2012 -- S 3001

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LC02714

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STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2012

____________

A N A C T

RELATING TO REVENUE PROTECTION

     Introduced By: Senators Goodwin, Bates, and Felag

     Date Introduced: May 24, 2012

     Referred To: Senate Finance

It is enacted by the General Assembly as follows:

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     SECTION 1. Purpose. The general assembly hereby finds that:

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     (a) The Twin River facility located in the Town of Lincoln (“Twin River”) is an

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important source of revenue for the state of Rhode Island, having been licensed by the Rhode

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Island Department of Business Regulation to conduct pari-mutuel wagering, and at which the

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Division (as defined herein) operates games of the Rhode Island Lottery.

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     (b) The Newport Grand facility located in the City of Newport (“Newport Grand”) is an

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important source of revenue for the state of Rhode Island, having been licensed by the Rhode

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Island Department of Business Regulation to conduct pari-mutuel wagering, and at which the

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Division (as defined herein) operates games of the Rhode Island Lottery.

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     (c) In a study commissioned by the Rhode Island Department of Revenue, Christiansen

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Capital Advisors, LLC anticipated that competition from gaming facilities recently authorized in

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Massachusetts could have a 25-40% negative impact on state revenues generated from state-

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operated gaming in Rhode Island, amounting to losses to the state of one hundred million dollars

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($100,000,000) or more in annual revenue.

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     (d) Revenues generated from state-operated gaming in Rhode Island constitute the third

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largest source of revenue to the state, behind only revenue generated from income taxes and sales

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and use taxes.

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     (e) Accordingly, competition from gaming facilities in Massachusetts present an

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imminent threat to revenues generated by the state, and thus an imminent threat to the public

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welfare.

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     (f) It is therefore imperative that action be taken to ameliorate the anticipated adverse

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effects on state revenues from competition from gaming facilities recently authorized in

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Massachusetts.

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     (g) It is also imperative that action be taken to preserve and protect the state’s ability to

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maximize revenues at Twin River and Newport Grand in an increasingly competitive gaming

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market by expanding critical revenue-driving promotional programs through legislative

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authorization and necessary amendments to contracts, previously authorized by the General

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Assembly, to position the promotional programs for long-term success.

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     (h) It is also in the best interest of the state to preserve public confidence in the integrity

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of Rhode Island gaming by authorizing the Division to promulgate regulations to direct and

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control state-operated Table Gaming (as defined herein).

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     (i) It is the intent of the general assembly that this act address, independently: (1) Section

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8 of Chapter 151, Article 25 of the Public Laws of 2011 authorizing a referendum question to be

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submitted to statewide and Town of Lincoln voters at the next general election asking such voters

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to approve Casino Gaming (as defined therein) at Twin River; and (2) Section 1 of Chapters 24

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and 25 of the Public Laws of 2012 authorizing a referendum question to be submitted to statewide

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and City of Newport voters at the next general election asking such voters to approve Casino

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Gaming at Newport Grand; it being the intent of the General Assembly that the voters’ actions on

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the referendum questions as to Twin River be independent of the voters’ actions on the

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referendum questions as to Newport Grand.

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     (j) It is also the intent of the general assembly that this act satisfies the general assembly’s

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obligations pursuant to §§ 42-61.2-2.1(b)(4) and 42-61.2-2.2(b)(4) of the Rhode Island General

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Laws.

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     (k) It is also the intent of the general assembly that this act, being necessary to address an

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imminent threat to the public welfare, as aforesaid, shall be liberally construed so as to effectuate

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its purposes, including without limitation, the state’s attempt to minimize certain commercial

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risks faced by UTGR (as defined herein) and Newport Grand, LLC (as defined herein) as a result

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of entering into agreements with the Division.

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     SECTION 2. Definitions. (a) For the purposes of this act, the following terms shall have

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the following meanings:

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     (1) "Division" means the division of lotteries within the department of revenue and/ or

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any successor as party to the UTGR Master Contract, the Newport Grand Master Contract and the

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GTECH Master Contract.

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     (2) "Equipment Vendor" means GTECH Corporation, a Delaware corporation

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(“GTECH”), party to the GTECH Master Contract authorized pursuant to Chapters 32 and 33 of

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the Public Laws of 2003.

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     (3) "GTECH Master Contract" means that certain Master Contract made as of May 12,

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2003 pursuant to Chapters 32 and 33 of the Public Laws of 2003, as amended from time to time.

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     (4) "Initial Promotional Points Program" means that promotional points program

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authorized in Section 4(a)(ii) of Part A as to Twin River and Part B as to Newport Grand of

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Chapter 16 of the Public Laws of 2010, as amended by Section 8 of Chapter 151, Article 25 of

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the Public Laws of 2011.

