Chapter 322

2005 -- S 0970 SUBSTITUTE B AS AMENDED

Enacted 07/15/05

A N A C T

ENABLING THE DIVISION OF LOTTERIES TO ENTER INTO A MASTER VIDEO LOTTERY TERMINAL CONTRACT WITH UTGR, INC. AND TO ENTER INTO A MASTER VIDEO LOTTERY TERMINAL CONTRACT WITH NEWPORT GRAND JAI ALAI, LLC

Introduced By: Senators J Montalbano, and Connors

Date Introduced: March 17, 2005

It is enacted by the General Assembly as follows:

SECTION 1. Purpose. The purpose of this act is to induce UTGR, as the applicant for

the video lottery terminal license at Lincoln Park, to construct, develop and invest (or to cause to

be constructed, developed and invested) an aggregate one hundred twenty-five million dollars

($125,000,000) of total project costs, including “hard” and allowable “soft” costs, in or related to

improvements, renovations and additions to Lincoln Park and appurtenant real and personal

property in order that the state's revenues from Lincoln Park will be increased, thereby increasing

the total funds available to the state and its citizens. It is the intent of the general assembly that

this act, being necessary for the welfare of the state and its citizens, shall be liberally construed so

as to effectuate its purposes, including without limitation, the state's attempt to minimize certain

commercial risks faced by UTGR when it operates the facility and the business conducted

thereon.

The further purpose of this act is to induce NGJA, as the applicant for the video lottery

terminal license at Newport Grand, to construct, develop and invest (or to cause to be constructed,

developed and invested) an aggregate twenty million dollars ($20,000,000) of total project costs,

including "hard" and allowable "soft" costs, in or related to improvements, renovations and

additions to Newport Grand and appurtenant real and personal property in order that the state's

revenues from Newport Grand will be increased, thereby increasing the total funds available to

the state and its citizens. It is the intent of the general assembly that this act, being necessary for

the welfare of the state and its citizens, shall be liberally constructed so as to effectuate its

purposes, including, without limitation, the state's attempt to minimize certain commercial risks

faced by NGJA when it operates the facility and the business conducted thereon.

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

following meanings:

(a) “Acquisition” means the acquisition of the Wembley US Group by BLB or a BLB

Affiliate.

(b) “Advisory committee” has the meaning set forth in Section 3(a) (6) of this act.

(d) “BLB affiliate” means any entity controlling, controlled by or under common control

with BLB.

(e) “Division” means the division of lotteries within the department of administration

and/or any successor as party to the master contract.

(f) “Effective date” for Lincoln Park means the first date on which all the conditions in

Section 6(a) of this act have been satisfied.

(g) “Force majeure” means any one or more causes beyond the reasonable control of the

state or any party to the master contract, including, but not limited to, strikes, lockouts and other

labor disputes, accidents, war, terrorism, invasions, riot, rebellion, civil commotion or

disturbances , the inability of any party to secure the necessary governmental permits to carry out

its obligations under the master contract notwithstanding the exercise of commercially reasonable

efforts, any act or judgment of any court granted in any legal proceeding, acts of God such as fire,

wind or lightning, earthquakes or other severe weather, delays by subcontractors to provide

services due to circumstances such as those cited above.

(h) “Gambling game” means any game having the attributes of chance, consideration and

prize, including without limitation any banking or percentage game played with cards, dice,

dominoes, or any electronic, electrical or mechanical device or machine for money, property, or

any representation of value.

(i) “Gaming facility” means any facility or venue offering one or more gambling games

that is physically located, in whole or in part, in the state, but excluding: (i) bingo; (ii) facilities

or venues that only on an occasional basis host such games and then only for the benefit of

religious, charitable, educational or fraternal organizations, volunteer fire and rescue companies

or other similar non-profit organizations; and (iii) facilities or venues operated pursuant to the

IGRA, where such operation is authorized without state consent and does not operate any

gambling games other than gambling games specifically authorized under Rhode Island law as of

the effective date of this act unless the right of such facility to operate gambling games other than

those specifically authorized under Rhode Island law as of the effective date of this act is not

derived from an act of the Rhode Island General Assembly, an amendment to the Rhode Island

constitution, or a voter referendum conducted pursuant to the Rhode Island constitution

permitting the operation of such other gambling games elsewhere in the state other than Lincoln

Park or Newport Grand.

