Scientific Games Enters Rhode Island Fracas Between IGT, Twin River

Posted on: August 7, 2019, 11:51h. 

Last updated on: August 7, 2019, 01:06h.

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

The ongoing spat between Twin River Worldwide Holdings, Inc. (NYSE:TRWH) and International Game Technology Plc (NYSE:IGT) regarding the latter’s dominance in Rhode Island’s gaming machine market has a new participant: Scientific Games Corp. (NASDAQ: SGMS).

With another company in the fray, Rhode Island Gov. Gina Raimondo could face more pressure to open a gaming machine deal for bidding. (Image: Wall Street Journal)

Scientific Games, one of IGT’s primary rivals, is reportedly in talks with Twin River, the operator of Rhode Island’s two casinos, to bid for Ocean State business.

Controversy is swirling as Gov. Gina Raimondo (D-RI) pushes lawmakers to approve a 20-year, $1 billion contract that would essentially grant IGT an out-sized percentage of the state’s gaming machines. TRWH has voiced concern that the deal is bad for its customers and taxpayers, and that Raimondo didn’t allow other companies to bid on the contract.

Twin River maintains that under Rhode Island law, a single manufacturer can control just half the gaming machines in the state, but by virtue of the 2015 merger with Gtech, IGT now runs close to 85 percent of gambling devices there, a position that would be solidified or increased if Raimondo’s proposal becomes law. SG is keeping abreast of the situation there.

We have retained a representative to monitor the Rhode Island bidding situation,” said Scientific Games Vice President Susan Cartwright in an email to the Providence Journal.

Earlier this week, two SG lobbyists met with Rhode Island House Speaker Nicholas Mattiello (D-RI). Mattiello has previously expressed dismay with Raimondo’s dealings with IGT, while questioning whether the governor’s proposal could hold up to legislative scrutiny.

It’s Getting Testy

Since early last month, when TRWH took out a full-page advertisement in the Providence Journal criticizing Raimondo’s pact with IGT, the relationship between the casino operator and the gaming machine maker has grown increasingly contentious.

In July, Twin River offered an upfront cash payment of $125 million to wrest control of running the Rhode Island lottery from IGT, an offer that was rebuffed by Raimondo.

More recently, TRWH ran a radio spot calling IGT machines “the worst ones on the floor.” That jab jibes with previous comments from Twin River alleging that IGT devices feature out-of-date concepts gamblers aren’t enthusiastic about and lower yields than rival machines. Lower yields mean less tax revenue for the state.

Jobs Threat

IGT’s previous Rhode Island agreement was signed under Gov. Donald Carcieri (R-RI) and featured a clause to keep 1,000 jobs in the state. That stipulation is part of the accord Raimondo is pushing, and IGT has warned that if the 20-year contract isn’t signed, it could reduce headcount in the Ocean State.

“IGT has said that without this jobs guarantee being baked into its lottery contract, the company, which is based in the United Kingdom, would reduce its Rhode Island footprint and consolidate work in other locations,” reports the Providence Journal.

In its bid to seize control of the lottery, Twin River said that it would be able to replace the lost IGT jobs, but the casino operator didn’t elaborate on exactly how it would retain those positions or create new employment opportunities.