2019 -- H 6266

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LC002933

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2019

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A N   A C T

ENABLING THE STATE LOTTERY DIVISION OF THE DEPARTMENT OF REVENUE TO

CONTRACT WITH IGT GLOBAL SOLUTIONS CORPORATION

     

     Introduced By: Representatives Mattiello, Shekarchi, Kennedy, Abney, and Edwards

     Date Introduced: June 28, 2019

     Referred To: House Finance

     (Governor)

It is enacted by the General Assembly as follows:

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     SECTION 1. Purpose. The purpose of this Act is to authorize the State Lottery Division

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of the Department of Revenue (the "Division") to agree to an extension of the Division's

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partnership with IGT Global Solutions Corporation, a Delaware corporation ("IGT"), including

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the continuance of a significant presence in the State. This Act shall be liberally construed to

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effectuate its purposes.

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     SECTION 2. Authorization and Empowerment of State Lottery Division.

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Notwithstanding any provisions of the general laws of the State or regulations adopted thereunder

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to the contrary, including, but not limited to, the provisions of Chapter 2 of Title 37, Chapter 61

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of Title 42, Chapter 64 of Title 42 and Chapter 148 of Title 42, the Division is hereby authorized

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and empowered to enter into an amendment (the "Master Contract Amendment") to the Master

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Contract dated as of May 12, 2003 by and between the Division and IGT, as amended (authorized

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pursuant to Chapter 33 of the 2003 Public Laws) (the "Master Contract"), which would extend the

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term of the Master Contract by twenty (20) years to June 30, 2043 and would, among other

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matters:

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     (i) Extend the term of the On Line Gaming Agreement dated as of January 29, 1997

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between IGT and the Division, as amended (including, without limitation, by Section 11 of the

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Master Contract) (the "On Line Lottery Agreement"), for an additional twenty (20) years to June

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30, 2043;

 

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     (ii) Extend the term of the Video Lottery Central Computer System Agreement dated as

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of December 20, 2001 between IGT and the Division, as amended (including, without limitation,

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by Section 12 of the Master Contract) (the "Video Lottery Agreement"), for an additional twenty

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(20) years to June 30, 2043;

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     (iii) Extend the term of the Video Lottery Terminal Technology Provider License

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Agreement dated as of September 28, 2000 between IGT and the Division, as amended

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(including, without limitation, by Section 13 of the Master Contract) (the "VLT Agreement"), for

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an additional twenty (20) years to June 30, 2043;

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     (iv) Extend the term of the Instant Ticket Vending Machine Agreement dated October 21,

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1999 between IGT and the Division and IGT (the "Instant Ticket Vending Machine Agreement"),

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as amended (including, without limitation, pursuant to Section 8.2 of the Master Contract), for an

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additional twenty (20) years to June 30, 2043;

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     (v) Extend the term of the Instant Ticket Agreement dated as of June 30, 2016 between

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the Division and IGT (the "Instant Ticket Agreement"), as amended, for twenty (20) years to June

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30, 2043;

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     (vi) Extend the term of the Website Services Agreement dated as of January 9, 2019

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between the Division and IGT (the "Website Services Agreement") for twenty (20) years to June

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30, 2043;

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     (vii) Provide for the purchase by IGT from the Division for the price of $25,000,000

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($12,500,000 of which shall be paid on or before June 30, 2021 and $12,500,000 of which shall

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be paid on or before June 30, 2022) the right to be (A) the exclusive provider to the Division of

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products and services pertaining to:

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     (1) Online lottery systems, on line lottery terminals and related equipment;

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     (2) Central communication systems (as defined in Section 42-61.2-1 of the general laws);

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     (3) Instant ticket vending machines;

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     (4) Instant tickets; and

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     (5) The processing of on line, instant ticket and video lottery transactions; and

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     (B) The exclusive provider to the Division of the number of video lottery terminals (as

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defined in Section 42-61.2-1 of the general laws) currently provided to the Division until the date

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which is the later of the date which is two (2) years following the effective date of the Master

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Contract Amendment and June 30, 2021;

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     (viii) Provide that (A) the rates pursuant to which the Division compensates IGT pursuant

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to the On Line Lottery Agreement shall be as follows:

 

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     Annual Sales Rate

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     Sales to $275 million 5.00%

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     Sales from above $275 million to $400 million 4.00%

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     Sales above $400 million 5.00%

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and (B) the rates pursuant to which the Division compensates IGT pursuant to the Video Lottery

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Agreement, the VLT Agreement, the Instant Ticket Vending Machine Agreement, the Instant

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Ticket Agreement and the Website Services Agreement shall remain unchanged;

