Twin River casino in Lincoln, Rhode Island says that because it hands over 60 percent of its profits to the state that it’s going under. So it’s asking the state to take less. In return, it promises to pay more!
It would start by promising to give the state USD 500 million up front. It wants the state to cut its take from 61.45 percent to 25 percent.
“The situation is dire. We are standing on the edge of a precipice,” announced a spokesman for the casino.
The governor and members of the state legislature, who face their own red ink to the tune of USD 425 million for next year, might just as easily have penned a variation on that wail.
Gaming is the state’s third largest revenue source. That makes it problematic that they will take the casino up on its offer.
After meeting with representatives of the casino House Speaker William J. Murphy commented, “It’s not going to happen… I think as businessmen they are very clever. You know, they know that we are in a financial bind right now, but it didn’t make sense to me at this point to drop the state’s rate…” He did leave the idea of further discussions open, particularly if the Senate expresses an interest in exploring it.
The owners of the casino are BLB Investors LLC, which includes Sol Kerzner and Len Wolman, who helped develop the Mohegan Sun in Connecticut, and who are the current backers of the Mashpee Wampanoag tribe in Massachusetts that wants to build a casino in Middleboro.
The state has so far made several accommodations to help its two casinos, Twin River, with 4,751 slot machines and Newport Grand, with 1,120. A few months ago the legislature allowed them to be open longer hours and just last week the administration allowed Twin River to test market a player rewards program.
Twin River is struggling to stay afloat and out of bankruptcy. It missed two mortgage payments earlier this spring to its lender Merrill Lynch Capital Corp. Its bond rating has been reduced and the contractor who did the renovations has put a lien on it. The lender has told the casino that if it could get its tax rate reduced that it would be willing to advance it the USD 500 million up front to pay the state, according to Twin River.
Although Twin River’s revenues are up over this month last year, by nearly 14 percent, it had to deploy more machines to get there. Some critics say that the casino’s problems are of its own making. First of all, BLB Investors paid too much when it bought the casino for USD 445 million three years ago and then spent much more than it originally estimated on renovating it. Their total investment was USD 700 million.