Constitutionality of Rhode Island Online Casino Bill Questioned

Bally’s Corp. and IGT, two major gambling businesses with headquarters in America’s smallest but most densely populated state, had a chance to pitch their plan for online casino gambling in Rhode Island, but not every stakeholder in government the local gambling economy appeared to be happy about the prospect as proposed.

IGT is a familiar name to most seasoned casino gamblers in the US, but not everyone is aware of the fact that Si Redd’s Las Vegas-based company was acquired by and merged with the world’s largest lottery operator, GTECH – a company that posted over US$ 4 billion in revenue for 2022 or that Bally’s as we know it is not the Bally’s they may have known a decade ago. That company sprung from Twin Rivers (Rhode Island’s exclusive video lottery terminal casino game supplier with venues in Lincoln and Tiverton) and acquired the Bally’s name from Caesar’s a short time ago in relative terms.

The pushback comes from what might seem to be the most unlikely of places – the Rhode Island State Lottery (RILOT). Under the proposed bill, RILOT would have complete control of nearly every aspect of the proposed online casino gambling market in the state from the making of game rules to terms and conditions, and every regulatory duty normally associated with online casino gambling. The servers themselves would be located in one or both of Bally’s land-based casinos in the state.

IGT provides Bally’s with technology and machines to run its lottery casinos and sportsbetting applications in the state.

The Will of the People

Casino gambling and gambling expansion in the state were allowed under voter referendums in accordance with the state constitution, which as of today states:

No act expanding the types or locations of gambling which are permitted within the state or within any city or town … shall take effect until it has been approved by the majority of those electors voting in a statewide referendum and by the majority of those electors voting in said referendum in the municipality in which the proposed gambling would be allowed.”

Furcolo said (formatting – source article): “While the Rhode Island Lottery believes there is a legislative path for authorizing iGaming, and is supportive of iGaming, it is the … Lottery’s position that the bill — as drafted — is likely unconstitutional and must be revised to conform with the authorization under the 2012 and 2016 Voter Referendums related to casino gaming.

IGT is Rhode Island’s exclusive supplier of lottery solutions such as traditional lottery, instant win tickets, video lottery terminals (casino “slots”), and internet lottery games in the state.

The company’s lottery contract was recently extended until 2043 guaranteeing IGT the exclusive right to provide those games and services for an additional 20 years.

More recently, Bally’s was approved by RILOT to continue its exclusive provenance of sportsbetting in the state for three years, in concert with and using the technologies of IGT.

More than Constitutional Issues?

According to a report in the Providence Journal, one of the problems raised at a Senate hearing was one of monopoly as the legislation under consideration would not allow competitive bidding for an online casino license tender. The legislation, as proposed, was written and delivered to state lawmakers by Bally’s Corp, IGT, or one of the consortium’s affiliates.

Another issue, the one at front and center is the ability of 18-year-olds to act as “gambling surrogates” or proxy bettors for other high school-aged residents even younger.

Rhode Island teens of 18 years or older are currently banned from purchasing or using alcohol, cigarettes, or recreational marijuana – but they are allowed to place sports bets. According to the Providence Journal article: “<this> has made them kingpins of sorts in high school gambling operations.”

It’s not always easy to parse what’s “really” being said in Rhode Island media as the state has an antiquated but fully democratic government in the republican form, but a labyrinthine and impossible for outsiders to navigate political system as well as a history of less than savory characters holding sway over many elements of power in the state. If those nuances, as well as other things about America’s oldest state, are not understood by readers, the media may falsely assume that readers outside of the state may know what is behind certain references.

One salient example is a statement made by former Sen. John Tassoni Wednesday night when he was speaking in the capacity of a Rhode Island Council on Problem Gambling board member. He told a Senate committee: “They were called ’10 percenters’ on Federal Hill,” while referring to 18-year-olds giving younger children access to gambling online.

The former Senator’s office was closed on Sunday as this article was written so we were unable to contact him for clarification. We find no history of the “obvious” assumption that teens “ran numbers” for bookmakers or any other guess at what nefarious nature a “teen ten percenter” would represent.

A snippet of RI history for context from WorldAtlas:

On May 4th, 1776, Rhode Island was the first colony to renounce allegiance to Great Britain and declare its independence. However, Rhode Island was the last state to ratify the United States Constitution. It finally did so on May 29, 1790.

Readers are welcome to do their own research on Federal Hill and its history to form a personal assumption about the former Senator’s reference. A cursory search revealed no reference to gambling for our researchers.

Former Senator Not Alone in Concerns

Rhode Island Lottery director, Mark Furcolo warned that the Senate bill (S948) is “likely unconstitutional” as it is currently written. The Journal states that even if that issue is put to rest, iGaming “is likely” to cannibalize state revenues from existing Lottery offerings. However, Bally’s addressed that issue in a Spectrum Gaming analysis prior to announcing the new legislation at a Chamber of Commerce dinner a couple of months ago.

It would appear to the casual observer that some of the “noise” rising up against the casino bill may come from competitors, as is understandably the case in a capitalist system that is supposed to be fair and free of monopolization.

A spokesman for the Sports Betting Alliance (a coalition that includes BetMGM, DraftKings, and FanDuel) reportedly asked why Rhode Island might join Delaware as the only state in the Unionwhose residents would be limited to a single choice when it comes to iGaming.”

While the aforementioned businesses are all primarily sportsbetting operators, they also have casino components in some states that allow online casino gambling along with sportsbetting.

The spokesperson, Jon Mandel continued: “The result will be no different than mobile sports betting,” referring to the recent RILOT/Bally’s contract renewal of three years.

Residents will continue to use the illegal market; <they will> drive into Connecticut; or <they will> wait until Massachusetts legalizes iGaming to then cross the border, to the benefit of that state, not Rhode Island.”

Is $210 Million Per Year in New Revenue Enough?

Mandelas purportedly backed up his argument by referring to stats from the first month the neighboring state, Massachusetts opened online sports betting in that state, beginning on March 10, 2023.

Mandalas stated: “GeoComply identified 1,761 instances of a Rhode Island resident first attempting to access a Massachusetts sports betting app in Rhode Island and then traveling to Massachusetts and successfully logging into an app.”

The Sports Betting Alliance argues: “Multiple iGaming operators will generate significantly more tax revenue for the state than if the state grants one company a monopoly.”

The Bally’s measure as written is expected to generate about $210 Million a year for state coffers based on its Spectrum Gaming analysis and report which was tendered along with the proposed legislation in February this year.

Source: Online gambling could bring $210m in revenue. Why is Rhode Island Lottery pushing back? Providence Journal, May 12, 2023

The post Constitutionality of Rhode Island Online Casino Bill Questioned appeared first on Casino News Daily.

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