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     (ix) Obligate IGT to, among other matters:

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     (A) Invest or cause to be invested by an Affiliate or an Eligible Third Party in the

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aggregate at least $150,000,000 in the State (the "Investment Obligation") in connection with

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acquiring interests in real property, improving real property and performing its obligations under

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the Master Contract, as amended by the Master Contract Amendment (the "Amended Master

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Contract"), including, without limitation, the provision of goods in connection with the business

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operations of IGT or any Affiliate in the State (the "Investment Obligation Assets");

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     (B) Employ, cause to be employed by an Affiliate or cause to be self-employed in the

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State during each calendar year commencing with 2019 at least 1,100 full time equivalent

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employees at compensation rates not less than 150% of the minimum wage in effect from time to

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time pursuant to Section 28-12-3 of the general laws (the "Employment Obligation");

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     (C) Assume responsibility for the lottery related activities performed by lottery sales

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representatives currently employed by the Division from the Division and in connection therewith

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offer employment to such lottery sales representatives; and

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     (D) Grant the Division the option to make proposals to IGT that IGT locate in the State

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certain employees not located in the State (the "Employee Location Obligation");

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     (x) Grant the Division the right to terminate the Amended Master Contract if (i) IGT fails

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to perform the Investment Obligation, (ii) IGT fails to perform the Employment Obligation, or

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(iii) IGT fails to perform the Employee Location Obligation in addition to any rights the Division

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has to terminate the Video Lottery Agreement, the VLT Agreement, the Instant Ticket Vending

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Machine Agreement, the Instant Ticket Agreement and the Website Services Agreement; and

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     (xi) Contain such other terms and conditions as the Division and IGT may agree.

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     As used in this Section 2:

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     (1) "Affiliate" means a Person that directly, or indirectly through one or more

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intermediaries, Controls, is Controlled by or is under common Control with IGT.

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     (2) "Control" means the possession, directly or indirectly, of the power to direct or cause

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the direction of the management and policies of a Person, whether through the ownership of

 

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voting securities, by contract or otherwise.

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     (3) "Eligible Third Party" means any Person which (acting jointly with IGT or at the

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direction of IGT) owns, leases or finances any of the Investment Obligation Assets.

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     (4) "Person" means a natural person, corporation, limited liability company, partnership

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(general or limited), joint venture, estate, trust or unincorporated association, any federal, state,

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county, or municipal government or any bureau, department or agency thereof, any fiduciary

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acting in such capacity, on behalf of any of the foregoing, or any other legal or business entity or

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organization.

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     SECTION 3. Section 42-61.2-1(2) of the General Laws in Chapter 42-61.2 entitled

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"Video-Lottery Games, Table Games and Sports Wagering" is hereby amended to read as

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follows:

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     (2) "Central communication system" means a system approved by the lottery division,

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linking all video-lottery machines terminals at a licensee licensed, video lottery retailer location

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to provide auditing program information and any other information determined by the lottery

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division. In addition, the central communications system must provide all computer hardware and

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related software necessary for the establishment and implementation of a comprehensive system

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as required by the lottery division. The central communications licensee may provide a maximum

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of fifty percent (50%) eighty five percent (85%) of the video-lottery terminals.

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     SECTION 4. Additional Provisions. The Master Contract Amendment shall also include

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provisions that require IGT to regularly update hardware and software; annually replace a

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minimum of six percent of video-lottery terminals; maintain a minimum of five percent of video-

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lottery terminals as premium or royalty games with games performing at less than one hundred

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fifty percent (150%) of floor average for any calendar year subject to review by the Division for

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replacement or modification; and abide by enforceable performance standards that require a

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reduction of the percent of video-lottery terminals in the event that IGT’s efficiency rating falls

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below the contractually obligated level of ninety-seven percent. In addition, all vendor fees shall

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be net of twenty percent (20%) promotional points.

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     SECTION 5. Inconsistencies. Insofar as the provisions of this Act are inconsistent with

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the provisions of any other general or special law of the State, the provisions of this Act shall

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control.

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     SECTION 6. Agreement. The State and IGT agree that the provisions of this Act are not

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intended to modify in any way the relative rights and obligations of the Division and IGT under

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the Master Contract Amendment.

 

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     SECTION 7. Effectiveness. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

ENABLING THE STATE LOTTERY DIVISION OF THE DEPARTMENT OF REVENUE TO

CONTRACT WITH IGT GLOBAL SOLUTIONS CORPORATION

***

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     This act would enable the state lottery division of the department of revenue to enter into

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a contract extension with IGT Global Solutions Corporation.

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     This act would take effect upon passage.

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