2014 -- S 3056

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LC005821

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2014

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A N   A C T

RELATING TO STATE AFFAIRS AND GOVERNMENT -- AUTHORIZING STATE-

OPERATED CASINO GAMING AT NEWPORT GRAND SUBJECT TO STATEWIDE AND

LOCAL VOTER APPROVAL

     Introduced By: Senators Goodwin, Felag, and Bates

     Date Introduced: June 03, 2014

     Referred To: Senate Finance

     It is enacted by the General Assembly as follows:

     SECTION 1. Sections 42-61.2-2.2 and 42-61.2-7 of the General Laws in Chapter 42-61.2

entitled "Video Lottery Terminal" are hereby amended to read as follows:

     42-61.2-2.2. State authorized to operate casino gaming at Newport Grand. -- (a)

State-operated casino gaming shall be authorized at the facility of the licensed video lottery

terminal retailer known as "Newport Grand" located in the town city of Newport; provided, that :

     (1) That the requirements of Article VI, Section 22 of the Rhode Island Constitution are

met with respect to said facility at the general election next to be held after enactment of this

section. in November of 2014; and

     (2) That the proposed amendment to the Rhode Island Constitution requiring that prior to

a change in location where gambling is permitted in any city or town, there must be a referendum

in said city or town and approval by the majority of those electors voting in said referendum on

said proposed change in location in said city or town, is also approved statewide at the statewide

general election to be held in November of 2014.

      (b) With respect to the Newport Grand facility, the authorization of this section 2.2 shall

be effective upon:

      (1) The certification by the secretary of state that the qualified voters of the state have

approved the expansion of gambling at such facility to include casino gaming and also approved

the amendment to the Rhode Island Constitution regarding a change in the location of where

gambling is permitted in any city or town; and

      (2) The certification by the board of canvassers of the city of Newport that the qualified

electors of the city of Newport have approved the expansion of gambling at such facility to

include casino gaming.

      (c) The general assembly finds that:

      (1) The operation of casino gaming at Newport Grand will play a critical role in the

economy of the state and enhance local revenues;

      (2) Pursuant to Article VI, Section 15 of the Rhode Island Constitution and the specific

powers, authorities and safeguards set forth in subsection (c) herein in connection with the

operation of casino gaming, the state shall have full operational control over the specified

location, subject to the restrictions of Article V, Section 22 of the Rhode Island Constitution, at

which casino gaming shall be conducted;

      (3) It is in the best interest of the state to have the authorization to operate casino gaming

as specified at Newport Grand;

      (4) Pursuant to the provisions of subdivision 42-61.2-2.1(b)(4), and by action of the

governor, an extensive analysis and evaluation of competitive casino-gaming operations was

completed, which concluded that the viability of Newport Grand as a video lottery terminal

facility is threatened by the location of casino gaming in Southeast Massachusetts.

      (5) The legislature shall, has by enactment of comprehensive legislation, during the 2012

and 2014 sessions, session, determine determined the terms and conditions pursuant to which

casino gaming would be operated in the state if it is authorized as set forth herein.

      (d) Notwithstanding the provisions of any other law and pursuant to Article VI, Section

15 of the Rhode Island Constitution, the state is authorized, subject to the restrictions of Article

V, Section 22 of the Rhode Island Constitution, to operate, conduct and control casino gaming at

Newport Grand subject to subsection (a) above. In furtherance thereof, the state, through the

division of state lottery and/or the department of business regulation, shall have full operational

control to operate the foregoing facilities, the authority to make all decisions about all aspects of

the functioning of the business enterprise, including, without limitation, the power and authority

to:

      (1) Determine the number, type, placement and arrangement of casino-gaming games,

tables and sites within the facility;

      (2) Establish with respect to casino gaming one or more systems for linking, tracking,

deposit and reporting of receipts, audits, annual reports, prohibitive conduct and other such

matters determined from time to time;

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      (3) Collect all receipts from casino gaming, require that Newport Grand collect casino-

gaming gross receipts in trust for the state through the division of state lottery, deposit such

receipts into an account or accounts of its choice, allocate such receipts according to law, and

otherwise maintain custody and control over all casino-gaming receipts and funds;

      (4) Hold and exercise sufficient powers over Newport Grand's accounting and finances

to allow for adequate oversight and verification of the financial aspects of casino gaming at the

facility, including, without limitation:

      (i) The right to require Newport Grand to maintain an annual balance sheet, profit and

loss, and any other necessary information or reports; and

      (ii) The authority and power to conduct periodic compliance or special or focused audits

of the information or reports provided, as well as the premises with the facility containing records

of casino gaming or in which the business of Newport Grand's casino-gaming operations are

conducted;

      (5) Monitor all casino-gaming operations and have the power to terminate or suspend

any casino-gaming activities in the event of an integrity concern or other threat to the public trust,

and in furtherance thereof, require the licensed video lottery retailer to provide a specified area or

areas from which to conduct such monitoring activities;

      (6) Define and limit the rules of play and odds of authorized casino-gaming games,

including, without limitation, the minimum and maximum wagers for each casino-gaming game;

      (7) Have approval rights over matters relating to the employment of individuals to be

involved, directly or indirectly, with the operation of casino gaming at Newport Grand;

      (8) Establish compulsive gambling treatment programs;

      (9) Promulgate, or propose for promulgation, any legislative, interpretive and procedural

rules necessary for the successful implementation, administration and enforcement of this

chapter; and

      (10) Hold all other powers necessary and proper to fully effectively execute and

administer the provisions of this chapter for its purpose of allowing the state to operate a casino-

gaming facility through a licensed video lottery retailer hosting said casino gaming on behalf of

the state of Rhode Island.

      (e) Subject to subsection (a) above, the state, through the division of state lottery and/or

the department of business regulation, may expand Newport Grand's existing video lottery license

issued, or issue Newport Grand a new casino-gaming license, to permit casino gaming to the

extent authorized by this act.

      (f) Subject to subsection (a) above, all rules and regulations shall be promulgated by the

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state, through the division of state lottery and the department of business regulation, in

accordance with the authority conferred upon the general assembly pursuant to Article VI,

Section 15 of the Rhode Island Constitution. In accord therewith, subject to subsection (a) above,

the state, through the division of state lottery and/or the department of business regulation, shall

have authority to issue such regulations as it deems appropriate pertaining to control, operation

and management of casino gaming as specifically set forth in subsections (b), (c) and (d).

     (g) Any referendum in the city of Newport regarding the expanding of types or locations

of gambling in said city as provided for in subsection (a) of this section shall become effective

only upon the approval of an amendment to the Rhode Island Constitution requiring that, prior to

a change in location where gambling is permitted in any city or town, there must be a referendum

in said city or town and the approval of the majority of those electors voting in said referendum

on said proposed change in location in said city or town.

     42-61.2-7. Division of revenue. [Effective June 30, 2011.] -- (a) Notwithstanding the

provisions of section 42-61-15, the allocation of net terminal income derived from video lottery

games is as follows:

      (1) For deposit in the general fund and to the state lottery division fund for

administrative purposes: Net terminal income not otherwise disbursed in accordance with

subdivisions (a)(2) -- (a)(6) herein;

      (i) Except for the fiscal year ending June 30, 2008, nineteen one hundredths of one

percent (0.19%) up to a maximum of twenty million dollars ($20,000,000) shall be equally

allocated to the distressed communities as defined in section 45-13-12 provided that no eligible

community shall receive more than twenty-five percent (25%) of that community's currently

enacted municipal budget as its share under this specific subsection. Distributions made under

this specific subsection are supplemental to all other distributions made under any portion of

general laws section 45-13-12. For the fiscal year ending June 30, 2008 distributions by

community shall be identical to the distributions made in the fiscal year ending June 30, 2007 and

shall be made from general appropriations. For the fiscal year ending June 30, 2009, the total

state distribution shall be the same total amount distributed in the fiscal year ending June 30,

2008 and shall be made from general appropriations. For the fiscal year ending June 30, 2010, the

total state distribution shall be the same total amount distributed in the fiscal year ending June 30,

2009 and shall be made from general appropriations, provided however that $784,458 of the total

appropriation shall be distributed equally to each qualifying distressed community. For each of

the fiscal years ending June 30, 2011, June 30, 2012, and June 30, 2013 seven hundred eighty-

four thousand four hundred fifty-eight dollars ($784,458) of the total appropriation shall be

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distributed equally to each qualifying distressed community.

      (ii) Five one hundredths of one percent (0.05%) up to a maximum of five million dollars

($5,000,000) shall be appropriated to property tax relief to fully fund the provisions of section 44-

33-2.1. The maximum credit defined in subdivision 44-33-9(2) shall increase to the maximum

amount to the nearest five dollar ($5.00) increment within the allocation until a maximum credit

of five hundred dollars ($500) is obtained. In no event shall the exemption in any fiscal year be

less than the prior fiscal year.