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     (5) "Newport Grand, LLC" means that limited liability company defined in Chapter 16 of

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the Public Laws of 2010, Part B, Section 2(l).

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     (6) "Newport Grand Master Contract" means that certain Master Video Lottery Terminal

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Master Contract made as of November 23, 2005 by and between the Division and Newport Grand

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Jai Alai, LLC, as amended from time to time.

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     (7) "Prior Marketing Year" means the prior state fiscal year.

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     (8) "Promotional Points" means the promotional points issued pursuant to any free play

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or other promotional program operated by the Division at a licensed video lottery terminal facility

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(including, without limitation, the promotional points programs at Twin River and Newport

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Grand authorized pursuant to Chapter 16 of the Public Laws of 2010, Part A as to Twin River and

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Part B as to Newport Grand, Section 4(a)(ii), Chapter 151, Article 25 of the Public Laws of 2011,

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Section 8(a)(i)), and Section 8 hereof as to Twin River and Section 9 hereof as to Newport Grand,

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which are downloaded to a video lottery terminal by a player.

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     (9) "Supplementary Promotional Points Program" means that promotional points program

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authorized in Section 8 hereof as to Twin River and Section 9 hereof as to Newport Grand.

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     (10) “UTGR” means that corporation defined in Chapter 16 of the Public Laws of 2010,

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Part A, Section 2(n).

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     (11) "UTGR Master Contract" means that certain Master Video Lottery Terminal

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Contract made as of July 18, 2005 by and between the Division, the Department of

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Transportation and UTGR, as amended from time to time.

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     SECTION 3. Except as otherwise amended by this act, the terms, conditions, provisions

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and definitions of Chapters 32 and 33 of the Public Laws of 2003, Chapters 322 and 323 of the

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Public Laws of 2005, Chapter 16 of the Public Laws 2010, Chapter 151, Article 25 of the Public

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Laws of 2011 and Chapter 24 and 25 of the Public Laws of 2012 are hereby incorporated by

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reference and shall remain in full force and effect.

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     SECTION 4. Sections 42-61.2-1 and 42-61.2-7 of the General Laws in Chapter 42-61.2

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

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     42-61.2-1. Definitions. [Effective until June 30, 2009.] -- For the purpose of this

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chapter, the following words shall mean:

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

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linking all video lottery machines at a licensee location to provide auditing program information

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and any other information determined by the lottery. In addition, the central communications

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system must provide all computer hardware and related software necessary for the establishment

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and implementation of a comprehensive system as required by the division. The central

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communications licensee may provide a maximum of fifty percent (50%) of the video lottery

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terminals.

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      (2) "Licensed video lottery retailer" means a pari-mutuel licensee specifically licensed

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by the director subject to the approval of the division to become a licensed video lottery retailer.

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      (3) "Net terminal income" means currency placed into a video lottery terminal less

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credits redeemed for cash by players.

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      (4) "Pari-mutuel licensee" means an entity licensed and authorized to conduct:

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      (i) Dog racing, pursuant to chapter 3.1 of title 41; and/or

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      (ii) Jai-alai games, pursuant to chapter 7 of title 41.

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      (5) "Technology provider" means any individual, partnership, corporation, or association

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that designs, manufactures, installs, operates, distributes or supplies video lottery machines or

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associated equipment for the sale or use in this state.

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      (6) "Video lottery games" means lottery games played on video lottery terminals

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controlled by the lottery division.

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      (7) "Video lottery terminal" means any electronic computerized video game machine

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that, upon the insertion of cash, is available to play a video game authorized by the lottery

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division, and which uses a video display and microprocessors in which, by chance, the player

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may receive free games or credits that can be redeemed for cash. The term does not include a

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machine that directly dispenses coins, cash, or tokens.

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     42-61.2-1. Definitions. [Effective June 30, 2009.] -- For the purpose of this chapter, the

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following words shall mean:

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

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linking all video lottery machines at a licensee location to provide auditing program information

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and any other information determined by the lottery. In addition, the central communications

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system must provide all computer hardware and related software necessary for the establishment

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and implementation of a comprehensive system as required by the division. The central

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communications licensee may provide a maximum of fifty percent (50%) of the video lottery

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terminals.

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      (2) "Licensed video lottery retailer" means a pari-mutuel licensee specifically licensed

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by the director subject to the approval of the division to become a licensed video lottery retailer.

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      (3) "Net terminal income" means currency placed into a video lottery terminal less

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credits redeemed for cash by players.