(j) “Gaming facility revenues” means any and all gross receipts derived from all

gambling games at a gaming facility less the total of all sums paid out as winnings to patrons,

including the cash equivalent of any merchandise or thing of value included in a jackpot or

payout.

(k) “IGRA” means the Indian Gaming Regulatory Act, 25 U.S.C. Sections 2701-2721, 18

U.S.C. Sections 1166-1168.

(l) “Lincoln Park Investment requirement” has the meaning set forth in Section 3(b) (l)

of this act.

(m) “Lincoln Park Investment requirement assets” has the meaning set forth in Section

3(b)(l) of this act.

(n) “Lincoln Park, Inc.” means Lincoln Park, Inc., a Rhode Island corporation, f/k/a

Burrillville Racing Association, Inc.

(o) “Lincoln Park” means the gaming and entertainment facility located at 1600

Louisquisset Pike, Lincoln, Rhode Island.

(p) “Master contract” means that certain master video lottery retailer contract to be

entered into by and between the division and UTGR as authorized herein or between the division

and NGJA as authorized herein.

(q) “Net terminal income” has the same meaning presently given the term in section 42-

61.2-1(3) of the general laws of the state.

(r) "NGJA" means Newport Grand Jai Alai, LLC, a Rhode Island limited liability

company. References herein to "NGJA" shall include its permitted successors and assigns under

the master contract.

(s) "NGJA affiliate" means any entity controlling, controlled by or under common control

with NGJA.

(t) "Newport Grand Investment requirement" has the meaning set forth in section 4(b)(1)

of this act.

(u) "Newport Grand Investment requirement assets" has the meaning set forth in section

4(b)(1) of this act.

(v) "Newport Grand" means the gaming and entertainment facility located at 150 Admiral

Kalbfus Road, Newport, Rhode Island.

(w) "Subsequent year" means each consecutive twelve (12) month period ending on the

last day of the calendar month preceding an anniversary of the opening of a new gaming facility.

(x) "Adjusted Base Year Net Terminal Income" means Lincoln Park's or Newport

Grand's, as applicable, two (2) year average net terminal income during the twenty-four (24)

calendar months ending on the last day of the calendar month preceding the opening of a new

gaming facility increased by the change in the December Consumer Price Index – All Urban

Consumers (CPI-U) for the immediately preceding year published by the Bureau of Labor

Statistics of the United States Government or its successor agency from the index for the

December immediately preceding the opening of a new gaming facility, not to exceed three

percent (3.0%) per year change in any year.

(y) "Slippage protection" shall mean: for any subsequent year (other than the first

subsequent year occurring after the base year), whenever the net terminal income is less than the

adjusted base year net terminal income, the blended rate shall be increased to that rate that would

have eliminated the resulting adverse impact from that difference upon UTGR or NGJA.

Provided, however, that for any subsequent year (including the first subsequent year) in which an

amount equal to twice the first six (6) months' net terminal income for such subsequent year shall

not exceed ninety percent (90%) of the adjusted base year net terminal income for such

subsequent year, the aforesaid increase to the blended rate shall occur beginning in the seventh

month of such subsequent year.

(z) "Blended Rate" for Lincoln Park means [(number of Existing Authorized Terminals in

operation)/ total number of video lottery terminals in operation for the calculation period) x

.2885; plus (number of Additional Authorized Terminals in operation for the calculation period

/total number of video lottery terminals in operation for the calculation period) x .2600].

"Blended Rate" for Newport Grand means [(number of Existing Authorized Terminals in

operation)/ total number of video lottery terminals in operation for the calculation period) x

.2600; plus (number of Additional Authorized Terminals in operation for the calculation period

/total number of video lottery terminals in operation for the calculation period) x .2600].

(aa) “State” means the state of Rhode Island.

