Video-slot income has been a sure thing, pegging double-digits increases every year since it began here in 1993.

01:00 AM EST on Sunday, February 13, 2005

BY SCOTT MAYEROWITZ
Journal State House Bureau

LINCOLN -- Minutes after the doors at Lincoln Park opened at 9 a.m. on a recent Monday, one in five slot machines was occupied.

That was the low point of the week.

By the height of Saturday night, the greyhound track was bursting at the seams. Patrons were feeding dollar bills into just about every video slot machine. Of the 2,543 machines there, 96 percent were in use, according to the state Lottery Commission.

At peak times like that, gamblers often hover around their favorite machines, waiting for a chance to play. Others -- unwilling to wait -- simply leave, track officials say.

To meet the ever-growing demand, Lincoln Park plans to add another 459 slot machines by May. That will bring the track to 3,002 video-lottery terminals -- the maximum now allowed by the Lottery Commission.

But those 459 VLTs would be nothing compared to the massive expansion that is looming.

Last week, BLB Investors -- a consortium of hotel and gambling interests -- announced plans to buy Lincoln Park from its British parent company, Wembley plc, for $435 million. It would also spend $20 million to buy four Wembley greyhound and horse tracks in Colorado. (BLB owns 22 percent of Wembley stock, so the deal would cost $339 million in cash.)

As part of the sale, BLB is seeking an 18-year agreement with the state spelling, out exactly what percentage of video slot revenue the company would have to pay to the state. With a long-term agreement in place, the company would then spend another $125 million to upgrade and expand the aging track.

Along with the $125-million renovation, BLB is also seeking state approval to install 1,750 new slot machines, bringing Lincoln Park's total to 4,752.

Foxwoods Resort Casino, in Connecticut, has 7,450.

Governor Carcieri, who fiercely opposes plans to build a casino in Rhode Island, said this week that he would entertain the possibility of more VLTs at Lincoln on three conditions: BLB could not add hotel or convention space; some of the new slot revenue must be dedicated to property-tax relief; and another share of that new revenue must go to the Narragansett Indians.

THE MONEY from Lincoln Park is too good for Carcieri to pass up.

In the past 12 months, gamblers there have lost more than $306 million in the slot machines, according to the Lottery Commission. The state's share was nearly $184 million. (The state also took in $50 million from its other slot parlor, Newport Grand.)

Gambling at the Lincoln and Newport sites, and from traditional lottery tickets, accounted for 11 percent of all state revenues last year. Each year, gambling represents a larger and larger portion of the state's income. Only the state income and sales taxes bring in more money.

The money is easy revenue for a state that hasn't seen an income-tax hike in years. It helps build roads, teach children and provide health care for the poor.

Senate President Joseph A. Montalbano said that, without major improvements, Lincoln Park might be unable to compete. Massachusetts is considering installing slot machines at its racetracks, and Foxwoods is undergoing a $700-million expansion.

"We're basically in a Catch-22, with our third-highest revenue source being surrounded by these other potential gambling facilities," Montalbano said last week. "We need to try to protect that revenue source as best we can."

He said a long-term tax agreement is needed, to get BLB to invest millions in renovating Lincoln Park. A lot of the customers, Montalbano noted, come from Massachusetts and could be lost if tracks there add slots.

House Speaker William J. Murphy, D-West Warwick, also said he is "quite concerned" about protecting the state's revenue against the competition.

"I think Massachusetts definitely has it on the drawing board," he said.

LINCOLN PARK opened in 1947, as a horse-racing facility. In 1977, greyhounds replaced the horses. In 1991, to boost revenue at the track, the state allowed simulcast betting, where gamblers wager on races at other dog and horse tracks around the country.

But the real bonanza for the faltering track came in 1992, with the introduction of electronic gambling.

Business was slow at first. The only offerings were video poker and video blackjack. After Connecticut struck a deal early in 1993 to allow slot machines at Foxwoods, however, Rhode Island followed suit.

On Saturday, Dec. 18, 1993, Rhode Island saw its first video slot machine.

Since then, the money hasn't stopped. Each year has seen double-digit growth in revenues. In the worst year to date, two years ago, the machines still took in 12 percent more than in the prior year.

For the next fiscal year, beginning July 1, the video slots are expected to contribute $290.4 million to the state budget.

The 1,750 new machines BLB is proposing for Lincoln would add $100 million a year to that pot, according to rough estimates by the state Economic Development Corporation, which were based on data from BLB.

