Ballot Measures

State-Operated Casino Gaming At Newport Grand In The City Of Newport

Description:

Shall an act be approved which would authorize the facility known as "Newport Grand" in the city of Newport to add state-operated casino gaming, such as table games, to the types of gambling it offers?

Revenues generated by the State of Rhode Island from state-operated gaming in Rhode Island constitute the third largest source of revenue to the State, behind only revenue generated from income taxes and sales and use taxes. In a study commissioned by the Rhode Island Department of Revenue, Christiansen Capital Advisors, LLC anticipated that competition from gaming facilities recently authorized in Massachusetts could have a 25 to 40 per cent negative impact on State revenues generated from state-operated gaming in Rhode Island, amounting to losses to the State of $100 million or more in annual revenues.

In order to reduce the potential adverse effects on State revenues from competition anticipated to come from casino gaming facilities authorized in Massachusetts, the General Assembly, pursuant to Chapters 24 and 25 of the Public Laws of 2012, amended Chapter 61.2 of Title 42 of the Rhode Island General Laws entitled "Video Lottery Terminal" to authorize the licensed video lottery terminal retailer known as "Newport Grand" to engage in state-operated casino gaming at its facility located in the City of Newport; provided that the requirements of Section 22 of Article VI of the Rhode Island Constitution are satisfied. Section 22 of Article VI of the Rhode Island Constitution provides that no act expanding the types of gambling permitted within any city or town in the State of Rhode Island shall take effect until it has been approved by a majority of those electors voting in a statewide referendum and by the majority of those electors voting in a referendum in the municipality in which the proposed gambling would be allowed.

Approval of the act authorizing Newport Grand to engage in state-operated casino gaming will result in Newport Grand being authorized to engage in state-operated casino gaming at its facility in the City of Newport in accordance with the legislation adopted by the General Assembly. However, even if a majority of the electors of the State of Rhode Island vote to approve such authorization for Newport Grand to engage in state-operated casino gaming at its facility in the City of Newport, such authorization will not take effect unless a majority of the electors of the City of Newport approve it as well.

The legislation adopted by the General Assembly provides that the State of Rhode Island is authorized to operate, conduct and control casino gaming at Newport Grand to the extent Newport Grand is authorized to engage in casino gaming. It goes on to provide that the State of Rhode Island, through the Lottery Division and/or the Department of make all decisions about all aspects of the functioning of the business enterprise, including, without limitation, the power and authority to:

(1) Determine the number, type, placement and arrangement of casino gaming games, tables and sites within the facility;

(2) Establish with respect to casino gaming one or more systems for linking, tracking, deposit and reporting of receipts, audits, annual reports, prohibitive conduct and other such matters determined from time to time;

(3) Collect all receipts from casino gaming, require that Newport Grand collect casino gaming gross receipts in trust for the State of Rhode Island through the Lottery Division, deposit such receipts into an account or accounts of its choice, allocate such receipts according to law, and otherwise maintain custody and control over all casino gaming receipts and funds;

(4) Hold and exercise sufficient powers over Newport Grand's accounting and finances to allow for adequate oversight and verification of the financial aspects of casino gaming at the facility;

(5) Monitor all casino gaming operations and have the power to terminate or suspend any casino gaming activities in the event of an integrity concern or other threat to the public trust;

(6) Define and limit the rules of play and odds of authorized casino gaming games, including, without limitation, the minimum and maximum wagers for each casino gaming game;

(7) Have approval rights over matters relating to the employment of individuals to be involved, directly or indirectly, with the operation of casino gaming at Newport Grand;

(8) Establish compulsive gambling treatment programs;

(9) Promulgate, or propose for promulgation, any legislative, interpretive and procedural rules necessary for the successful implementation, administration and enforcement of Chapter 61.2 of Title 42 of the Rhode Island General Laws; and

(10) Hold all other powers necessary and proper to fully effectively execute and administer the provisions of Chapter 61.2 of Title 42 of the Rhode Island General Laws for its purpose of allowing the State of Rhode Island to operate a casino gaming facility through a licensed video lottery retailer hosting said casino gaming on behalf of the State of Rhode Island.