(bb) “State consent” means the failure by the state to exhaust all of its administrative and

judicial remedies to oppose the taking or the conversion of land in Rhode Island into trust under

25 U.S.C. section 465 where such taking or conversion is for the purpose of gaming under IGRA.

(cc) “Term” means the term of the master contract, which is five (5) years from the

Effective Date of the master contract; provided further that UTGR shall have two successive five

(5) year extension options and NGJA shall have one five (5) year extension option, which shall be

considered part of the term, subject to the following:

(i) UTGR's right to exercise the extension options shall be subject to UTGR not being in

default of any material covenant, term or condition of the master contract that has not been cured

within the applicable cure periods therefore set forth in the master contract; and further subject to

the requirement that there shall be not less than one thousand three hundred (1,300) full time

equivalent employees at Lincoln Park at the time the option is exercised and on average for the

one year period preceding the date the option is exercised, as confirmed by the department of

labor and training. For purpose of satisfying this requirement, full time equivalent employee

means any employee who (1) works a minimum of thirty (30) hours per week or two (2) or more

part time employees whose combined weekly hours equal or exceed thirty (30) hours per week

and (2) earns no less than one hundred fifty percent (150%) of the hourly minimum wage

prescribed by Rhode Island law. In addition to those employees of UTGR, employees with

lessees, concessionaires, or other third parties, but excluding any state employees, shall be

included for purposes of meeting this requirement.

(ii) NGJA's right to exercise its extension option shall be subject to NGJA not being in

default of any material covenant, term or condition of the master contract that has not been cured

within the applicable cure periods therefore set forth in the master contract; and further subject to

the requirement that there shall be not less than three hundred sixty (360) full time equivalent

employees at Newport Grand at the time the option is exercised and on average for the one year

period preceding the date the option is exercised, as confirmed by the department of labor and

training. For purpose of satisfying this requirement, full time equivalent employee means any

employee who (1) works a minimum of thirty (30) hours per week or two (2) or more part time

employees whose combined weekly hours equal or exceed thirty (30) hours per week and (2)

earns no less than one hundred fifty percent (150%) of the hourly minimum wage prescribed by

Rhode Island law. In addition to those employees of NGJA, employees with lessees,

concessionaires, or other third parties, but excluding any state employees, shall be included for

purposes of meeting this requirement.

(dd) “UTGR” means UTGR, Inc., a Delaware corporation and member of the Wembley

US Group, and, upon the Effective Date of the Acquisition, a direct or indirect wholly-owned

subsidiary of BLB, and including any UTGR business affiliate. References herein to “UTGR”

shall include its permitted successors and assigns under the master contract.

(ee) “UTGR business affiliate” means any corporation, trust, partnership, joint venture or

any other form of business entity that controls, is controlled by or is under common control with,

UTGR.

(ff) “Video lottery terminal” has the meaning given the term in section 42-61.2-1(7) of

the General Laws of the state as in effect on the date hereof and as operated by the division on the

date hereof.

(gg) “Wembley” means Wembley, plc, an entity formed under the laws of the United

Kingdom.

(hh) “Wembley US Group” means the United States direct and indirect subsidiaries of

Wembley in existence on the Effective Date of the Acquisition.

(ii) “Base Year” means the consecutive twelve (12) month period ending on the last day of

the calendar month preceding the opening of a new gaming facility.

SECTION 3. Authorized procurement of UTGR master contract

(a) Notwithstanding any provisions of the general laws or regulations adopted thereunder

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

61 of Title 42 of the General Laws, and the provisions of section 42-61.2-7, the division is hereby

expressly authorized and empowered to enter into the master contract with UTGR for the term

and for the following purposes, all of which shall be set forth in more particular detail in the

master contract. The division is further authorized to approve the transfer of the video lottery

retailer license held by Lincoln Park, Inc. to UTGR and:

(1) To license 4,752 video lottery terminals at Lincoln Park to UTGR during the term,

including first the 3,002 existing authorized video lottery terminals, and replacements thereof

from time to time, at Lincoln Park (herein, the “Existing Authorized Terminals”), and then 1,750

additional video lottery terminals, and replacements thereof from time to time, as are hereby

authorized for Lincoln Park (herein, the “Additional Authorized Terminals”);

(2) Subject to adjustment as provided herein, to fix in the master contract the allocation of

net terminal income attributable to the Existing Authorized Terminals as follows:

(i) To UTGR when it shall become the licensed video lottery retailer: twenty-eight and

eighty-five hundredths percent (28.85%);

(ii) The division shall have the authority to determine the placement and location of the

Existing Authorized Terminals under the terms of this act and the master contract.

