always be competition. I welcome it. It makes me strive to be better. But how do I compete with free food and drinks?"

Robert I. Burke, owner of Pot Au Feu restaurant and Federal Reserve, said: "The people you're talking about bringing in here have studied the eye movements of the elderly to see how fast they can take their Social Security check. . . . You should not be a party to that. No one in Rhode Island should. Everyone who leaves a casino says, 'I should have quit while I was ahead.' Stay with the 60 percent you've got. Don't be like them. The casino people know they have marks here. They know they've given you the smell of money."

Yesterday also brought an announcement by six senators that they were seeking the expertise of the Rhode Island Public Expenditure Council to "analyze the research and information, pro and con, that has been presented to date on the proposed casino . . . ," including a recent $38,000 Senate-commissioned report.