Small State, Big Impact: RI Wages a Bet on Revenue from a New Industry

This is budget season for the state of Rhode Island and that means both expenses and revenue to balance out the state budget are under review. In the state’s ongoing search for new sources of revenue, Governor Raimondo and General Assembly leadership placed a large bet last year that legalized sports gambling would deliver significant revenue returns to the state once it got underway. But as the state passes the six-month mark since sports betting was launched at both Twin River facilities, the legalized sports wagering program has undergone some adjustments from the earliest days and a mobile app coming on-line is part of the state’s strategy to strengthen RI’s sports betting program.

The sports betting program is overseen by the state Department of Revenue and its Lottery division. We spoke to the Department’s spokesman Paul Grimaldi for updates on how the program was devised, where it stands presently and where the state hopes to take it.

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“Oversight of casino gambling in the state has long rested with the Rhode Island Lottery and the Department of Business Regulation. They work in conjunction with the R.I. State Police to maintain a close watch on gaming operations, Lottery agents and gaming participants,” explains Paul. Rhode Island officials monitored how sports betting was set up in the handful of other states where it’s legal, he says, as RI operations and the partners were being established.“The state took careful notice of existing and proposed operations in other states and partnered with two premier gaming industry companies – IGT and William Hill.” Once sports gambling within states was legalized by a U.S. Supreme Court ruling over a year ago, Paul explains it was very significant in terms of branding within the region and growth potential, that Rhode Island acted quickly to legalize it in 2018.

“Being an early adopter allowed the state to secure the services of premier gaming industry partners who might otherwise have committed to competitors in other states,” Paul explains. “An early start also allowed our partners in the sports-betting operation to develop customer loyalties within the New England market, something that will benefit the state over time.”

There are skeptics about the program who point out the state has seen underwhelming revenue returns since the launch. When the bill was passed last June to legalize it, there were sports betting revenue projections of $23.5 million into the first year. That has not materialized thus far as the combination of a later than expected launch and the wagering and outcome of the Superbowl game have resulted in low returns and even losses. There was naturally very high wagering activity on the Superbowl, and no surprise, bets favoring the Patriots outnumbered bets favoring the Rams. Paul explains that when the hometown and regional favorites went onto victory, it was good for us fans, but not so good for the revenue returns.

“The sports book paid out $2.3 million in winnings for bets tied to the Super Bowl,” he says, out of nearly 51,000 wagers placed overall. Paul emphasizes that the experience of other states shows the revenue produced comes over time, and is not a quick return, despite what the public may believe. The returns also follow a specific breakdown of percentages distributed to various parties.“As with all aspects of casino gaming, winnings are first paid to bettors, the remaining funds are taken in by the state. After administrative/marketing expenses are deducted, the state then distributes net revenues to its sports-betting partners, including 32 percent to sports book operators IGT/William Hill and 17 percent to Twin River. The state keeps 51 percent of the net revenues." The host communities receive small portions of the revenues, with both Lincoln and Tiverton receiving $100,000 each annually from the sports-book operations, adds Paul.

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We spoke to Twin River officials to get a wider perspective on the state’s sports betting program since the company’s two casino properties are the only ones sanctioned by the state to run a sports book. Twin River Casino spokeswoman Patti Doyle told us some adjustments have been made at the Lincoln casino since a high volume of wagering created long lines and wait times at the initial roll-out last fall.

“Phase One involved the opening of sports betting terminals on our third floor in the simulcast area in Lincoln,” she explains, “then we opened additional terminals on the second level of the simulcast area to accommodate peak business. In December, a month or so later, we opened the Sports Book Bar and Grill, a dedicated food and beverage space for sports betting which boasts more than 100 TV screens and more terminals.” She says the added terminals and the new sports bar area have helped accommodate the wagering activity and adds the casino anticipated there would be peak activity times coupled with slower periods. “New Englanders are passionate about their sports! It is inevitable that some days/hours/seasons will be busier than others,” says Patti.

The Superbowl game, with the region's beloved New England Patriots not only creating brisk sports wagering activity but also “beating the sports book” by being triumphant, represents a prime example of why sports gambling revenues inevitably go up and down.  As in many other elements of the casino’s projections of gains and losses, Patti says the company takes a big picture view of activity over the long haul. “The State and its partners, IGT, William Hill and Twin River, take a long view on the sports betting offering,” Patti emphasizes. “There are bound to be games with a heavy favorite and Super Bowl 50 was no exception.”

A desire to see faster growth in terms of wagering activity and revenues for the second year of sports betting at Twin River has been voiced by some leaders of the General Assembly this session and a bill creating a mobile sports betting app program, to greatly expand the number of those placing wagers, was passed by the General Assembly in March and was signed into law by Governor Raimondo in recent days. The app program operates from locations within the borders of the state only and the user must go to the Twin River facility to have the app downloaded onto their mobile phone. Meantime it seems inevitable that legalized sports wagering is coming to states along RI’s borders very soon. The legislatures in Massachusetts, New Hampshire and Connecticut are reviewing their own legalized sports betting bills and expect to have some version of them approved by this summer. Is the management of Twin River looking over its shoulder? Patti says competition is nothing new to the casino operator and does not impact how they view their own business mission.

“We remain focused on the things we can control and try not to worry too much about those we cannot,” Patti underscores. “We can and do try to control the guest experience at our two Rhode Island properties. We always understood it was likely inevitable that other states would implement sports betting.” She emphasizes the company’s focus on providing a strong customer experience is not altered by changes in the wider marketplace or new competition.“We view sports betting as one more amenity we are pleased to offer our customers,” says Patti, “and we can report that our parking lot is full of MA, CT and NH license plates as well as RI!” 

 

 

 

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