(3) Subject to adjustment as provided herein, to fix in the master contract the allocation of

net terminal income attributable to the Additional Authorized Terminals as follows:

(i) To UTGR when it shall become the licensed video lottery retailer: twenty-six percent

(26%);

(ii) The division shall have the authority to determine the placement and location of the

Terminals under the terms of this act and the master contract.

(4) To provide in the master contract that the allocations set forth above in Section

3(a)(2)(i) and Section 3(a)(3)(i) shall be calculated on a pro rata basis as follows:

(i) net terminal income x [(number of Existing Authorized Terminals in operation)/ total

number of video lottery terminals in operation for the calculation period) x .2885; plus

(ii) (number of Additional Authorized Terminals in operation for the calculation period

/total number of video lottery terminals in operation for the calculation period) x .2600].

(5) To include in the master contract all other terms and conditions appropriate to

contracts of this type, as acceptable to the division.

(6) To establish an advisory committee (the “advisory committee”), the purpose of which

shall be to consider and advocate programs and initiatives from time to time to benefit all

constituencies with an interest in the continued economic success of Lincoln Park, and in

particular, the recommendation of steps to coordinate the operation of Lincoln Park with the state

and municipal agencies to maximize the efforts of joint marketing campaigns designed to benefit

both Lincoln Park and other state-based businesses. The advisory committee shall meet

quarterly, shall select from one of its members a chairperson and shall adopt by-laws to govern its

meetings. The advisory committee shall consist of seven (7) members as follows: One (1)

member representing UTGR or a UTGR business affiliate appointed by UTGR; one (1) member

representing the town of Lincoln, Rhode Island, appointed by the Lincoln town administrator

with the advice and consent of the Lincoln town council; one (1) member representing the Rhode

Island Convention Center Authority, which may be either a member of the board of

commissioners or a designee appointed by the board; one (1) member representing the Greater

Providence Chamber of Commerce appointed by that entity; one (1) member representing the

Northern Rhode Island Chamber of Commerce appointed by that entity, one (1) member

representing the Providence-Warwick Convention Visitors Bureau appointed by that entity, and

one public member appointed by the governor.

(7) To provide for the following limitations on the use of Lincoln Park during the term:

no hotel will be constructed or operated at Lincoln Park or by the then owner or operator of

Lincoln Park (or their respective commonly controlled affiliates) in close proximity to the

facility; and the facility will not be marketed as a venue for conventions or events of the type

which are part of the target market for the Rhode Island convention center authority, the

Providence Performing Arts Center, or the Veterans Memorial Auditorium, including Broadway

or Broadway-type plays, or any theatrical performances of a musical, non-musical, or comedic

variety (except that this limitation shall not prohibit the facility from being marketed to hold, and

from holding, holiday fairs for local businesses, concerts, sporting and other entertainment events

which are open generally to the public and if held in an indoor events venue at Lincoln Park, with

no stage house, and with a non-fixed seating capacity of such venue not to exceed 1,500 people

for musical concerts and comedy shows, and 2,100 people for all other events).

(8) To provide in the Master Contract for slippage protection as defined in Section 2(y).

(9) To provide in the Master Contract for adjustment in the blended rate during the

eleventh through fifteenth years of the term as set forth in Section 5(b).

(b) Under the terms of the master contract authorized under this act, UTGR shall agree

that during the term it shall undertake, among others, the following obligations:

(1) UTGR will invest, in the aggregate, within three (3) years following the effective date

of the master contract in accordance with a schedule set forth in the master contract (but subject

to an extension of the original three (3) year period as set forth in Section 3(c) below), at least one

hundred twenty-five million dollars ($125,000,000) of total project costs, including “hard” and

allowable “soft” costs (the “Lincoln Park investment requirement”), in connection with: (i)

additions, renovations and/or improvements to Lincoln Park and to appurtenant real or personal

property, including without limitation, improvements designed and constructed to provide access

to Lincoln Park; and (ii) performing UTGR's obligations regarding investment requirements

under the master contract (“Lincoln Park investment requirement assets”). "Hard costs” shall

mean all costs that in accordance with United States generally accepted accounting principles

