Rhode Island Gov. Raimondo Balks at Twin River Offer to Take Lottery Contract From IGT

Posted on: July 17, 2019, 05:00h. 

Last updated on: July 16, 2019, 09:00h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Gov. Gina Raimondo (D-RI) doesn’t want Twin River Worldwide Holdings, Inc. (NYSE:TRWH), Rhode Island’s lone casino operator, usurping International Game Technology Plc (NYSE:IGT) as the state’s lottery manager.

Rhode Island Gov. Gina Raimondo (D) doesn’t Twin River running the state’s lotto. (Image: Politico).

Recently, Twin River offered Rhode Island $125 million in cash upfront to takeover the Ocean State’s lottery contracts from IGT. The lottery is the state’s third-largest revenue generator.

This isn’t the business they are in,″ Raimondo said of Twin River in an interview with the Providence Journal. “And this is the third biggest source of revenue for Rhode Island. I think it would be incredibly risky to turn over this to a business that has zero track record in it.”

TRWH’s offer to oversee Rhode Island’s lottery likely stems from the company’s recent bashing of Raimondo’s decision to award a 20-year, $1 billion contract to IGT to run the bulk of the gaming machines at the Tiverton Casino Hotel and Twin River Casino Hotel, TRWH’s two Rhode Island gaming properties.

Earlier this month, Twin River took out a full-page advertisement in the Providence Journal, saying Raimondo’s deal with IGT is anti-competitive because it was a “no bid” contract and that it’s bad for Rhode Island taxpayers.

Lots Of Squabbling

TRWH says Rhode Island law allows for a single gaming machine manufacturer to control up to half the state’s devices, but IGT’s slice of that pie is getting close to 85 percent. The operator of Rhode Island’s casinos, as well Delaware and Mississippi gaming properties, asserts Rhode Island Lottery has looked the other way in allowing IGT to amass an overly dominant share of the state’s gaming machine market.

Additionally, Twin River claims IGT machines feature dated concepts and lower yields, meaning less revenue for the state, than products made by competing firms.

TRWH’s $125 million offer to run Rhode Island Lottery looks to be the latest sign of the company’s dissatisfaction with IGT’s perch in the state. Up to 1,100 jobs could be on the line if the lottery manager is changed, but Twin River believes it can create that many or more positions in IGT’s place, reports the Providence Journal.

It appears Raimondo’s accord with IGT has other critics, including Rhode Island House Speaker Nicholas Mattiello, also a Democrat. Mattiello said that Raimondo negotiated the pact with IGT in secrecy and that when the governor is ready, she needs to bring a proposal to the General Assembly that will stand up to the body’s “legislative scrutiny.”

Problems With Ownership

Some of Raimondo’s reluctance to consider Twin River as manager of Rhode Island Lottery appears to revolve around the casino operator’s status as a public company.

“They are owned by a hedge fund out of, I think, New York City,” said the governor in the Providence Journal article.

While it is accurate that many of TRWH’s largest shareholders are hedge funds, there are scores of other professional investors holding the stock.

A company being publicly traded would seem to be an odd quibble for a former venture capitalist, as Raimondo is. Plus, she does not appear to take issue with IGT also being publicly traded. Nor does she seem bothered by hedge fund ownership of the gaming device maker’s shares.

Several hedge funds are among IGT’s biggest investors, including HG Vora Capital Management, LLC, a firm that is also a major Twin River shareholder.