Dispute between the state, Twin River and IGT could be larger than ‘Little Rhody’ By Howard Stutz, Executive Editor, CDC Gaming Reports July 23, 2019 at 6:48 pm Imagine going into a restaurant and finding just three items on the menu. Or how about browsing a bookstore that offers just three titles, or visiting a large mall with just three brands? Like a lot of things, the value of entertainment is based on choice. Just ask executives at Twin River Holdings, which operates Rhode Island’s two casinos. Under a proposed deal between the governor’s office and gaming equipment giant International Game Technology, 85 percent of the slot floors at Twin River’s two casinos would house IGT games. “We think Rhode Island taxpayers should be terrified by this deal,” Twin River Executive Vice President Marc Crisafulli told the Providence Journal on July 7. Rhode Island is the nation’s smallest state – roughly 1,545 square miles, if you include Narragansett Bay. This dispute between gaming companies could be much larger. The agreement would start in 2023, but through IGT’s $6.4 billion merger with Rhode Island-based GTech Holdings in 2015, the company already controls 84 percent of the slot floors at the Twin River and Tiverton casinos. Scientific Games has 12 percent of the remaining slot space, and Everi Holdings has the other 4 percent. Twin River believes the new deal could cost the state hundreds of millions of dollars in lost gaming revenue, due primarily to the competition Rhode Island faces from casinos in Connecticut and Massachusetts. Last month’s opening of the $2.6 billion Encore Boston Harbor added more than 3,100 slot machines to an already crowded market. Giving IGT 85 percent of all the remaining slot machine floor space in Rhode Island, Twin River feels, will stifle competition and choice. IGT doesn’t see it that way. The company, which is headquartered in Rome but maintains a substantial corporate presence in Rhode Island and Nevada, employs 1,100 in the Ocean State. “It’s a good deal for the state,” Robert Vincent, the chairman of IGT’s Global Solutions Corp. subsidiary, told the Providence Journal. He called it an “economic development package” that extends IGT’s commitment to Rhode Island, which includes its corporate headquarters and expansion plans. However, the deal floods the market with IGT product and keeps other slot machine manufacturers on the sidelines. For example, some of the industry’s most popular games are absent from Twin River and Tiverton, including the newest machines from Aristocrat Technologies and Konami Gaming. Smaller manufacturers are also under-represented; because of the percentages, Scientific Games and Everi can each only offer a few game titles. All of the casinos in Massachusetts – Encore, MGM Springfield, and Plainridge Park – offer games from every licensed manufacturer. So do Foxwoods and Mohegan Sun, Connecticut’s two Indian casinos. SunTrust Bank gaming analyst Barry Jonas wrote in his initiation coverage report on Twin River that Rhode Island Lottery regulations hurt the state’s slot machine product. For example, neither Tiverton nor Twin River have Aristocrat’s popular “Lightning Link” linked progressive machine, which is found in almost every major casino in the U.S. The Rhode Island Lottery governs all gaming in the state and oversees the slot machine makeup. “We believe this model limits relative slot product competitiveness,” Jonas wrote. “While many of Twin River’s core players are likely to either not notice the difference, or even prefer some of the older classic content, we believe there is a subset of more discriminating players who are willing to travel to play the latest and greatest slot product.” IGT has licensing deals with other slot machine manufacturers, but they cover older models, not the newest games on the market. According to SunTrust, under the Rhode Island Lottery, the state has ownership over the gaming floor and receives 100% of the revenue. Twin River receives between 26% and 29% of slot revenues and 83.5% of table game revenues as compensation for operating the casinos. In an advertising campaign to sway public opinion against the deal this month, Twin River executives said the new contract “doesn’t seem to make any business sense.” Governor Gina Raimondo announced plans for the new 20-year deal with IGT at the end June. It’s up to the State Legislature to approve the new agreement at a special session in September. Separately, the state lottery has a no-bid contract with IGT for its central lottery devices system. IGT is ensconced in Rhode Island’s gaming history. Lottery giant GTech, which was headquartered in the state, acquired IGT in 2015 and assumed the slot machine manufacturer’s name. GTech had bought several small slot machine companies over the years and added those products into the IGT slot line. Because of the purchase, IGT has 4,364 machines out of the combined 5,175 games on Twin River’s two slot floors. IGT also has a deal with the state to provide the sports betting platform utilized by the casinos. William Hill US, however, manages the sports betting operations. Twin River’s predecessor company was founded in Rhode Island in 1947. Rhode Island is a mere 37 miles wide and 48 miles long. The percolating disagreement between the two gaming companies may engulf much more than “Little Rhody.” Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at firstname.lastname@example.org. Follow @howardstutz on Twitter.