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      (4) "Pari-mutuel licensee" means an entity licensed and authorized to conduct:

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      (i) Dog racing, pursuant to chapter 3.1 of title 41; and/or

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      (ii) Jai-alai games, pursuant to chapter 7 of title 41.

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      (5) "Technology provider" means any individual, partnership, corporation, or association

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that designs, manufactures, installs, operates, distributes or supplies video lottery machines or

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associated equipment for the sale or use in this state.

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      (6) "Video lottery games" means lottery games played on video lottery terminals

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controlled by the lottery division.

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      (7) "Video lottery terminal" means any electronic computerized video game machine

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that, upon the insertion of cash, is available to play a video game authorized by the lottery

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division, and which uses a video display and microprocessors in which, by chance, the player

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may receive free games or credits that can be redeemed for cash. The term does not include a

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machine that directly dispenses coins, cash, or tokens.

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      (8) "Casino gaming" means any and all table and casino-style games played with cards,

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dice or equipment, for money, credit, or any representative of value; including, but not limited to

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roulette, blackjack, big six, craps, poker, baccarat, paigow, any banking or percentage game, or

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any other game of device included within the definition of Class III gaming as that term is

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defined in Section 2703(8) of Title 25 of the United States Code and which is approved by the

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state through the division of state lottery.

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     (9) "Net Table Game Revenue" means win from Table Games minus counterfeit

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currency.

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     (10) "Rake" means a set fee or percentage of cash and chips representing cash wagered in

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the playing of a nonbanking Table Game assessed by a Table Game Retailer for providing the

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services of a dealer, gaming table or location, to allow the play or operation of any nonbanking

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Table Game.

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     (11) “Table Game” or “Table Gaming” means that type of Casino Gaming in which table

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games are played for cash or chips representing cash, using cards, dice or equipment and operated

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by one or more live persons.

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     (12) "Table Game Retailer" means a retailer authorized to conduct Table Gaming

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pursuant to §§ 42-61.2-2.1 and 42-61.2-2.2 of the Rhode Island General Laws.

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

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

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games is as follows:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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hundred fifty-eight dollars ($784,458) of the total appropriation shall be distributed equally to

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each qualifying distressed community.

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

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

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

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

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

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less than the prior fiscal year.

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

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

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

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

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

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

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

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

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

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

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

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funding shall be determined by appropriation.

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      (2) To the licensed video lottery retailer:

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

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

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($384,996);

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

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

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

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($384,996).

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     (iii) Effective July 1, 2013, provided that the referendum measure authorized by Section

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1 of Chapters 24 and 25 of the Public Laws of 2012 is approved statewide and in the City of

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Newport and provided further that Newport Grand commences and continues the operation of

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table games, the rate of net terminal income payable to Newport Grand, LLC under the Newport

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Grand Master Contract shall increase by one and one half percent (1.5%).

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

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

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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);

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

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

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

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($767,687).

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

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

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

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

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

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

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

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

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proprietary content at its licensed video lottery facility;

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

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

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competiveness of the licensed video lottery retailer;

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

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

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

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and

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

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

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

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

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

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

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

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

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

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

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income of authorized machines at Newport Grand, except that:

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     (i) Effective November 9, 2009 until June 30, 2012 2013, the allocation shall be one and

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

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

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eligible hours authorized, and

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

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of Chapters 24 and 25 of the Public Laws of 2012 is approved statewide and in the City of

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

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income of authorized video lottery terminals at Newport Grand; and

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

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terminal income of authorized machines at Lincoln Park Twin River except that,

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     (i) Effective November 9, 2009 until June 30, 2012 2013, the allocation shall be one and

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forty-five hundredths percent (1.45%) of net terminal income of authorized machines at Lincoln

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Park Twin River for each week the facility operates video lottery games are offered on a twenty-

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four (24) hour basis for all eligible hours authorized, and

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

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

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

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income of authorized video lottery terminals at Twin River; and

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

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

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

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

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

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

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

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

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

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debts; and

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

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

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

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

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

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

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frequently than annually.

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

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

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Amendment to the UTGR Master Contract.

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

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

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frequently than annually.

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

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

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Amendment to the Newport Grand Master Contract.

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

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

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

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purposes:

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

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(f)(1)(ii);

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

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

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

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

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

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

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

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subsection (f)(1).

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

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

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

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purposes:

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     (i) Eighteen percent (18%) of Net Table Game Revenue, except as provided in subsection

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(f)(1)(ii);

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

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to above subsection (g)(1).

