Lottery audit shows impact of gaming competition on R.I.

THE RHODE ISLAND LOTTERY is the state’s largest source of voluntary income, comprising sales through online games, instant games, video lottery and table games.
THE RHODE ISLAND LOTTERY is the state’s largest source of voluntary income, comprising sales through online games, instant games, video lottery and table games.

PROVIDENCE – A recently released audit of the R.I. Lottery shows the state agency is closely monitoring increased gaming operations in neighboring states, as the recent opening of Plainridge Park Casino in Massachusetts has negatively impacted revenue.
The R.I. Lottery, or “The Lot,” as it’s called, is the state’s largest source of voluntary income, comprising sales through online games, instant games, video lottery and table games. And despite increased sales realized from instant tickets, retail and table games, The Lot’s transfer of $369.8 million to the state’s general fund in fiscal 2016 was 3.2 percent less than the prior fiscal year, “due in large part to competition from [Plainridge],” which opened in June 2015, according to an audit of The Lot’s financial statements by the R.I. Office of the Auditor General.
Plainridge, in Plainville, Mass., made the most impact on The Lot’s largest revenue source, video lottery, which realized a net revenue decrease of 5.3 percent to $488.7 million in fiscal 2016.
The impact, however significant, was less extreme than expected, according to the audit. But The Lot is closely watching this year’s election, as ballot question No. 1 in Rhode Island is asking voters to decide whether to allow the opening of a new Rhode Island casino in Tiverton. The new gaming facility would include table games and if successful could augment state gaming revenue.
“A new gaming facility located in Tiverton, R.I., is widely considered to be better positioned to compete with future gaming competition expected in nearby Massachusetts,” according to the audit.
The Tiverton casino, if approved by voters, would open under the gaming license of Newport Grand, which has no table games and has produced dwindling returns as of recent. The state has always competed with Connecticut for gambling revenue, but Massachusetts has made recent changes to allow the expansion of casinos in the Bay State, which could negatively impact the Rhode Island’s balance sheet.
“Both neighboring states have already approved or are considering additional casino expansion likely to increase gaming competition in New England,” according to the audit. “The Lottery and the state continually monitor the risk to gaming operations resulting from competition in nearby states.”
Other highlights from The Lot audit include PowerBall sales, which increased 39.4 percent, or $10.3 million, to $36.3 million in fiscal 2016. The increase was largely fueled by six jackpots topping $100 million during the fiscal year, including the record-breaking $1.6 billion jackpot won in January that threw the U.S. populous into a ticket-buying frenzy. Higher jackpots typically result in increased sales, according to the audit.
New instant ticket games helped produce a 6.4 percent increase, or $5.8 million, to $96.3 million for fiscal 2016, while an improved economy translated into a more stable retailer base, which in turn produced greater Keno sales, growing 4 percent, or $3.2 million, to $83.7 million.
Table games net revenue from Twin River Casino increased $19.2 million, or 18 percent, to $125.8 million compared with the prior fiscal year. The Lincoln-based casino added 12 table games in August 2015 and 16 poker tables in December 2015.
The Lot is currently running a long-term deficit of $18.3 million, which includes a remaining balance of $4.4 million from the previous sale of its exclusive rights to operate its gaming systems, and its proportionate share – $13.9 million – of the state’s pension liability as a participating employer in the Employees’ Retirement System Plan. The Lot employs about 80 people, according to its website.
In July, the Lottery entered into another contract with International Game Technology PLC through June 30, 2023, providing instant ticket printing services and a redesigned website at a value of $2.7 million.

The full audit can be found HERE.

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