Twin River Worldwide Holding, the operator of Rhode Island’s two casinos, has been ordered by the state Lottery to remove 360 of the “underperforming” video slots provided by IGT.
News about the removal of gaming machines arrive just shortly after Twin River revealed plans to lay off 30 table games supervisors and 65 dealers due to sliding revenues in recent months. The company operates two gambling venues in Rhode Island – one in Tiverton and one in Lincoln.
The Providence Journal reports that Rhode Island Lottery Director Gerald Aubin told a legislative oversight committee on Monday that IGT’s video slots are “underperforming” the minimum requirements in its contract with the state as well as machines provided by other companies to the two Twin River casinos. The Lottery official also told legislators that he would take appropriate measures to prevent the state and its gaming venues from bleeding any more money.
Under IGT’s contract with the Lottery, the company provides the majority of slot machines at Rhode Island’s two casinos. According to the most recent report by the Lottery, IGT provided 4,364 gambling machines or about 84% of the state’s total, while Scientific Games provided 616 and Everi provided 195.
The terms of IGT’s contract obligate the company to pay 7% of the net revenue its devices generate to the state. Gov. Gina Raimondo recently agreed to extend IGT’s contract for an additional 20 years through 2043 without a competitive bidding process. The fact that no such process was held raised eyebrows as IGT’s machines have been performing worse than those provided by Scientific Games and Everi for a while now.
Gov. Raimondo justified her decision to greenlight the IGT deal by saying that only this way the state could keep 1,000 jobs at IGT’s offices in the state, which annually pay an average $100,000.
Underperforming Machines
While not much information was revealed about the now imminent removal of 360 IGT slot machines from the two casinos, a spokesperson for the Rhode Island Department of Revenue told The Providence Journal that state “Lottery officials met with IGT managers […] to inform the company that it would remove 360 of its [VLTs] from the casinos.”
However, The Providence Journal notes that under the gambling provider’s current contract with the state, the Lottery can remove up to 15% of IGT’s machines – or about 655 devices – from the two casinos if they underperform.
Rhode Island measures the performance of a provider’s slot machines based on a formula that determines “how much money a group of machines earns as a percentage of the total Net Terminal Income for the casinos as a whole.” A company’s efficiency rating “would be 100% if its machines earn the same percentage of the NTI as the percentage of machines it has in the casinos” and “the rating falls below 100% if those machines earn less than that.”
According to the latest annual report by the Lottery, IGT’s machines had fallen below the required threshold. Some of the company’s devices located at the Lincoln and Tiverton casinos are more than 20 years old.
As mentioned above, the Lottery plans to remove 360 IGT slot machines. The company said that it would work with the Lottery to accomplish the removal of the gaming machines and would replace another 270 of the existing devices with newer ones.
Boston Casino Hits Twin River’s Revenue
As mentioned earlier, Twin Rivers has moved to reduce its Rhode Island workforce after new regional competition hit its profitability. Wynn Resorts opened the $2.6 billion Encore Boston Harbor luxury resort in neighboring Massachusetts, and the property’s first full month results were more than promising.
However, revenue at Twin River’s casino in Lincoln suffered a big blow in July. The gambling operator said that table games revenue at the venue dropped 34% year-on-year to $7.6 million, while slot machines were down 17% to $32.2 million. The slot machines decrease was in line with the company’s expectations, but table games performed worse than projected.
Rhode Island is about to receive what could be a big boost to its gambling revenues as it has emerged that a mobile betting app has entered the final stages of testing. The state’s two casinos went live with retail betting late last year. The Rhode Island Legislature passed this past spring a bill authorizing mobile betting. The launch of an app would give an important competitive edge to Rhode Island as the state is the only one in New England that will be offering a digital betting product.
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