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     SECTION 5. Chapter 42-61.2 of the General Laws entitled "Video Lottery Terminal" is

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hereby amended by adding thereto the following section:

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     42-61.2-3.1. Table game regulation. – (a) In addition to the powers and duties of the

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Division director under Sections 42-61-4, 42-61.2-3 and 42-61.2-4, and pursuant to § 42-61.2-2.1

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and § 42-61.2-2.2, the Division director shall promulgate reasonable rules and regulations relating

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to state-operated Table Gaming and set policy for these Table Games. These rules and regulations

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shall include, but not be limited to:

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     (1) Establishing standards and procedures for Table Gaming and associated equipment.

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(2) Establishing standards, rules and regulations to govern the conduct of Table Games and the

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system of wagering associated with Table Games, including without limitation:

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     (i) The object of the Table Game and method of play, including what constitutes win, loss

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or tie bets;

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     (ii) Physical characteristics of the Table Games and Table Game equipment;

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     (iii) Wager and payout odds for each type of available wager;

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     (iv) The applicable inspection procedures for any of the following, as required by a Table

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Game:

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     (A) Cards;

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     (B) Dice; and

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     (C) Wheels and balls.

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      (v) Procedures for the collection of bets and payouts, including requirements for internal

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revenue service purposes;

11-111

     (vi) Procedures for handling suspected cheating or Table Gaming irregularities;

11-112

     (vii) Procedures for handling any defective or malfunctioning Table Game equipment.

11-113

     (3) Establishing the method for calculating Net Table Game Revenue and standards for

11-114

the daily counting and recording of cash received in the conduct of Table Games, and ensuring

11-115

that internal controls are followed, including the maintenance of financial books and records and

11-116

the conduct of annual audits.

11-117

     (4) Establishing the number and type of Table Games authorized at a Table Game

11-118

Retailer’s facility, and all rules related thereto.

11-119

     (5) Establishing any Table Game rule changes, Table Game minimum and maximum

11-120

wager changes, and changes to the type of Table Game being offered at a particular gaming table,

11-121

including any notice by the Table Game Retailer to the public.

11-122

     (6) Requiring the Table Game Retailer to:

11-123

     (i) Provide written information at each Table Game about game rules, payoffs or winning

11-124

wagers and other information as the Division may require.

11-125

     (ii) Provide specifications approved by the Division to integrate and update the Table

11-126

Game Retailer’s surveillance system to cover all areas where Table Games are conducted. The

11-127

specifications shall include provisions providing the Division and other persons authorized by the

11-128

Division with onsite access to the system.

11-129

      (iii) Designate one or more locations within the Table Game Retailer’s facility to

11-130

conduct Table Games.

11-131

     (iv) Ensure that visibility in a Table Game Retailer’s facility is not obstructed in any way

11-132

that could interfere with the ability of the Division, the Table Game Retailer or other persons

11-133

authorized under this section or by the Division to oversee the surveillance of the conduct of

11-134

Table Games.

11-135

     (v) Ensure that the count room for Table Gaming has appropriate security for the

11-136

counting and storage of cash.

12-1

     (vi) Furnish each Table Game with a sign indicating the permissible minimum and

12-2

maximum wagers at the Table Game.

12-3

     (vii) Adopt policies or procedures to prohibit any Table Game equipment from being

12-4

possessed, maintained or exhibited by any person on the premises of a Table Game Retailer’s

12-5

facility except in the areas of such facility where the conduct of Table Games is authorized or in a

12-6

restricted area designated to be used for the inspection, service, repair or storage of Table Game

12-7

equipment by the Table Game Retailer or in an area used for employee training and instruction by

12-8

the Table Game Retailer.

12-9

     (viii) Ensure that drop boxes are brought into or removed from an area where Table

12-10

Games are conducted or locked or unlocked in accordance with procedures established by the

12-11

Division.

12-12

     (ix) Designate secure locations for the inspection, service, repair or storage of Table

12-13

Game equipment and for employee training and instruction to be approved by the Division.

12-14

     (7) Establishing the size and uniform color by denomination of Table Game chips used in

12-15

the conduct of Table Games, including tournaments, and a policy for the use of promotional or

12-16

commemorative chips used in the conduct of certain Table Games. All types of Table Game chips

12-17

shall be approved by the Division prior to being used for play at a Table Game.

12-18

     (8) Establishing the procedure to be used by a Table Game Retailer to determine and

12-19

extract a Rake for the purposes of generating Net Table Game Revenue from nonbanking games.

12-20

     (9) Establishing minimum standards relating to the acceptance of tips or gratuities by

12-21

dealers at a Table Game, which shall include:

12-22

     (i) The requirement that tips or gratuities accepted by dealers at banking Table Games be

12-23

placed in a common pool for complete distribution pro rata among all dealers based on the daily

12-24

collection of such tips or gratuities; provided however, the Division may establish an alternative

12-25

distribution method for tips or gratuities at a banking Table Game upon submission by the Table

12-26

Game Retailer of a proposal to modify the existing distribution method for tips or gratuities.

