Election defeat clouds future for Newport Grand

While prospective card dealers, drink servers and security guards were lining up at Twin River Casino’s job fair in Lincoln last week to claim one of the 350 new positions expected from the video-gambling parlor’s expansion to table games, life at Rhode Island’s other gaming site, Newport Grand, was quieter.
No one at the former jai-alai fronton was talking publicly about the election defeat that blocked Newport Grand’s own expansion plans, which would also have added live games such as roulette or blackjack to the current video offerings, or what it would mean for the business’ future.
Before the vote, Newport Grand CEO Diane Hurley had warned that with new casinos planned for Massachusetts, Newport Grand “cannot financially survive as presently constituted.”
In fiscal 2012, revenue at Newport Grand was $28.1 million, or 35 percent, less than in 2005. And that’s before new competition coming from Massachusetts and the newly expanded Twin River.
But with table games Hurley had expected to hire at least 50 new workers up front and the facility had recently removed “Slots” from its name.
Newport Grand employees last week said Hurley was on vacation and could not be reached.
At Newport City Hall, local leaders who had backed the table-games referendum were taking a wait-and-see approach to an issue that directly affects the city budget.
“Personally I am not happy that the city revenue [from property taxes and a share of gambling proceeds] could be in jeopardy, because it is not easy to replace $1 million in the budget,” said Newport Mayor Henry F. Winthrop. “But I am sure Newport Grand has a plan.”
Despite overwhelming statewide support for allowing table games at both Ocean State slot parlors and two-thirds statewide support for Newport Grand specifically, local voters rejected the referendum, 53 percent to 47 percent.
The defeat reflected a long-running aversion to casinos in Newport that supporters hoped had softened, as reflected by support from Senate President M. Teresa Paiva-Weed, D-Newport, because of the threat to state revenue posed by Massachusetts casinos.
Five of seven Newport city councilors supported the referendum, with one neutral and one opposed, Winthrop said. In the weeks leading up to the vote, Hurley focused her outreach efforts on local voters.
In addition to a local distrust of gambling, Newport Grand supporters pointed to rumors from casino opponents that the referendum was the first move in a long-range scheme to create an Atlantic City-style waterfront casino in downtown Newport, as hurting support for the expansion.
“Personally I thought there was a lot of misinformation that came out in the final hour,” Winthrop said.
Newport County Chamber of Commerce Executive Director Jody Sullivan said she wasn’t shocked that the city rejected Newport Grand’s expansion.
“Newport has had a long history of not wanting gambling, so it shouldn’t have been a surprise to everybody,” Sullivan said.
The defeat of Newport Grand’s bid to expand into table games comes as the video-slot parlor appeared to have pulled out of the revenue tailspin it has been in since 2005.
In fiscal 2012, which ended June 30, Newport Grand made $51.4 million, a 2 percent increase from the previous year, when the slot parlor pulled in $50.2 million, according to figures from the R.I. Department of Revenue Office of Budget Analysis. The amount Newport Grand transferred to the state rose to $31.7 million in fiscal 2012, up from $31 million the previous year.
Christiansen Capital Advisors, the consultants whose report on Rhode Island’s fiscal vulnerability to new Massachusetts casinos helped make the case for table games, predicted that barring new competition, Newport Grand revenue would grow just below 4 percent between 2011 and 2017.
But the report estimates that the presence of live table games at Twin River alone will siphon off $5.8 million, or 11 percent, of Newport Grand’s annual revenue by 2017.
Depending on where the nearest Massachusetts casino is located, Christiansen estimated that Newport Grand video-slot revenue, at best, would drop to $29.2 million by 2017, with the state’s share falling to $21.1 million and net income of $1.4 million.
At worst – with a casino in Fall River or New Bedford – gross revenue would drop to $23.3 million during the same period, with the state getting $16.8 million and net operator income of $700,000. •

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