To the Editor:
Raimondo’s contract renewal proposal with International Gaming Technology is a classic example of a politician putting corporate interests first at the expense of the taxpayers. It comes as no surprise to see IGT donated $150,000 to the Democratic Governors Association, which Raimondo is the chairman of, a year prior to this deal being forged.
Raimondo agreed to a 20-year extension of the state’s current contract with IGT, giving IGT control over 85 percent of gambling machines in the Rhode Island Lottery on the agreement that IGT pays the state $25 million up front, and updates the machines. While this may seem like an opportunity for the state, Rhode Island misses numerous benefits that it could have reaped with this deal and misses out on millions of dollars of revenue.
The most controversial part of the deal Raimondo and IGT created is that it is a no-bid contract; meaning no other competitor could compete for the control over RI Lottery’s machines. Unsurprisingly, companies were willing to pay much more than $25 million to have control over 85 percent of the slot machines; according to the Calvin Ayre, if given the option to bid, companies such as Twin River and Scientific Games were expected to offer in the vicinity of $100 million.
However, investing in IGT could be more profitable in the long run even if they paid less up front. This is not the case either; Rhode Island is losing money. According to the Providence Journal, IGT’s machines each netting an average of $94,000 annually, earning Rhode Island $56,000 per machine. However, one of IGT’s competitors, Everi, nets an average of $110,000 per machine yearly, earning the state $66,000 annually per machine. Another competitor, Scientific Games, net $146,000 annually on each machine, earning the state $87,000 annually per machine.
Making matters even worse, Rhode Island is overpaying IGT for running the state’s lottery system and video central system of the slot machines. As the Providence Journal states, Rhode Island pays IGT five times more than what other states, such as Massachusetts, pay IGT’s competitors to run similar systems. Investing in IGT is a financial loss in state revenue in every way possible.
Proponents of IGT’s new contract point out that IGT will be upgrading Rhode Island’s lottery system and keeping 1,100 jobs in the state, citing IGT’s threats to operate in a different state if not awarded the contract renewal. However, these are not high paying jobs as IGT claims; many make less than $40,000 annually. Further, the loss of jobs can be easy combated by including a stipulation that whichever company is awarded control over Rhode Island’s slot machines must have an operation in Rhode Island. Rhode Island will not be responsible to foot the bill of updating the lottery system if IGT is not awarded the contract either, as upgrading the lottery system is a requirement for all companies running slot machines in Rhode Island.
Since Rhode Island will lose money on renewing IGT’s contract and fails to reap any benefits, it begs the question as to why Raimondo has pushed the extension of the contract. The answer becomes clear when Raimondo’s relationship with Donald Sweitzar is examined. According to Inside Sources, Sweitzar works with Raimondo and is in contact with her daily, being that he is the treasurer of the Democratic Governors Association that Raimondo in the chairman of. In addition to making a large donation to the DGA, IGT also pays Sweitzar thousands of dollars every month to lobby for the company. Neither Raimondo or Sweitzar have the interests of Rhode Island at heart, but the interests of IGT; this was a deal created to benefit IGT at the taxpayers’ expense.
Dan Ryan is politically active student at the University of Rhode Island.