Casino in R.I. is facing bankruptcy

To help the Lincoln, R.I., gaming emporium stay afloat, Carcieri plans to allow Twin River to operate 24 hours a day, seven days a week, and to let the so-called racino drop greyhound racing, a financially losing proposition otherwise required by state law. Twin River is currently open 24 hours on weekends, but closes at 3 a.m. during the week.

Twin River’s troubles reverberate on Beacon Hill, where the effort to legalize gambling in Massachusetts gained momentum this spring and where lawmakers in the House and Senate are preparing for a full debate in the fall.

In a clear sign of Rhode Island’s reliance on gambling revenue, Carcieri scheduled a press conference yesterday in Providence immediately after Twin River’s owners filed for Chapter 11 reorganization across town in federal bankruptcy court. That consensual filing, an agreement hashed out with Twin River’s lenders and the state, absolves the developers of nearly half of their roughly $590 million in debt, but hands over ownership to the creditors.

By allowing Twin River to remain open, the agreement, which must be approved by a bankruptcy judge, would allow the gambling salon to continue to feed the state $20 million or more a month, a guaranteed share of house winnings that proved too rich for Twin River’s developers to sustain while also making their debt payments. The group, known as BLB Investors LLC, spent $470 million in 2005 to acquire the seedy Lincoln Greyhound Park and another $220 million to overhaul it as Twin River, borrowing the bulk of that money.

“Let me repeat that Twin River is open, and it is business as usual,’’ said Carcieri, a Republican, distinguishing between more gambling and expanded gambling. Although Twin River would operate 24/7 under the plan, it would remain a video parlor, not a full casino. Gamblers now wager about $2 billion a year on Twin River’s approximately 4,750 video terminals - which mimic blackjack and roulette, as well as slot machines, with life-sized screens and interactive dealers - but the gaming, dining, and entertainment facility lacks full table games and hotel rooms.

Twin River has had financial trouble since early last year. The state allowed the facility to open 24 hours a day on weekends last year, despite objections of town residents in a Lincoln referendum. The governor’s 24/7 plan immediately drew local opposition.

“It will impact the residents of that part of town,’’ said Ronald A. McKenna, president of the Lincoln Town Council. “They already objected to the weekend 24 hours. This will just make their situation worse. But obviously the governor has his mind all made up, and damn be the residents of Lincoln, as long as the state of Rhode Island gets what they want.’’

Edward M. Mazze, a professor and former business school dean at the University of Rhode Island, said Twin River’s reorganization does not mean state-sanctioned gambling cannot succeed in New England. Instead, it is a reminder that a state can become reliant on gambling revenue and that a balance must be struck between government and developer, said Mazze, citing Twin River’s overinvestment in “bells and whistles’’ and its steep guarantee to the state.

Rhode Island takes about 61.5 percent of house winnings at Twin River. By comparison, resort casinos and slot parlors proposed in Massachusetts by Governor Deval Patrick and Treasurer Timothy Cahill, respectively, would contribute 27 percent of winnings to the state.

That makes Twin River singlehandedly Rhode Island’s third-largest revenue stream, after income and sales taxes. And in a state with a 12.1 percent May unemployment rate, it employs 441 full-time and 357 part-time workers.

“The fact of the matter is, we’re stuck,’’ Mazze said, referring to Rhode Island. “We don’t see other revenue sources coming in, and we’re going to fight hard to protect something that everybody is apparently against.’’

Even as Carcieri called for added hours and maintained the state’s position on its winnings collections, he distanced himself from casinos. “I’m not a big fan of gambling, because I do not think it is economic development,’’ the governor said.

“We have it; it’s here,’’ he said at the press conference. “My job is to do the best we can to protect it and keep the taxpayers healthy.’’

BLB is a partnership that includes Sol Kerzner and Len Wolman, the resort and gaming magnates who developed Mohegan Sun in Connecticut and are in the investors in a proposed Mashpee Wampanoag casino in Middleborough, Mass. The Chapter 11 filing affects only the Rhode Island venture, said Patti Doyle, a BLB spokeswoman, who called it “the best possible outcome for the state of Rhode Island and for Twin River patrons.’’

The filed agreement would allow BLB to reduce its debt to $300 million and continue operating Twin River, while its creditors, led by Merrill Lynch Capital Corp., would assume ownership and could seek new operators.