After several hearings in the House, Senate panel topics include expansion plans, the $100-million licensing fee, and whether the Narragansett tribe is even necessary for the project.

01:00 AM EDT on Tuesday, May 25, 2004

BY KATHERINE GREGG and SCOTT MAYEROWITZ
Journal State House Bureau

PROVIDENCE -- The president and CEO of Harrah's Entertainment came to Rhode Island yesterday -- for the second time in two weeks -- to try to quell fears and lower lawmakers' expectations about how much the Las Vegas company is willing to pay for an exclusive casino license.

Testifying before a Senate committee, Gary Loveman was questioned about expansion plans, how much damage the proposed West Warwick casino would have on the state-subsidized Rhode Island Convention Center, and how his company deals with gambling addicts.

At one point, he was even asked why Harrah's needed to cut the Narragansett Indians in on the revenues when the casino will be entirely owned by Harrah's.

"Other than the fact that this polls better with the Narragansetts in the mix, why is it important to you to have the Narragansetts as partners in this proposal?" asked Sen. J. Michael Lenihan, D-East Greenwich.

The answer: "I think it is important because it makes the project much more compelling to the residents of the state," Loveman said. "This is a tribe that has been seeking this opportunity for a long time. . . this project offers great benefits to them as well as us."

But many more questions went unanswered -- or only partially answered -- when the Senate Committee on Constitutional and Gaming Issues held its first hearing this year on Harrah's bid for a statewide vote on this question: "Shall there be a casino in the town of West Warwick operated by an affiliate of Harrah's Entertainment in association with the Narragansett Indian Tribe."

Harrah's and the tribe are proposing to pay 25 percent of the first $400 million earned by the new casino and incrementally more -- up to 35 percent -- on whatever they earn above that. At those levels, they have told lawmakers to expect between $114 million and $128 million annually.

They have also offered to pay $100 million, spread over 10 years, for the casino license, and protect the state, at least initially, against revenue losses.

Talking about the $100-million offer, committee Chairwoman Maryellen Goodwin, D-Providence, asked: "Is that the limit?"

Loveman's answer: "It can be carved out in an infinite number of ways. . . as long as it's financially equivalent," he said. "We just need to have a decent rate of return on the project."

(For example, if lawmakers insist on an upfront payment, they might only get half as much because $100 million is the equivalent of $50 million invested at 7 percent for 10 years.)

At one point, the leading Senate advocate for the casino -- Sen. Stephen Alves, of West Warwick -- told colleagues his town had "done its due diligence." The town "has entered into a preliminary agreement with the operators, regarding taxation and compensation for hosting the casino."

But when Harrah's lawyer David Satz, Town Administrator Wolfgang Bauer and council President Jeanne-Marie DiMasi were asked about Alves' statement, they said no such agreement exists.

"I think it is semantics," Satz said.

"We have not agreed to anything yet," agreed DiMasi.

Said Bauer: "There was a written draft, prepared by Harrah's, sent to us which we pretty much gutted out and Harrah's said they would go back to the drawing boards."

"Agreement. Document. All of that," Alves said. "There's a copy of a preliminary agreement."

The current offer to West Warwick would give the town 2 percent of net gambling revenues. Harrah's projects that would be about $9 million in the first year and more than $10 million by the third year. In addition to that revenue, Harrah's has also proposed paying a level property tax of $5 million a year.

The Narragansett Indian tribe would get 7.5 percent of gambling revenue after taxes and have the option of buying the casino after 20 years. Harrah's estimates that the tribe would get a little more than $20 million a year.

At another point, Bauer told the senators that Harrah's has not yet given the town renderings and an actual site plan for the proposed $600-million casino with 3,000 slot machines, 100 table games, a 500-room hotel and 55,000 square feet of ballroom/meeting space.

In fact, yesterday's PowerPoint presentation did not even contain the picture of the possible model for the new casino that Harrah's gave a House committee two weeks ago: the Harrah's-Cherokee casino and 15-story hotel in North Carolina, near the entrance to the Great Smoky Mountains National Park.

When asked the extent to which West Warwick had studied impacts on traffic and other local concerns, Bauer said: "Senator, to an extent some of these things can't happen before a site plan is developed and I don't think Harrah's is going to develop that site plan and spend the money on consultants to do the details until sometime after the vote takes place."

Republican Sen. David Bates, of Barrington, questioned the "substantial effect" a casino with 500 hotel rooms and 55,000 square feet of meeting space could do to business at the heavily taxpayer-subsidized Rhode Island Convention Center.

By comparison, the state's convention center in Providence has a 100,000-square-foot exhibit hall and a 20,000-square-foot ballroom space.

"Certainly, we'd be looking for modestly sized convention, business meetings and the like," Loveman told Bates.

But, at that size, "It's quite a modest space," he said. "It would be used to the largest degree for player events that we host for casino customers, occasionally for entertainment, but to a much less significant degree what might be called conventions of the sort the Providence convention center would house."

Asked about Harrah's expansion plans, Loveman said: "Typically, the first place we expand is with hotel space. We find that we don't, historically, have sufficient room capacity to support our business, especially on weekends. In some instances, casino space will follow."

But at 115,000 square feet, "that is a pretty big casino," he said. "So I am confident the first step would be hotel space and then perhaps, other amenities. But convention space and casino space would be relatively lower on the list."

Lenihan questioned what Harrah's does to identify problem gamblers.

Loveman said that "we do not consider ourselves credible to evaluate" people as problem gamblers. But the company makes sure that self-identified addicts do not receive further mailing and promotions, he said, and Harrah's bars those patrons who request such a measure. The company also, as a policy, will not cash public assistance checks.

Richard A. Hines, of Citizens Concerned About Casino Gambling, said the character of towns surrounding Connecticut's two casinos "has been irreversibly changed . . . property values near the casinos and on the roads leading to them have declined and other types of economic development have been stymied."

Citing his group's research, Hines said the town of Preston, Conn., saw -- as the casinos developed -- its medical emergency calls increase from 204 in 1988 to 955 in 1996. The Connecticut State Police troop responsible for the area near the casinos apprehends the highest rate of drunken drivers in the state, he said.

The large number of "low-wage casino workers," Hines said, has resulted in a severe shortage of affordable housing, with workers "hot bunking" -- sleeping in the same shared bed at different times by working different shifts.