In order to further protect State gaming revenues and maintain the competitiveness of Newport Grand and the State's other gaming facility, Twin River, the General Assembly has also adopted legislation called the Revenue Protection Act, which is cited as Chapters 289 and 290 of the Public Laws of 2012, to address, among other things, the share of net table game revenues to be received by the State if casino gaming is approved, establish the share of video lottery terminal revenue to be received by the City of Newport going forward, incentive gaming programs to protect market share and mitigate the potential impact of casino gaming in Massachusetts, and a regulatory framework to ensure oversight of casino gaming by the Lottery Division.

The Revenue Protection Act establishes the State of Rhode Island's share of net table game revenues from Newport Grand to be 18 per cent of such revenues. The operator of Newport Grand, Newport Grand, LLC, shall receive all net table game revenues not otherwise disbursed to the State.

The State currently receives approximately 61.9 per cent of net terminal income from video lottery terminals at Newport Grand. Effective July 1, 2013, assuming the referendum question is approved statewide and in the City of Newport, and assuming Newport Grand commences and continues to offer table games, the share of net terminal income of the licensed video lottery retailer at Newport Grand from video lottery terminals shall increase by 1.5 per cent to 29.26 per cent and the State's share of net terminal income will decline accordingly to 60.41 per cent. The State's percentage share of revenues from table games at Newport Grand is significantly less than the State's percentage share of revenues from video lottery terminals because the operational expenses relating to table games to be paid by Newport Grand, LLC are substantially higher than the operational expenses relating to video lottery terminals.

The House and Senate Fiscal Staff of the General Assembly, as set forth in presentation materials generated for the House and Senate Finance Committees in connection with their consideration of the Revenue Protection Act, estimated that Newport Grand would generate $5 million in net table game revenues from table gaming in the first full year of operation, which would result in the State's share of net table game revenues being approximately $0.9 million. There is, however, no assurance that such level of revenues, or any other particular level of revenues, will be achieved or what impact casino gaming in other states will have on revenues generated at Newport Grand from casino gaming and video lottery terminals in the future.

The Revenue Protection Act provides that effective as of July 1, 2013, provided that the referendum question is approved by the electors statewide and in the City of Newport, the City of Newport's share of net terminal revenues from video lottery terminals at Newport Grand shall increase from 1.01 per cent to 1.45 per cent each year. Should revenues from video lottery terminals decline, the City of Newport will receive 1 per cent of net table game revenues from the share of Newport Grand for a four year period to help the City of Newport, as the host community, transition during the period of decline in net terminal income from video lottery terminals at Newport Grand.

The Revenue Protection Act also provides the Lottery Division with all necessary authority to oversee and regulate all aspects of the table gaming operations, should casino gaming be authorized at Newport Grand, by, among other things, addressing personnel and hiring procedures and financial management and reporting, requiring the Lottery Division to establish regulations on or before March 31, 2013, authorizing the offering of table games at Newport Grand for all or a portion of the days and times that video lottery terminals are offered, and addressing the need for problem gambling services at Newport Grand by requiring Newport Grand to work with the Lottery Division to provide funding and offer problem gambling programs, including a player-self exclusion program and a problem gambling hotline.

To review the provisions of the Revenue Protection Act in their entirety and their effect as it relates to table games and video lottery terminals at Newport Grand should the referendum question be approved by electors statewide and in the City of Newport, we refer you to the legislation enacted under Chapters 289 and 290 of the Public Laws of 2012. There is, however, no assurance that the provisions of the Revenue Protection Act will not be amended in the future by the General Assembly, including without limitation, the share of revenues to be received by the State from table games and video lottery terminals.

A vote to "Approve" this question means you wish to approve the act authorizing Newport Grand to engage in state-operated casino gaming at its facility in the City of Newport in accordance with the provisions of such act.

A vote to "Reject" this question means you do not approve the act authorizing Newport Grand to engage in state-operated casino gaming at its facility in the City of Newport in accordance with the provisions of such act.

Concurrently with this referendum question, there is a similar referendum question regarding casino gaming being presented to the electors statewide and in the Town of Lincoln relating to the licensed video lottery terminal retailer known as "Twin River" and its facility located in the Town of Lincoln. Voter approval or non-approval with respect to such referendum question shall be independent of voter approval or non-approval of this referendum question with respect to Newport Grand and its facility in the City of Newport, and vice versa.

HOW MUCH MONEY WILL BE BORROWED?

The referendum would not authorize any borrowing.

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