(“GAAP”) are appropriately chargeable to the capital accounts of UTGR or would be so

chargeable either with an election by UTGR or but for the election of UTGR to expense the

amount of the item, and “soft costs” shall mean all other costs appropriately chargeable to the

investment requirement which are not hard costs in accordance with GAAP. In determining

whether the investment requirement has been satisfied, soft costs in excess of ten million dollars

($10,000,000) shall be excluded. Provided further, that none of the expenditures in this subsection

shall qualify as eligible expenditures for purposes of any credit, including historic tax credits as

provided in chapter 44-33.2 and enterprise zone credits as provided in chapter 42-64-3.

(2) On or before the dates set forth in the master contract and in all events on that date

which is 90 days after the third anniversary of the effective date of the master contract (as such

original three (3) year period may have been extended as set forth in Section 3(c) below), UTGR

shall submit to the division UTGR's certification, certified by a certified public accounting firm

acceptable to the division and using procedures approved by the division not inconsistent with

GAAP, providing its professional opinion, on behalf of itself and its applicable UTGR business

affiliates as to the aggregate amounts expended, allocated between “hard” and allowable “soft”

costs in respect of the investment requirement, so as to enable the division to measure UTGR's

investment requirement assets and to confirm UTGR's compliance with its obligation under

Section 3(b)(1) hereof. UTGR shall pay all costs of obtaining and preparing the professional

opinion obtained from the certified public accounting firm required by this subsection; and

entitled to, among other things, terminate the master contract if UTGR fails to fulfill the

aggregate investment requirement pursuant to Section 3(b)(1) hereof prior to that date which is

three (3) years from the effective date of the master contract, unless such failure is attributable to:

(i) the failure to receive the necessary local approvals in connection with the improvements,

construction and other activities referenced in Section 3(b)(1), notwithstanding the use of UTGR's

commercially reasonable efforts to obtain such approval; (ii) delays attendant to any litigation

brought by any third-party contesting in any way the construction of the improvements and

having the effect of delaying the expenditure of the investment requirement and which litigation

is ultimately resolved in a manner allowing the expenditure of the investment requirement to

proceed; or (iii) the occurrence of one or more force majeure events beyond the control of UTGR.

The aforesaid original three (3) year period shall be extended by the number of days delay

occurring as a result of any one or more of the events described in clauses (i), (ii) or (iii) of the

preceding sentence.

(d) The master contract shall also provide that, following completion of the investment

requirement, UTGR shall maintain Lincoln Park in a manner substantially consistent with first

class racinos operated elsewhere in the United States pursuant to regulations adopted by the

division and approved by the permanent joint committee on state lottery.

SECTION 4. Authorized procurement of NGJA master contract

(a) Notwithstanding any provisions of the general laws or regulations adopted thereunder

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

61 of Title 42 of the General Laws, and the provisions of section 42-61.2-7, the division is hereby

expressly authorized and empowered to enter into the master contract with NGJA for the term

and for the following purposes, all of which shall be set forth in more particular detail in the

master contract; and

(1) To license 2,101 video lottery terminals at Newport Grand during the term, including

first the 1,301 currently authorized video lottery terminals, and replacements thereof from time to

time, at Newport Grand (herein, the “Existing Authorized Terminals”), and then 800 additional

video lottery terminals, and replacements thereof from time to time, as are hereby authorized for

Newport Grand (herein, the “Additional Authorized Terminals”);

(2) Subject to adjustment as provided herein, to fix in the master contract the allocation of

net terminal income of twenty-six percent (26%).

(i) The division shall have the authority to determine the placement and location of the

Terminals under the terms of this act and the master contract.

(3) To include in the master contract all other terms and conditions appropriate to

contracts of this type, as acceptable to the division.

(4) To provide in the Master Contract for slippage protection as defined in 2(y).