12-27

     (ii) The requirement that tips or gratuities accepted by dealers at nonbanking Table

12-28

Games are not required to be pooled and may be retained by the dealers; provided however, the

12-29

Division may establish an alternative distribution method for tips or gratuities at a nonbanking

12-30

Table Game upon submission by the Table Game Retailer of a proposal to modify the existing

12-31

distribution method for tips or gratuities.

12-32

     (10) Establishing the minimal proficiency requirements for Table Game personnel,

12-33

including without limitation Table Game dealers. The foregoing requirements of this subsection

12-34

(10) shall not affect any rules or regulations of the Rhode Island Department of Business

13-1

Regulation requiring licensing of personnel of state-operated gaming facilities.

13-2

     (11) Establishing the practices and procedures governing the conduct of Table Game

13-3

tournaments.

13-4

     (12) Establishing appropriate eligibility requirements and standards for traditional Table

13-5

Game equipment suppliers.

13-6

     (13) Any other matters necessary for conducting Tables Games.

13-7

     (b) The Division shall promulgate the Table Game regulations authorized by this section

13-8

on or before March 31, 2013.

13-9

     SECTION 6. Sections 42-61.2-5, 42-61.2-8 and 42-61.2-12 of the General Laws in

13-10

Chapter 42-61.2 entitled "Video Lottery Terminal" are hereby amended to read as follows.

13-11

     42-61.2-5. Exclusion of minors. -- No person under the age of eighteen (18) years may

13-12

play a video lottery game or a Table Game authorized by this chapter, nor shall any licensed

13-13

video lottery or Table Game retailer knowingly permit a minor to play a video lottery machine or

13-14

Table Game or knowingly pay a minor with respect to a video lottery credit slip or Table Game

13-15

chip. Violation of this section shall be punishable by a fine of five hundred dollars ($500).

13-16

     42-61.2-8. Penalty for manipulation or tampering. -- Any person who, with intent to

13-17

manipulate the outcome, payoff, and/or operation of a video lottery terminal or Table Game,

13-18

manipulates the outcome, prize, or operation of a video lottery terminal or Table Game by

13-19

physical or electronic means shall be guilty of a felony punishable by imprisonment for not more

13-20

than ten (10) years or by a fine of not less than ten thousand ($10,000) dollars or both.

13-21

     42-61.2-12. Video lottery terminal prize -- Set-off for child support debts Prize --

13-22

Set-off for child support debts. -- Notwithstanding the provisions of section 42-61-7 relating to

13-23

assignment of prizes, the following set off provisions shall apply to the payment of any prize

13-24

requiring the issuance of Internal Revenue Service Form W-2G by a video lottery retailer

13-25

(whether or not a Table Game Retailer) to a patron:

13-26

      (1) With respect to a person entitled to receive the prize who has an unpaid child support

13-27

order(s) arrearage(s) in excess of five hundred dollars ($500), as provided by the department of

13-28

human services pursuant to subsection 42-61-7.1(3), the division of state lottery:

13-29

      (i) Shall establish rules and regulations pursuant to section 42-61.2-3 and section 42-

13-30

61.2-3.1) providing for the establishment and operation of a system whereby the division of state

13-31

lottery shall have the ability to communicate such information to video lottery retailers so as to

13-32

identify a person entitled to receive a prize requiring the issuance of Internal Revenue Service

13-33

Form W-2G who has an unpaid child support order(s) arrearage(s).

14-34

      (ii) Upon receipt of information indicating an unpaid child support arrearage the video

14-35

lottery retailer shall set off against the amount due to that person an amount up to the balance of

14-36

the child support arrearage(s). The video lottery retailer shall then make payment as prescribed by

14-37

the division of lottery to the Rhode Island family court in the case of child support arrearage(s)

14-38

which shall deposit the amount set off into the registry of the family court for a period of forty-

14-39

five (45) days, or if any application for review has been filed pursuant to subsection 27-57-1(d),

14-40

until final disposition of the application until further order of the court.

14-41

      (iii) The video lottery retailer shall pay to this person the remaining balance of the prize

14-42

amount, if any, after reduction of the amount set off above for child support.

14-43

      (2) The division of lottery, the lottery director and the video lottery retailer shall be

14-44

discharged of all further liability upon payment of a prize pursuant to this section. Except in the

14-45

case of gross negligence, the division of lottery, the lottery director and the video lottery retailer

14-46

shall not be liable to any party or person for failure to make such a set-off.