      (iii) One and twenty-two one hundredths of one percent (1.22%) to fund section 44-34.1-

1, entitled "Motor Vehicle and Trailer Excise Tax Elimination Act of 1998", to the maximum

amount to the nearest two hundred fifty dollar ($250) increment within the allocation. In no event

shall the exemption in any fiscal year be less than the prior fiscal year.

      (iv) Except for the fiscal year ending June 30, 2008, ten one hundredths of one percent

(0.10%) to a maximum of ten million dollars ($10,000,000) for supplemental distribution to

communities not included in paragraph (a)(1)(i) above distributed proportionately on the basis of

general revenue sharing distributed for that fiscal year. For the fiscal year ending June 30, 2008

distributions by community shall be identical to the distributions made in the fiscal year ending

June 30, 2007 and shall be made from general appropriations. For the fiscal year ending June 30,

2009, no funding shall be disbursed. For the fiscal year ending June 30, 2010 and thereafter,

funding shall be determined by appropriation.

      (2) To the licensed video lottery retailer:

      (a) (i) Prior to the effective date of the NGJA Master Contract, Newport Jai Ali twenty-

six percent (26%) minus three hundred eighty four thousand nine hundred ninety-six dollars

($384,996);

      (ii) On and after the effective date of the NGJA Master Contract, to the licensed video

lottery retailer who is a party to the NGJA Master Contract, all sums due and payable under said

Master Contract minus three hundred eighty four thousand nine hundred ninety-six dollars

($384,996).

      (iii) Effective July 1, 2013 the rate of net terminal income payable to Newport Grand,

LLC under the Newport Grand Master Contract shall increase by two and one quarter percent

(2.25%) points. The increase herein shall sunset and expire on June 30, 2015 and the rate in effect

as of June 30, 2013 shall be reinstated.

      (b) (i) Prior to the effective date of the UTGR Master Contract, to the present licensed

video lottery retailer at Lincoln Park which is not a party to the UTGR Master Contract, twenty-

eight and eighty-five one hundredths percent (28.85%) minus seven hundred sixty-seven

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thousand six hundred eighty-seven dollars ($767,687);

      (ii) On and after the effective date of the UTGR Master Contract, to the licensed video

lottery retailer who is a party to the UTGR Master Contract, all sums due and payable under said

Master Contract minus seven hundred sixty-seven thousand six hundred eighty-seven dollars

($767,687).

      (3) (i) To the technology providers who are not a party to the GTECH Master Contract

as set forth and referenced in Public Law 2003, Chapter 32, seven percent (7%) of the net

terminal income of the provider's terminals; in addition thereto, technology providers who

provide premium or licensed proprietary content or those games that have unique characteristics

such as 3D graphics, unique math/game play features or merchandising elements to video lottery

terminals may receive incremental compensation, either in the form of a daily fee or as an

increased percentage, if all of the following criteria are met:

      (A) A licensed video lottery retailer has requested the placement of premium or licensed

proprietary content at its licensed video lottery facility;

      (B) The division of lottery has determined in its sole discretion that the request is likely

to increase net terminal income or is otherwise important to preserve or enhance the

competiveness of the licensed video lottery retailer;

      (C) After approval of the request by the division of lottery, the total number of premium

or licensed propriety content video lottery terminals does not exceed ten percent (10%) of the

total number of video lottery terminals authorized at the respective licensed video lottery retailer;

and

      (D) All incremental costs are shared between the division and the respective licensed

video lottery retailer based upon their proportionate allocation of net terminal income. The

division of lottery is hereby authorized to amend agreements with the licensed video lottery

retailers, or the technology providers, as applicable, to effect the intent herein.

      (ii) To contractors who are a party to the Master Contract as set forth and referenced in

Public Law 2003, Chapter 32, all sums due and payable under said Master Contract;

      (iii) Notwithstanding paragraphs (i) and (ii) above, there shall be subtracted

proportionately from the payments to technology providers the sum of six hundred twenty-eight

thousand seven hundred thirty-seven dollars ($628,737);

      (4) (A) To the city of Newport one and one hundredth percent (1.01%) of net terminal

income of authorized machines at Newport Grand, except that:

      (i) Effective November 9, 2009 until June 30, 2013, the allocation shall be one and two

tenths percent (1.2%) of net terminal income of authorized machines at Newport Grand for each