(b) Under the terms of the master contract authorized under this act, NGJA shall agree

that during the term it shall undertake, among others, the following obligations:

(1) NGJA will invest, in the aggregate, within three (3) years following the effective date

of the master contract in accordance with a schedule set forth in the master contract (but subject

to an extension of the original three (3) year period as set forth in Section 4(c) below), at least

twenty million dollars ($20,000,000) of total project costs, including “hard” and allowable “soft”

costs (the “Newport Grand investment requirement”), in connection with: (i) additions,

renovations and/or improvements to Newport Grand and to appurtenant real or personal property,

including without limitation, improvements designed and constructed to provide a hotel of at least

ninety (90) rooms; and (ii) performing NGJA's obligations regarding investment requirements

under the master contract (“Newport Grand investment requirement assets”). "Hard costs” shall

mean all costs that in accordance with United States generally accepted accounting principles

(“GAAP”) are appropriately chargeable to the capital accounts of NGJA or would be so

chargeable either with an election by NGJA or but for the election of NGJA to expense the

amount of the item, and “soft costs” shall mean all other costs appropriately chargeable to the

investment requirement which are not hard costs in accordance with GAAP. In determining

whether the investment requirement has been satisfied, soft costs in excess of two million five

hundred thousand dollars ($2,500,000) shall be excluded. Provided further, that none of the

expenditures in this subsection shall qualify as eligible expenditures for purposes of any credit,

including historic tax credits as provided in chapter 44-33.2 and enterprise zone credits as

provided in chapter 42-64.3.

(2) On or before the dates set forth in the master contract and in all events on that date

which is 90 days after the third anniversary of the effective date of the master contract (as such

original three (3) year period may have been extended as set forth in Section 4(c) below), NGJA

shall submit to the division NGJA's certification, certified by a certified public accounting firm

acceptable to the division and using procedures approved by the division not inconsistent with

GAAP, providing its professional opinion, on behalf of itself and its applicable NGJA business

affiliates as to the aggregate amounts expended, allocated between “hard” and allowable “soft”

costs in respect of the investment requirement, so as to enable the division to measure NGJA's

investment requirement assets and to confirm NGJA's compliance with its obligation under

Section 4(b)(1) hereof. NGJA shall pay all costs of obtaining and preparing the professional

opinion obtained from the certified public accounting firm required by this subsection; and

entitled to, among other things, terminate the master contract if NGJA fails to fulfill the aggregate

investment requirement pursuant to Section 4(b)(1) hereof prior to that date which is three (3)

years from the effective date of the master contract, unless such failure is attributable to: (i) the

failure to receive the necessary local approvals in connection with the improvements,

construction and other activities referenced in Section 4(b)(1), notwithstanding the use of NGJA's

commercially reasonable efforts to obtain such approval; (ii) delays attendant to any litigation

brought by any third-party contesting in any way the construction of the improvements and

having the effect of delaying the expenditure of the investment requirement and which litigation

is ultimately resolved in a manner allowing the expenditure of the investment requirement to

proceed; or (iii) the occurrence of one or more force majeure events beyond the control of NGJA.

The aforesaid original three (3) year period shall be extended by the number of days delay

occurring as a result of any one or more of the events described in clauses (i), (ii) or (iii) of the

preceding sentence.

(d) The master contract shall also provide that, following completion of the investment

requirement, NGJA shall maintain Newport Grand in a first class manner pursuant to regulations

adopted by the division and approved by the permanent joint committee on state lottery.

SECTION 5. Slippage protection. -- (a)(1) In view of the current and prospective

economic benefits afforded to the state and to all other parties benefiting from the commercial

activities operated at Lincoln Park and Newport Grand, and in order to better assure, throughout

the term, that Lincoln Park and Newport Grand and the businesses conducted thereon will be able

to compete fairly with any other gaming facilities operating from time to time within the state,

during the term, the state, including any agency or instrumentality thereof, does hereby expressly

pledge and agree that the owners of Lincoln Park and Newport Grand and the business operated

thereon shall be afforded slippage protection subject to the following: Lincoln Park shall be

afforded slippage protection if:

(i) During the term of the master contract, a new gaming facility in Rhode Island

becomes operational;

(ii) Neither UTGR nor any UTGR business affiliate is involved in any way in the

operation or ownership of such new gaming facility; and

(iii) UTGR is not in default of any material covenant, term or condition of the master

contract that has not been cured within the applicable cure periods therefore set forth in the

master contract.