14-47

      (3) The department of human services shall periodically within each year furnish the

14-48

director with a list or compilation of names of individuals, together with any other identifying

14-49

information and in a form that the director shall require, who as of the date of the list or

14-50

compilation, have an unpaid child support order arrearage in excess of five hundred dollars

14-51

($500) as shown on the Rhode Island family court decrees department of human services child

14-52

support enforcement computer system ("CSE system"). For the purposes of this section, the terms

14-53

used in this section shall be given the meaning and definitions specified in section 15-16-2.

14-54

      (4) Any party aggrieved by any action taken under this section may within thirty (30)

14-55

days of the withholding of the payment by the lottery director seek judicial review in the family

14-56

court, which may, in its discretion, issue a temporary order prohibiting the disbursement of funds

14-57

under this section, pending final adjudication.

14-58

      (5) Notwithstanding any other general or special law to the contrary, this section shall

14-59

apply to all existing gambling facilities within the state as of the time of enactment and also to

14-60

any gambling facility within this state which is established after the date of enactment.

14-61

     SECTION 7. Chapter 42-61.2 of the General Laws entitled "Video Lottery Terminal" is

14-62

hereby amended by adding thereto the following sections:

14-63

     42-61.2-13. Table game enforcement. – (a) Whoever violates sections 42-61.2-2.1 or

14-64

42-61.2-3.1, or any rule or regulation, policy or procedure, duly promulgated thereunder, or any

14-65

administrative order issued pursuant to sections 42-61.2-2.1 or 42-61.2-3.1, shall be punishable as

14-66

follows:

14-67

     (1) In the Division director's discretion, the Division director may impose an

14-68

administrative penalty of not more than $1,000 for each violation. Each day of continued

15-1

violation shall be considered as a separate violation if the violator has knowledge of the facts

15-2

constituting the violation and knows or should know that such facts constitute or may constitute a

15-3

violation. Lack of knowledge regarding such facts or violation shall not be a defense to a

15-4

continued violation with respect to the first day of its occurrence. Written notice detailing the

15-5

nature of the violation, the penalty amount, and effective date of the penalty will be provided by

15-6

the Division director. Penalties shall take effect upon notification. A written request for a hearing

15-7

must be submitted in writing to the Division director within 30 days of notification of violation.

15-8

     (2)(a) In the Division director's discretion, the Division director may endeavor to obtain

15-9

compliance with requirements of this chapter by written administrative order. Such order shall be

15-10

provided to the responsible party, shall specify the complaint, and propose a time for correction

15-11

of the violation.

15-12

     (b) The Division director shall enforce this chapter.

15-13

     (c) Any interest, costs or expense collected under this section shall be appropriated to the

15-14

Division for administrative purposes.

15-15

     (d) Any penalty imposed by the Division pursuant to this Section 42-61.2-13 shall be

15-16

appealable to Superior Court.

15-17

     42-61.2-14. Compulsive and problem gambling program. – The Division and the State

15-18

acknowledge that the vast majority of gaming patrons can enjoy gambling games responsibly, but

15-19

that there are certain societal costs associated with gaming by some individuals who have

15-20

problems handling the product or services provided. The Division and the State further

15-21

understand that it is their duty to act responsibly toward those who cannot participate

15-22

conscientiously in gaming. Pursuant to the foregoing, Twin River and Newport Grand, in

15-23

cooperation with the State, shall offer compulsive and problem gambling programs that include,

15-24

but are not limited to (a) problem gambling awareness programs for employees; (b) player self-

15-25

exclusion program; and (c) promotion of a problem gambling hotline. Twin River and Newport

15-26

Grand shall modify their existing compulsive and problem-gambling programs to include Table

15-27

Games to the extent such games are authorized at such facilities.

15-28

     42-61.2-15. Table game hours of operation. – To the extent Table Games are

15-29

authorized at Twin River, such Table Games may be offered at Twin River for all or a portion of

15-30

the days and times that VLTs are offered. To the extent Table Games are authorized at Newport

15-31

Grand, such Table Games may be offered at Newport Grand for all or a portion of the days and

15-32

times that VLTs are offered.

15-33

     SECTION 8. Authorized Procurement of Third Amendment to the UTGR Master

15-34

Contract.