In addition to the state and the track owner, money from the slots is paid to the Town of Lincoln and to the slot-machine manufacturers, including West Greenwich-based GTECH. Dog and kennel owners used to get a share, but lawmakers last year increased Lincoln Park's share with the understanding that the track owner would give a portion of its take to the dog owners.

THE REV. THOMAS A. Grey, executive director of the National Coalition Against Legalized Gambling, said he is disappointed at Carcieri's conditional support for the deal.

Carcieri was the keynote speaker at the coalition's annual conference in Warwick, in September, when the governor was praised for blocking the proposed Harrah's Entertainment and Narragansett Indian casino in West Warwick.

Grey said Carcieri "clearly has recognized that gambling expansion is not in the best interest of Rhode Island," but that he seems to be backing the plan to solve some other problems. He said the governor is using the deal to "buy the Narragansetts off. It seems to me that that's not leadership, and it's certainly not good public policy."

Under the governor's proposal, Grey said, Rhode Island would only become that much more dependent on gambling money to balance its budget.

"States become chasers," Grey said. "Just like the person that sits in front of the machine and says 'I'll put another dollar in and I'll hit.' " Adding the 1,750 machines, he said, "would be a decision that says that the government is addicted to this as a revenue stream."

Carcieri's spokesman Jeff Neal said that, when the governor took office in 2003, the state "already depended heavily" on gambling.

Yet, in the governor's first month in office, he went along with a plan to add 1,825 new slot machines, combined, at Lincoln Park and Newport Grand.

"That money is used to fund important state programs, many of which serve our most vulnerable citizens," Neal said of the gambling revenue. "Even with that revenue source, the state government continues to be confronted with serious budget shortfalls."

Carcieri draws a distinction between backing more slot machines at Lincoln Park and his continued opposition to the proposed casino.

"Working to protect Rhode Island's current investment in Lincoln and Newport is fundamentally different from agreeing to the creation of an entirely new casino, in the heart of our state," Neal said.

Robert D. Billington, president of the Blackstone Valley Tourism Council, said that Lincoln Park has been a very good community partner and a good neighbor, providing a lot of money to the state, town and charities.

"There's a lot of money that goes through Lincoln Park that ends up going back to the State of Rhode Island and supporting our social services," he said.

Billington said gambling has become part of the culture and is available everywhere.

"They're going to gamble somewhere," Billington said. "It might as well be here."

MORE MACHINES could lead to more gambling addicts.

Dr. Robert Breen, director of the Rhode Island Gambling Treatment Program, said that video slot machines -- such as those at Lincoln Park and Newport Grand -- can get people addicted "far quicker than any other form of gambling."

People who become compulsive gamblers do so within a year of starting to play the VLTs, Breen said, based on his studies of people in his program at Rhode Island Hospital.

For people playing instant lottery games -- such as keno and scratch tickets -- it takes an average of 1.9 years to become addicted. Playing traditional casino games -- such as blackjack, craps and roulette -- take about 2.8 years. Betting on horse or greyhound races takes 5.1 years, and sports betting takes 6.3 years, Breen said.

Basically, he said, the slower the game, the longer it takes to become addicted.

Nationally, between 1 percent and 3 percent of adults are compulsive gamblers. Within 50 miles of a casino, that number doubles, Breen said. Given those statistics, one can estimate that about 30,000 adults in Rhode Island are gambling addicts.

Breen's program, which receives some state money, treats about 150 people a year. The average losses for a person in the program are $75,000.

Video slots are "very deceptive," Breen said. They use virtual technology "to make the experience on the screen a lot more exciting, in terms of 'almost winning,' than the true probability is," he said.

In particular, they create "near wins," in which it looks as if the gambler almost won. For instance, if five matching symbols need to line up for a jackpot, a "near win" might have four that match and the fifth only a single notch away.

Breen said the near misses can give players an addicting adrenaline rush.

"That near win can be physiologically as rewarding as an actual win," he said. "It will keep them sitting in front of that machine, or motivate them to go get more money so they can continue to play that machine."

Gamblers start seeing a pattern of these near wins, and think the machine is "due."

"It makes you believe that machine is getting closer and closer to paying you. So you can't leave, because you've invested that time and money and that machine owes you," Breen said.

In reality, Breen said, the winning is determined by a random number generator. Near wins do not change the odds.

Adding more video machines would increase interest among habitual players, Breen said, but it would also entice other people "who don't normally come" to Lincoln Park.

"It's not rocket science," he added. "If there are more ways to gamble, and it's more accessible, there's going to be more gambling problems."