RSSTwin River Faces Closure, Bankruptcy or State Ownership
Feb 05
Business Casinos, Gambling Comments Off
Among the possible options for the Twin River casino in Lincoln, RI are imminent shutdown, bankruptcy by the operators BLB Investors LLC and possible purchase by the state of Rhode Island. The casino reportedly faces $525 million in debt, but has become the state’s third largest source of revenue since it opened almost two years ago. That gives the state a strong interest in keeping the casino open.
In a deal with the state, 60% of the casino’s gambling revenue goes back to Rhode Island. That take could conceivably increase if the state took over ownership of the property.
Though a state-owned casino is unprecedented in the U.S. (it’s a model that seems to work for Canada), lawmakers are giving the proposal serious consideration, even as the casino owners are lobbying for help. Twin River wants the state to reduce its percentage of operating revenue, something the legislature appears unwilling to consider. It is actively looking for options to avoid bankruptcy and restructure its debt while remaining open for business.
The question of state ownership has allowed parties on both sides of the gambling debate to raise the moral and economic arguments again. Money flows to the state, but does the model work if the casino patrons are made up of tax-paying residents to begin with? As anyone connected to the casino industry knows, once a gambling hall opens, it takes a lot to bring it down. The state quickly becomes dependent on the revenue source and will likely find a way to bail out the casino because it is in Rhode Island’s best interest to keep it running.
In these murky economic times, any description of a “bail out” is met with skepticism, and the legislature is (rightly) avoiding the comparison to the federal government’s stimulus bailout.