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week the facility operates video lottery games on a twenty-four (24) hour basis for all eligible

hours authorized, and

      (ii) Effective July 1, 2013 2015, provided that both:

     (I) The the referendum measure authorized by Section 1 of Chapters 24 and 25 of the

Public Laws of 2012 is approved statewide and in the City of Newport, authorizing casino

gaming at Newport Grand is approved statewide and by the city of Newport at the statewide

general election to be held in November of 2014; and

     (II) The proposed amendment to the Rhode Island Constitution requiring that prior to a

change in location where gambling is permitted in any city or town, there must be a referendum

in said city or town and approval by the majority of those electors voting in said referendum on

said proposed change in location in said city or town, is approved statewide at the statewide

general election to be held in November of 2014, in which event then the allocation shall be one

and forty-five hundredths percent (1.45%) of net terminal income of authorized video lottery

terminals at Newport Grand; and

      (B) To the town of Lincoln one and twenty-six hundredths percent (1.26%) of net

terminal income of authorized machines at Twin River except that,

      (i) Effective November 9, 2009 until June 30, 2013, the allocation shall be one and forty-

five hundredths percent (1.45%) of net terminal income of authorized machines at Twin River for

each week video lottery games are offered on a twenty-four (24) hour basis for all eligible hours

authorized, and

      (ii) Effective July 1, 2013, provided that the referendum measure authorized by Article

25, Chapter 151, Section 4 of the Public Laws of 2011 is approved statewide and in the Town of

Lincoln, the allocation shall be one and forty-five hundredths percent (1.45%) of net terminal

income of authorized video lottery terminals at Twin River; and

      (5) To the Narragansett Indian Tribe, seventeen hundredths of one percent (0.17%) of net

terminal income of authorized machines at Lincoln Park up to a maximum of ten million dollars

($10,000,000) per year, which shall be paid to the Narragansett Indian Tribe for the account of a

Tribal Development Fund to be used for the purpose of encouraging and promoting: home

ownership and improvement, elderly housing, adult vocational training; health and social

services; childcare; natural resource protection; and economic development consistent with state

law. Provided, however, such distribution shall terminate upon the opening of any gaming facility

in which the Narragansett Indians are entitled to any payments or other incentives; and provided

further, any monies distributed hereunder shall not be used for, or spent on previously contracted

debts; and

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      (6) Unclaimed prizes and credits shall remit to the general fund of the state; and

      (7) Payments into the state's general fund specified in subdivisions (a)(1) and (a)(6) shall

be made on an estimated monthly basis. Payment shall be made on the tenth day following the

close of the month except for the last month when payment shall be on the last business day.

      (b) Notwithstanding the above, the amounts payable by the Division to UTGR related to

the Marketing Program shall be paid on a frequency agreed by the Division, but no less

frequently than annually.

      (c) Notwithstanding anything in this chapter 61.2 of this title 42 to the contrary, the

Director is authorized to fund the Marketing Program as described above in regard to the First

Amendment to the UTGR Master Contract.

      (d) Notwithstanding the above, the amounts payable by the Division to Newport Grand

related to the Marketing Program shall be paid on a frequency agreed by the Division, but no less

frequently than annually.

      (e) Notwithstanding anything in this chapter 61.2 of this title 42 to the contrary, the

Director is authorized to fund the Marketing Program as described above in regard to the First

Amendment to the Newport Grand Master Contract.

      (f) Notwithstanding the provisions of section 42-61-15, the allocation of Net Table Game

Revenue derived from Table Games at Twin River is as follows:

      (1) For deposit into the state lottery fund for administrative purposes and then the

balance remaining into the general fund:

      (i) Sixteen percent (16%) of Net Table Game Revenue, except as provided in subsection

(f)(1)(ii);

      (ii) An additional two percent (2%) of Net Table Game Revenue generated at Twin

River shall be allocated starting from the commencement of Table Game activities by such Table

Game Retailer, and ending, with respect to such Table Game Retailer, on the first date that such

Table Game Retailer's net terminal income for a full State fiscal year is less than such Table

Game Retailer's net terminal income for the prior State fiscal year, at which point this additional

allocation to the State shall no longer apply to such Table Game Retailer.

      (2) To UTGR, Net Table Game Revenue not otherwise disbursed pursuant to above

subsection (f)(1); provided, however, on the first date that such Table Game Retailer's net

terminal income for a full State fiscal year is less than such Table Game Retailer's net terminal

income for the prior State fiscal year, as set forth in subsection (f)(1)(ii) above, one percent (1%)

of this Net Table Game Revenue shall be allocated to the town of Lincoln for four (4) consecutive

State fiscal years.

