When state governments decide to award a contract to a company following a transparent, competitive bidding process, everybody wins. Taxpayers get the best value for their hard-earned dollars and companies feel confident investing in a place where deals are made in the light of day and not behind closed doors.
Unfortunately, states such as Rhode Island have resigned themselves to a system compromised by opaque no-bid deals and dubious accounting.
In August, Gov. Gina Raimondo urged the General Assembly to greenlight a 20-year, $1 billion contract extension to lottery, gaming and sports betting company International Game Technology (IGT) to operate the state lottery and virtually all gaming machines. But this deal makes little sense for taxpayers across the state, and other companies have already indicated interest in offering Rhode Island residents better terms.
Taxpayers deserve to have their dollars spent on deals decided in an open and transparent public forum, with multiple bidders fairly competing for state business.
By now, most Rhode Island residents have heard IGT’s tired claims about their proposed contract extension. The company has warned that, if an August 2018 agreement allowing IGT to run the Rhode Island Lottery and control 85 percent of the state’s video gaming machines is not renewed, residents would pay the price. Purportedly, 1,000 Rhode Island jobs are at stake if IGT doesn’t get a 20-year contract extension. But because the state is relying on a no-bid process to determine lottery and gambling control, taxpayers are left in the dark as to what other companies have to offer or what represents the best value for money that they can receive.
Multiple companies have already come out in public to offer a better deal, including one earlier this week.
International lottery company Camelot Lottery Solutions, in partnership with casino owner Twin River, has claimed that they can deliver 1,100 jobs at a fraction of the time and cost estimated by IGT. Camelot has proposed a 12-year contract (instead of 20) that would cover 50 percent of Rhode Island gaming machines (instead of 85 percent), at a cost to taxpayers of less than $500 million. Compare this to IGT’s plan, which would cost taxpayers $1 billion and mean significantly less flexibility if the state isn’t pleased with IGT’s performance 10 years down the line.
And there’s already good reason to believe that Rhode Island and her residents will lose out from the proposed behind closed doors arrangement. IGT’s slot machine competitors have already generated $52,000 more in revenues per machine than IGT does, a large gap considering there are more than 5,000 machines in-state. Since the state takes a 60 percent share of gaming revenue, IGT’s revenue shortfall costs the state more than $150 million per year. For that sizeable sum, Rhode Island could all-but-eliminate its fiscal shortfall and provide much-needed tax relief for residents.
Despite the significant benefits of embracing competitive bidding, Rhode Island leadership refuses to see the light. Sadly, gaming proceeds at present flow not to the business offering taxpayers the best deal, but to the company with the most political clout. That distinction belongs to IGT, which has multiple ties to the beleaguered Raimondo administration.
Over the past seven months, the company has donated $150,000 to the Democratic Governors Association, chaired by none other than Gov. Raimondo. And the treasurer of the Raimondo-led DGA just happens to be former IGT chairman Donald Sweitzer, who is paid $7,500 a month by his “former” employee to lobby the Rhode Island State House.
Fortunately, Rhode Island lawmakers have taken action against this likely conflict of interest and lodged multiple ethics complaints against the governor in an attempt to restore good governance to this field. But far more needs to be done to ensure that Rhode Island embraces open, competitive bidding which ensures taxpayers receive the best deal possible.
Members of the General Assembly must carefully compare the promises made by IGT to the proposals of other companies such as Camelot and this can only be done in an open, transparent process where all options can be scrutinized by lawmakers as well as the public.
The stakes are far greater than the $500 million in savings that IGT’s competitors have offered taxpayers. Businesses in the future can save residents of states across the country billions of dollars in the future by offering innovative, low-cost bids. But they’ll only do so if they’re assured that said states will examine their claims fairly and impartially.
For the sake of their residents, states must embrace open competition and let the best bidder win.