With the approval by House and Senate committees, casino proposals may reach the floors of both chambers this week.

08:19 AM EDT on Wednesday, June 23, 2004

BY KATHERINE GREGG and SCOTT MAYEROWITZ
Journal State House Bureau

Journal photo / Connie Grosch Narragansett Chief Sachem Matthew Thomas, seated at left, waits with the tribe's lobbyist, Guy Dufault, standing at center; former West Warwick Mayor J. Michael Levesque, who works for Harrah's Entertainment, far right, and Bob Duva, a cofounder of CasiNO!2000, at the State House yesterday as the Senate Committee on Constitutional Issues and Gaming holds a hearing on the casino bill.

PROVIDENCE -- Committees in the House and Senate yesterday approved slightly different bills to allow a statewide referendum in November on the proposed casino that Harrah's Entertainment is seeking to build, with a promised cut to the Narragansett Indians.

Unseen until moments before last night's hearing, the 48-page "Rhode Island Gaming Control and Revenue Act" cleared the Senate Committee on Constitutional and Gaming Issues on a 5-2 vote.

A short time later, it cleared the House Finance Committee on a 13-4 vote. But not all of the yea votes came from supporters of the casino.

"Though I oppose the casino in general, I believe my constituents should have the opportunity to vote on the issue, so I vote yes," said Rep. Victor Moffitt, R-Coventry. "The people . . . have a right to vote on this and they are smart enough to vote on this," echoed Rep. Thomas Slater, D-Providence.

Looking more wary than happy, the Narragansetts' chief sachem, Matthew Thomas, said: "I'll be deliriously happy when we put the shovel in the ground." But, "this is a positive step, a baby step to finally getting this thing to the people to vote it up or down," he said.

The vote also elicited dire predictions from spokesmen for Lincoln Park and Newport Grand, whose state-sponsored video-gambling operations are expected to produce a projected $216 million for the state this year.

"This proposal is all about a casino that is going to be built on the backs of Rhode Island taxpayers," said Lincoln Park spokesman Michael Trainor, voicing "disappointment" that the House Finance Committee, in particular, did not look harder at Harrah's "rosy promises."

The state gets close to 60 cents of every dollar left in the video slots at the track at the end of each day. The legislation that surfaced yesterday would allow Harrah's to pay less than half that much. Faced with the competition from a lower-taxed casino, Trainor said: "Our projection for the impact on Lincoln Park, in year one, is a 30 to 40 percent drop in revenue. We will quite frankly be fortunate to still be in business in three years."

Newport Grand CEO Diane Hurley said: "All Harrah's has done is shuffle the numbers around to make it appear that Rhode Island is getting a better deal. In fact, Rhode Islanders are being treated as second-class citizens by this out-of-state gambling conglomerate that cares only about their bottom line."

Among the highlights of the voluminous bill:

Voters would be asked: "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?"

If voters said yes, Harrah's would have dibs on an exclusive casino license. In return, it would be required to pay a $100-million license fee, an additional hotel tax of $1 per occupied room per night, and a new tiered tax ranging from 25 percent on its first $400 million in gambling revenues, up to 40 percent on earnings of $1 billion and up. Harrah's projected net gains for the state of between $81 million and $114 million through 2010, but that apparently included payroll and sales taxes.

The only obvious difference between the two bills: whether the casino would be regulated by the Lottery Commission or a lottery subcommittee.

On the House side, Rep. Paul Crowley, D-Newport, had several barbed exchanges with Harrah's vice president and lawyer David Satz about why the bill only ties Harrah's to a $500-million investment, instead of the $600 million the company has repeatedly cited.

At one point, Crowley said: "The justification for the low tax rate that you'll be paying is because you are making a substantial multimillion-dollar investment," but "that has got to be confirmed and verified in our minds to justify the low tax rate."

"We fully intend to provide the Lottery Commission and the regulators . . . " Satz began before Crowley cut him off, saying: "No, no, no. You've got to provide the Finance Committee. They work for us. We don't work for them."

Later, in response to a question from Crowley about Harrah's agreement with the Narragansetts, Satz said: "We've had a basic understanding with the tribe," but "no formal agreement has been reached."

Crowley: "Understandings aren't good enough. I want to know is there a written contractual agreement?" Satz said there is an agreement, but since "the state has drove a hard bargain," it is in flux. But whatever the outcome, "it doesn't change anything relative to what the state's take is."

But Crowley said he was not happy with the answer when "the fact that you are here in this room tonight is contingent upon the public sympathy for the plight of the Narragansetts. Absent that, Harrah's isn't even in this room. Let's be honest about that."

The seven members of the Senate Committee on Constitutional and Gaming Issues had only a handful of questions and comments about the latest bill.

Sen. J. Michael Lenihan took issue with a section which says that as long as the Town of West Warwick is actively seeking authorization to amend its comprehensive plan, construction of the casino can begin without the normal regulatory approvals.

"My question is," Lenihan said, "what happens if the plan isn't approved?"

Lenihan, D-East Greenwich, also questionned the enormous impact on surrounding communities, which will not receive any money for infrastructure improvements.

Lenihan also questioned the timing of the vote on a 48-page bill that he and other committee members received only moments before the hearing.

"I would appreciate the opportunity to take and read the legislation to make sure that in addition to what we've been told about the bill there isn't something else there," he said. "This legislation is of enormous consequence and it ought not to be considered, in my judgment, in this matter."

The committee recessed for about 45 minutes while Lenihan read the bill. No other member was seen reviewing the entire document.

After, Lenihan said: "The proposal for casino gambling, in my judgment, makes little or no economic sense. I think of it as an open hole, a guaranteed-to-lose proposition in which people can dump their disposable income . . . This is not economic development. It's economic desperation. It's a situation where you have a town and a tribe who have been through difficult times and now we have a corporation which is willing to take advantage of their difficult times and provide them with what looks like a life raft."

Later, Governor Carcieri released a statement repeating his opposition to a casino and saying that the new deal does nothing to change that position.

"I continue to believe that a casino will undercut state revenues, will destroy nearby businesses, will increase the potential for public corruption, and will impose inevitable societal costs on our state," Carcieri said. "But I also believe that the casino question is about more than just dollars and cents. It's about the heart and soul of Rhode Island, and the future direction of our small state."

The governor also said he was disappointed that the deal "was devised behind closed doors, and that the General Assembly plans to act on it before the public has had an opportunity to learn the details. A decision as momentous as this should not be cobbled together at the 11th hour, with no opportunity for the public comment."

The full House has scheduled a vote on the casino bill for Friday, and the Senate for tomorrow.

Senate President Joseph A. Montalbano, D-North Providence, said: "There are enough votes, and then some, to override a veto . . . I think that the policy of the Senate has always been: let the people decide if there's going to be a casino."

With staff reports from Andrea L. Stape.