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      (g) Notwithstanding the provisions of section 42-61-15, the allocation of Net Table

Game Revenue derived from Table Games at Newport Grand is as follows:

      (1) For deposit into the state lottery fund for administrative purposes and then the

balance remaining into the general fund: eighteen percent (18%) of Net Table Game Revenue.

      (2) To Newport Grand LLC, Net Table Game Revenue not otherwise disbursed pursuant

to above subsection (g)(1) provided, however, on the first date that such Table Game Retailer's

net terminal income for a full State fiscal year is less than such Table Game Retailer's net

terminal income for the prior State fiscal year, one percent (1%) of this Net Table Game Revenue

shall be allocated to the city of Newport for four (4) consecutive State fiscal years.

     SECTION 2. Pursuant to Article VI, section 22 of the Rhode Island Constitution, the

following question shall be submitted by the secretary of state to the qualified electors of the state

at the statewide general election to be held in November of 2014, and the secretary of state shall

certify the election results:

     "Shall an act be approved which would authorize the facility known as 'Newport Grand'

in the city of Newport to add state-operated casino gaming, such as table games, to the types of

gambling it offers only and exclusively at the facility located at 150 Admiral Kalbfus Road,

Newport?"

     SECTION 3. Pursuant to Article VI, section 22 of the Rhode Island Constitution, the

following question shall be submitted by the local board of canvassers to the qualified electors of

the city of Newport at the statewide general election to be held in November of 2014, and the

results thereof shall be certified to the secretary of state:

     "Shall an act be approved which would authorize the facility known as 'Newport Grand'

in the city of Newport to add state-operated casino gaming, such as table games, to the types of

gambling it offers only and exclusively at the facility located at 150 Admiral Kalbfus Road,

Newport?"

     SECTION 4. Unless otherwise amended by this act, the terms, conditions, provisions,

and definitions of chapters 322 and 323 of the public laws of 2005 and chapter 16 of the public

laws of 2010 are hereby incorporated herein by reference and shall remain in full force and effect.

     SECTION 5. The question, to be submitted to the qualified electors relating to the

expansion of gaming at Newport Grand, shall appear on the ballots as the first referendum

question. The question to be submitted to the qualified electors relating to the amendment to the

Rhode Island Constitution regarding the location of gambling in a municipality shall appear on

the ballots as the second referendum question.

     SECTION 6. This act shall take effect upon passage. Provided, the provisions of Section

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1 of this act shall remain in effect only if the question submitted to the voters at the general

election to be held in November of 2014 relating to the expansion of gaming at Newport Grand is

approved by a majority of the electors voting both statewide and in the city of Newport, and if the

amendment to the Rhode Island Constitution regarding the location of gambling in a municipality

submitted to the voters in the same election is approved by a majority to the electors voting

statewide. In the event either or both questions does not receive sufficient voter approval to take

effect, then the provisions of Section 1 of this act shall be repealed upon the certification by the

Secretary of State of the results of said votes.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO STATE AFFAIRS AND GOVERNMENT -- AUTHORIZING STATE-

OPERATED CASINO GAMING AT NEWPORT GRAND SUBJECT TO STATEWIDE AND

LOCAL VOTER APPROVAL

***

     This act would authorize a voter referendum on the approval of state-operated casino

gaming at the Newport Grand facility. Such referendum would take place at the statewide

general election to be held in November of 2014. Such expansion could only take place if, in

addition to state and local voter approval of the referendum, there was also statewide voter

approval of a constitutional amendment dealing with changes in the location of where gambling is

permitted in any city or town. The act would also amend the allocation of net terminal income of

authorized video lottery terminals at Newport Grand, if both measures pass.

     This act would take effect upon passage. Provided, the provisions of Section 1 of this act

would remain in effect only if the question submitted to the voters at the general election to be

held in November of 2014 relating to the expansion of gaming at Newport Grand is approved by

a majority of the electors voting both statewide and in the city of Newport, and if the amendment

to the Rhode Island Constitution regarding the location of gambling in a municipality submitted

to the voters in the same election, is approved by a majority of the electors voting statewide. In

the event either or both questions does not receive sufficient voter approval to take effect, then

the provisions of Section 1 of this act would be repealed upon the certification by the Secretary of

State of the results of said votes.

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