Rhode Island, a mini Vegas? Gambling, the 3rd-largest revenue stream

It is no secret that Rhode Island relies heavily on gambling revenue. More

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Rhode Island, a mini Vegas? Gambling, the 3rd-largest revenue stream

BLOOMBERG NEWS FILE PHOTO / JACOB KEPLER
IT IS NO SECRET that Rhode Island relies heavily on gambling revenue.
Posted 12/6/10

It is no secret that Rhode Island relies heavily on gambling revenue.

Nor is it unexpected when the Ocean State ranks near the bottom – or at the very bottom – on national indices that measure the business climate.

Yet, there is one recent index on which Rhode Island lands at the very top: State Lottery Sales Per Capita, Fiscal Year 2008.

In the rankings prepared by the Tax Foundation, Rhode Island ranks first for per capita lottery sales in 2008 at $2,275 per person, far ahead of second-ranked South Dakota at $879 per person.

But do Rhode Islanders really spend as much as $2,275 per person on lottery tickets every year? With a population of about 1 million people, that would mean each man, woman and child in the state spends $44 each week on the lottery.

“I don’t feel that number is right,” Jeffrey Jarrett, professor of management science at the College of Business at the University of Rhode Island, told Providence Business News. “There is nothing in the character of Rhode Islanders or the marketing of the state lottery system to indicate that people in this state should buy almost three times more lottery tickets than the second-ranked state.”

And in fact they don’t. The Tax Foundation study uses numbers that include revenue from the state’s video lottery terminals at Twin River and Newport Grand – which is how the state reports it. But only five states use similar numbers, thus skewing the overall results.

Further clouding the picture is the fact that Rhode Island’s per capita number is inflated by spending from out-of-state visitors at the VLTs.

The video gambling revenue accounts for the lion’s share of state lottery sales – $2.15 billion, or 89.8 percent of the total $2.4 billion in fiscal year 2008, according to figures obtained from the Rhode Island Lottery. Instant tickets raised $81.5 million in 2008, 3.4 percent of the total, and online games such as the Daily Numbers, PowerBall and Keno generated almost $160 million, 6.7 percent of the whole.

Alicia Hansen, staff writer for the Tax Foundation in Washington, D.C., pointed to a footnote on the Tax Foundation’s list that states the Rhode Island figures include gross – as opposed to net – VLT sales.

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