(a)(2) Newport Grand shall be afforded slippage protection if:

(i) During the term of the master contract, a new gaming facility in Rhode Island

becomes operational;

(ii) Neither NGJA nor any NGJA business affiliate is involved in any way in the

operation or ownership of such new gaming facility; and

(iii) NGJA is not in default of any material covenant, term or condition of the master

contract that has not been cured within the applicable cure periods therefore set forth in the

master contract.

(b) During the eleventh through fifteenth years of the UTGR term, in addition to slippage

protection as provided in this section, the blended rate shall be adjusted by twenty five percent

(25%) of the annual change in the December Consumer Price index – All Urban Consumers

(CPI-U) for the immediately preceding year, published by the Bureau of Labor Statistics of the

United States Department of Labor minus the annual growth rate in net terminal income

for the prior year. In no case shall the annual adjustment increase or decrease the blended rate as

the same may have been adjusted for slippage protection as provided for in this section by more

than one percent (1.0%).

of subsection 42-61.2-7(a)(2) and except as hereinafter expressly provided in Section 5 hereof,

the state hereby expressly agrees under this act: (i) not to enter into any agreement or adopt,

modify or amend any law, rule or regulation that would impair the rights of UTGR or NGJA

under this act and under the master contract; and (ii) that the failure to provide UTGR or NGJA

with slippage protection as described in Section 5 and in the master contract shall constitute a

violation of this act and a breach of the master contract, and shall entitle UTGR or NGJA to bring

a claim against the division and the state for actual damages and/or specific performance and/or

other equitable relief, notwithstanding any limitation on such damages imposed by the laws of the

state. For purposes of computing the actual damages with respect to any claim by UTGR or

NGJA against the state or the division for a failure to provide slippage protection pursuant to the

provisions of this act and the master contract, “actual damages” means the positive difference

between: (i) the gaming facility revenues UTGR or NGJA would have retained had the state or

the division provided slippage protection for the period of time that the state or division fails to

provide slippage protection during the term of the master contract; and (ii) the gaming facility

revenues actually retained by UTGR or NGJA.

(d) Notwithstanding anything in this Section 5 to the contrary, nothing in this act shall

limit the authority of the division to enforce its rights under the master contract or the state to

enact, adopt and enforce laws and regulations which are of general application.

SECTION 6. Prerequisites to state undertaking construction so as to provide additional

access/egress to Lincoln Park.

(a) As a prerequisite to the state's obligation to provide improvements to the access

and/or egress to Lincoln Park pursuant to the provisions of subsection (b) hereof, it shall be

required that all the conditions set forth in the master contract be satisfied, including the

following:

(1) The passage of this act by the General Assembly;

(2) The closing of the Acquisition by BLB, or a BLB Affiliate, of the Wembley US

Group, including without limitation, UTGR;

(3) The master contract has been signed by UTGR and the director or the acting director

of the division of lotteries. Provided, however, in the absence of a director or acting director, the

governor shall be authorized to sign the initial master contract on behalf of the division.

(4) The completed transfer to UTGR by Lincoln Park, Inc. of the video lottery retailer

license issued to Lincoln Park, Inc. by the division, including the approval by the division of

UTGR as a licensed video lottery retailer; and

(5) The completed transfer to UTGR by Lincoln Park, Inc. of the pari-mutuel license

issued to Lincoln Park, Inc. by the department of business regulation, including the approval by

the department of business regulation of UTGR as a pari-mutuel licensee.

(b) The state, acting through the Rhode Island department of transportation or other

relevant agency shall provide the necessary road cuts, bridges, tunnels, highway widening, traffic

lights and the related signage on and from Route 146 as may be necessary in order to improve

access to and egress from Lincoln Park (and as set forth in the final highway improvement plans

provided by BLB or a BLB affiliate that are approved by the Rhode Island department of

transportation). Such construction shall be designed so as to minimize the amount of motor

vehicle traffic use and/or travel upon secondary roads and/or through residential neighborhoods

surrounding Lincoln Park. UTGR shall provide and pay for the design of such improvements and

upon completion thereof and approval by the state, the state shall take all reasonable steps to have

such improvements included in the state transportation improvement plan or to cause such

improvements to be exempt therefrom. UTGR shall pay all costs for the construction of such

improvements.