16-1

     (a) Notwithstanding any provision of the general or Public Laws to the contrary, within

16-2

90 days of the enactment of this Act, the Division is hereby expressly authorized and directed to

16-3

enter into with UTGR a Third Amendment to the UTGR Master Contract to effectuate the terms

16-4

and conditions of this Act relative to video lottery terminals and Table Games, and also including,

16-5

without limitation, the following:

16-6

      (1) There is hereby authorized a Supplementary Promotional Points Program at Twin

16-7

River (in addition to the Initial Promotional Points Program), pursuant to the terms and conditions

16-8

established from time to time by the Division during the term of the UTGR Contract. The

16-9

approved amount of the Supplementary Promotional Points Program shall equal six percent (6%)

16-10

of Twin River net terminal income of the Prior Marketing Year. For avoidance of doubt, the

16-11

aggregate approved amount of the Initial and Supplementary Promotional Points Programs, in

16-12

total, shall therefore be ten percent (10%) of the amount of net terminal income of Twin River of

16-13

the Prior Marketing Year, plus an additional $750,000 allocated pursuant to the terms of Chapter

16-14

151, Article 25 of the Public Laws of 2011, Section 8(a)(i).

16-15

     (2) The distribution of Promotional Points pursuant to the Supplementary Promotional

16-16

Points Program shall reduce only the shares of net terminal income to be distributed (i) pursuant

16-17

to subsection 42-61.2-7(a)(1) of the Rhode Island General Laws, (ii) to UTGR, pursuant to

16-18

subsection 42-61.2-7(a)(2) of the Rhode Island General Laws, (iii) to the Town of Lincoln

16-19

pursuant to subsection 42-61.2-7(a)(4) of the Rhode Island General Laws, and (iv) to the

16-20

Narragansett Indian Tribe, pursuant to subsection 42-61.2-7(a)(5) of the Rhode Island General

16-21

Laws, the reduction in each specified receiving entity’s allocated share of net terminal income to

16-22

be in the proportion that such receiving entity’s allocated share of net terminal income bears to

16-23

the allocated shares of the other receiving entities specified in this subsection (a)(2). By way of

16-24

example only, based upon current rates to the technology providers pursuant to §42-61.2-7(c), the

16-25

pro rata reduction in net terminal income for each of the parties listed in subsections (i)-(iv)

16-26

hereof shall be such party’s actual share divided by 0.905.

16-27

     (3) The Division may implement and account for the Initial and Supplementary

16-28

Promotional Points Programs at its discretion, except that the Division shall, at the close of each

16-29

state fiscal year, review any debits or credits of net terminal income made during the immediately

16-30

preceding state fiscal year pursuant to the Initial and Supplementary Promotional Points

16-31

Programs, and reallocate net terminal income as necessary to comply with the requirements of the

16-32

Initial and Supplementary Promotional Points Programs set forth in Chapter 16, Section 4(a)(ii)

16-33

of Part A of the Public Laws of 2010, Section 8 of Chapter 151, Article 25 of the Public Laws of

16-34

2011 and this Section 8.

17-1

     (4) The requirements of this Section 8 related to the Supplementary Promotional Points

17-2

Program shall take effect on and after July 1, 2012.

17-3

     SECTION 9. Authorized Procurement of Third Amendment to the Newport Grand

17-4

Master Contract.

17-5

     (a) Notwithstanding any provision of the general or Public Laws to the contrary, within

17-6

90 days of the enactment of this Act, the Division is hereby expressly authorized and directed to

17-7

enter into with Newport Grand, LLC a Third Amendment to the Newport Grand Master to

17-8

effectuate the terms and conditions of this Act relative to video lottery terminals and Table

17-9

Games, and also including, without limitation, the following:

17-10

     (1) There is hereby authorized a Supplementary Promotional Points Program at Newport

17-11

Grand (in addition to the Initial Promotional Points Program), pursuant to the terms and

17-12

conditions established from time to time by the Division during the term of the Newport Grand

17-13

Master Contract. The approved amount of the Supplementary Promotional Points Program shall

17-14

equal six percent (6%) of Newport Grand net terminal income of the Prior Marketing Year. For

17-15

avoidance of doubt, the aggregate approved amount of the Initial and Supplementary Promotional

17-16

Points Programs, in total, shall therefore be ten percent (10%) of the amount of net terminal

17-17

income of Newport Grand of the Prior Marketing Year, plus an additional $750,000 allocated

17-18

pursuant to the terms of Chapter 151, Article 25 of the Public Laws of 2011, Section 8(a)(i).

