Twin River has plan to keep RI gaming revenues growing
If the reaction of Warwick Rotarians is a reliable gauge, voters are concerned about the impact of Massachusetts’ casinos on Rhode Island gaming revenues and will vote to allow table games at Twin River in Lincoln and Newport Grand in Newport.
John Taylor, chairman of the Board of Twin River Worldwide Holdings, Inc., spoke at the Rotary club Thursday, outlining how the 4,710-VLT [video lottery terminal] parlor is operating today and about its aim to become a “convenience casino,” as opposed to a destination casino, if Rhode Island and the town of Lincoln voters approve table games in November.
A native of Pawtucket who has worked more than a decade in the gaming industry, Taylor assumed Twin River operation in November of 2010. He said Twin River is doing “extremely well,” with gross revenues growing by 9 percent for a total of $479.2 million during calendar year 2011, while revenues at the Connecticut casinos of Mohegan Sun and Foxwoods were both down for the year. Growth hasn’t stopped in 2012 either. Gross revenues were up another 9 percent for the first quarter and 7 percent for the month of June.
“I think we’re doing a pretty good job in running this business,” he said.According to Paul Dion, chief of revenue analysis for the state, Twin River VLTs generated $291.1 million in state revenues for Fiscal Year 2012, an increase of 7.7 percent from the prior fiscal year. Newport Grand VLT revenues were $31.7 million, an increase of 2.4 percent.
But will it stay that way? Can the state count in excess of $290 million in revenues from Twin River – the third largest source of state revenues behind income and sales tax? Taylor said allowing Twin River to operate a casino is about preserving and creating jobs and “protection of a revenue stream.” He estimated table games would generate an additional $20 million in state revenue, create 350 direct jobs and another 300 related jobs, and have a $60 million economic impact on the state’s economy.
Presently, more than 50 percent of Twin River players come from Massachusetts. Can that continue to happen if Massachusetts goes ahead with three casinos, and quite possibly a slot parlor that would siphon off Rhode Island players and keep those players in the Commonwealth?
Twin River is funding The Coalition to Bring Jobs to Rhode Island, a campaign to pass a referendum. The coalition is made up of companies and agencies with representatives from the Greater Providence Chamber of Commerce, Rhode Island Hospitality Association, Providence-Warwick Convention and Visitor Bureau, Rhode Island Building and Construction Trades Council, GTECH and the Rhode Island Convention Center Authority, among others.
Taylor said Twin River has been pursuing a four-point plan since he came aboard, which he sees as keeping the money rolling in to the Ocean State:
First, he said, is the recognition that the “taxpayers are our partners.” A total of 61.5 cents of every dollar Twin River makes on VLTs goes to the state, as compared to less than 30 cents per dollar going into Connecticut coffers from Foxwoods and Mohegan Sun. If table games were approved, 18 cents of every dollar of profit would go to the state. Dion said the state projects Twin River will gross $80 million in table games and Newport will gross $8.4 million in Fiscal Year 2014, with 18 percent of those amounts flowing to the state.
Taylor said the state has taken an active role in cooperatively marketing the parlor by exempting the 61.5 percent tax from “promo points” players earn and keep them returning.
Second, he said, Twin River has raised the level of customer service through employee training programs, knowing that people will try other venues and aiming to provide an experience that will have them coming back.
The third point of the plan relates to the company balance sheet. He said the former owners of Twin River, who declared bankruptcy in 2009, invested too heavily in building out the parlor at a time when the economy was softening. That company had $600 million in debt. Taylor said Twin River, which came out of bankruptcy in the last year, has been paying down its balance sheet for the past 18 to 19 months, is now carrying $300 million in debt and is positioning itself so that it can make future investments.
The final platform in the plan is the inclusion of table games, converting Twin River from a VLT parlor to a casino. Should voters agree – Twin River would need approval of both state and Town of Lincoln referenda – the casino would open with 65 tables on July 1, 2013. Taylor estimated that number could grow to 125 if there was the demand.
No hotel is proposed as part of the project. In fact, legislation prohibits it. Twin River would become “a convenience casino,” that would be easily accessible, enabling people to stop in for a couple of hours, or an evening, of play. He said the tables could be accommodated within the existing structure, with possibly the loss of some VLTs. Any reduction of VLTs would require Lottery Commission approval. Taylor projects a 3 to 5 percent growth in slot revenue as a result of the “companion play” resulting from introducing the tables.
In addition to the revenues flowing directly to the state, Twin River conducted a study of its operation and concluded that its 900 jobs, what it buys from local vendors and its operations have a $165 million impact on the state’s economy. Table games would spin off an additional $60 million to the economy, the study showed.
Taylor’s audience seemed most interested in how Twin River can sustain current operations and also grow in what promises to be an increasingly competitive environment for the gaming dollar.
If Taylor had doubts, he didn’t voice them. He said the focus of the company is to gain voter approval of a Twin River casino. It’s part of his plan to keep the business and gaming in the state competitive.
Dion said the state projects $302.9 million from Twin River and another $31.7 million from Newport in VLT revenues for the current fiscal year.