SECTION 7. Inconsistent provisions. Insofar as the provisions of this act are inconsistent

with the provisions of any other general or special law, including, without limitation, the

provisions of Chapter 2 of Title 37 and Chapter 61 of Title 42, the provisions of this act shall be

controlling.

SECTION 8. State's Lincoln Park Obligations Contingent Upon Acquisition Completion.

The obligations of the state, including the department of transportation and/or the division, set

forth under the provisions of this act shall be and are hereby declared to be expressly contingent

upon the acquisition of the Wembley US Group by BLB or a BLB Affiliate taking place, as

contemplated in this act. Except as may be permitted by the master contract, this act shall not be

deemed and/or construed to create and or vest any rights in BLB or a BLB Affiliate which may be

assigned, delegated, and/or otherwise transferred to any other entity.

SECTION 9. Section 42-61.2-7 of the General Laws in Chapter 42-61.2 entitled "Video

Lottery Terminal" is hereby amended to read as follows:

42-61.2-7. Division of revenue. – (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 commission fund for

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

subdivisions (a)(2) through (a)~~(5)~~ (6) herein; provided the revenue estimators shall establish at

the Revenue Estimating Conferences pursuant to chapter 35-16 the amount of the net terminal

income and the state's share of net terminal income that is solely attributable to the introduction

of newly authorized machines at Lincoln Park and Newport Grand pursuant to Sections 3 and 4

herein. Said amount shall be distributed as follows:

(i) 12.50% 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.

(ii) 3.125% 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. Once there are sufficient

additional funds, the maximum credit defined in subdivision 44-33-9(2) shall increase by

increments of fifty dollars ($50.00) until a maximum credit of five hundred dollars ($500) is

obtained.

(iii) 78.125% 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 five hundred dollar ($500)

increment within the allocation. In no event shall the exemption in any fiscal year be less than the

prior fiscal year.

(iv) 6.25% to a maximum of ten million dollars ($10,000,000) for supplemental

distribution to communities not included in (a)(1)(i) above distributed proportionately on the

basis of general revenue sharing distributed for that fiscal year.

(v) Any amounts in excess of the limits in (i) through (iv) above shall be allocated to the

general fund.

(2) To the licensed video lottery retailer: ~~(a) Lincoln Greyhound Park twenty-eight and~~

~~eighty-five hundredths percent (28.85%) minus seven hundred sixty seven thousand six hundred~~

~~eighty seven dollars ($767,687);~~ (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).

(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 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.

(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 subsections (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) To the city of Newport ~~or town in which the licensed video retailer is licensed:~~ one

percent (1%) plus one quarter percent (0.25%) of net terminal income that is solely attributable to

the introduction of newly authorized machines at Newport Grand pursuant to sections 3 and 4

herein as determined by the Revenue Estimating Conference; and to ~~provided, however,~~

~~beginning January 1, 2005,~~ the town of Lincoln ~~shall receive~~ one and one quarter percent (1.25%)

plus one quarter percent (0.25%) of net terminal income that is solely attributable to the

introduction of newly authorized machines at Lincoln Park pursuant to sections 3 and 4 herein as

determined by the Revenue Estimating Conference; and

(5) To the Narragansett Indian Tribe, five percent (5%) of net terminal income that is

solely attributable to the introduction of newly authorized machines at Lincoln Park as

determined by the revenue estimators at the Revenue Estimating Conferences pursuant to chapter

35-16 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.

~~(5)~~ (6) Unclaimed prizes and credits shall remit to the general fund of the state;

~~(6)~~ (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.

SECTION 10. Severability. If any clause, sentence, paragraph, section, or part of this act

shall be adjudged by any court of competent jurisdiction to be invalid, such judgment shall not

affect, impair, or invalidate the remainder thereof, but shall be confined in its operation to clause,

sentence, paragraph, section or part directly involved in the controversy in which such judgment

shall have been rendered.

SECTION 11. This act shall take effect upon passage.

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LC02842/SUB B/4

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