17-19

     (2) The distribution of Promotional Points pursuant to the Supplementary Promotional

17-20

Points Program shall reduce only the shares of net terminal income to be distributed (i) pursuant

17-21

to subsection 42-61.2-7(a)(1) of the Rhode Island General Laws, (ii) to Newport Grand, LLC,

17-22

pursuant to subsection 42-61.2-7(a)(2) of the Rhode Island General Laws, and (iii) to the City of

17-23

Newport, pursuant to subsection 42-61.2-7(a)(4) of the Rhode Island General Laws, the reduction

17-24

in each specified receiving entity’s allocated share of net terminal income to be in the proportion

17-25

that such receiving entity’s allocated share of net terminal income bears to the allocated shares of

17-26

the other receiving entities specified in this subsection (a)(2). By way of example only, based

17-27

upon current rates to the technology providers pursuant to §42-61.2-7(c), the pro rata reduction in

17-28

net terminal income for each of the parties listed in subsections (i)-(iii) hereof shall be such

17-29

party’s actual share of net terminal income divided by 0.905.

17-30

     (3) The Division may implement and account for the Initial and Supplementary

17-31

Promotional Points Programs at its discretion, except that the Division shall, at the close of each

17-32

state fiscal year, review any debits or credits of net terminal income made during the immediately

17-33

preceding state fiscal year pursuant to the Initial and Supplementary Promotional Points

17-34

Programs, and reallocate net terminal income as necessary to comply with the requirements of the

18-1

Initial and Supplementary Promotional Points Programs set forth in Chapter 16, Section 4(a)(ii)

18-2

of Part B of the Public Laws of 2010, Section 8 of Chapter 151, Article 25 of the Public Laws of

18-3

2011 and this Section 9.

18-4

     (4) The requirements of this Section 9 related to the Supplementary Promotional Points

18-5

Program shall take effect on and after July 1, 2012.

18-6

     SECTION 10. Authorized Procurement of a Fifth Amendment to the GTECH Master

18-7

Contract.

18-8

     (a) Notwithstanding any provision of the general or Public Laws to the contrary, within

18-9

90 days of the enactment of this Act, the Division is hereby expressly authorized and directed to

18-10

enter into with the Equipment Vendor, a Fifth Amendment to the GTECH Master Contract for the

18-11

following purposes and containing the following terms and conditions:

18-12

     (1) The GTECH Master Contract shall be amended to provide for the Equipment

18-13

Vendor’s contractual ratification of the Division’s past and current practice of deducting the

18-14

Equipment Vendor’s pro rata share of the amount of the Initial Promotional Points Program as

18-15

part of such program, and the GTECH Master Contract shall be further amended to provide for

18-16

the Equipment Vendor’s participation in the Initial Promotional Points Program in accordance

18-17

with such practice through June 30, 2023.

18-18

     (2) Section 8.1 of the of the GTECH Master Contract shall be amended to provide that

18-19

the Equipment Vendor shall not be obligated to replace the following components of the lottery

18-20

system provided by the Equipment Vendor pursuant to the On-Line Lottery Agreement (as such

18-21

term is defined in the GTECH Master Contract) through June 30, 2023:

18-22

     (A) Lottery central-system hardware and software, as referenced in the GTECH Master

18-23

Contract; and

18-24

     (B) One thousand (1,000) lottery terminals, as referenced in the GTECH Master Contract.

18-25

     SECTION 11. This act shall take effect upon passage, except for section 6. With respect

18-26

to Twin River, this Section 6 shall take effect only if Casino Gaming at Twin River is approved

18-27

statewide and by the Town of Lincoln pursuant to Article 25, Chapter 151, Section 4 of the Public

18-28

Laws of 2011. With respect to Newport Grand, this Section 6 shall take effect only if Casino

18-29

Gaming at Newport Grand is approved statewide and by the City of Newport pursuant to Section

18-30

1 of Chapters 24 and 25 of the Public Laws of 2012. Voter approval or non-approval with respect

18-31

to one facility shall be independent of voter approval or non-approval with respect to the other

18-32

facility.

=======

LC02714

========

EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N A C T

RELATING TO REVENUE PROTECTION

***

20-1

     This act would make several amendments regarding gaming in Rhode Island, and

20-2

specifically table. The act would provide for the regulation of table gaming. The act also would

20-3

revise the allocation of revenue in the event table gaming is approved at Newport Grand and/or

20-4

Twin River by appropriate vote.

20-5

     This act would take effect upon passage, except for section 6. With respect to Twin

20-6

River, this Section 6 shall take effect only if Casino Gaming at Twin River is approved statewide

20-7

and by the Town of Lincoln pursuant to Article 25, Chapter 151, Section 4 of the Public Laws of

20-8

2011. With respect to Newport Grand, this Section 6 shall take effect only if Casino Gaming at

20-9

Newport Grand is approved statewide and by the City of Newport pursuant to Section 1 of

20-10

Chapters 24 and 25 of the Public Laws of 2012. Voter approval or non-approval with respect to

20-11

one facility shall be independent of voter approval or non-approval with respect to the other

20-12

facility.

=======

LC02714

=======