2020 -- H 7523
========
LC004693
========
STATE OF RHODE ISLAND
IN GENERAL ASSEMBLY
JANUARY SESSION, A.D. 2020
____________
AN ACT
ENABLING THE STATE LOTTERY DIVISION OF THE DEPARTMENT OF REVENUE TO
CONTRACT WITH IGT GLOBAL SOLUTIONS CORPORATION AND TWIN RIVER
Introduced By: Representatives Mattiello, Shekarchi, Kennedy, Abney, and Edwards
Date Introduced: February 11, 2020
Referred To: House Finance
It is enacted by the General Assembly as follows:
1 SECTION 1. Purpose. The purpose of this Act is, among other things: (a) To authorize the
2 State Lottery Division of the Department of Revenue (the "Division") to agree to an extension of
3 the Division's partnership with IGT Global Solutions Corporation, a Delaware corporation ("IGT"),
4 including the continuance of a significant presence in the State; and (b) To authorize the Division
5 to agree to an extension of the Division's partnership with the Rhode Island Affiliates of Twin River
6 Worldwide Holdings, Inc., a Delaware corporation ("TRWH"), including an expansion of Twin
7 River's facility in Lincoln. This Act shall be liberally construed to effectuate its purposes.
8 SECTION 2. Definitions.
9 (a) In this Act, capitalized terms not otherwise defined shall have the meanings given them
10 in § 42-61.2-1 as of the effective date of this act.
11 (b) In this act:
12 (1) "Affiliate" means a person that directly, or indirectly through one or more
13 intermediaries, controls, is controlled by or is under common control with a person;
14 (2) "Control" means the possession, directly or indirectly, of the power to direct or cause
15 the direction of the management and policies of a person, whether through the ownership of voting
16 securities, by contract or otherwise;
17 (3) "Eligible Third Party" means any person which (acting jointly with IGT or at the
18 direction of IGT) owns, leases or finances any of the investment obligation assets;
 1 (4) "Joint Venture" means a Delaware limited liability company to be owned by IGT or
2 affiliates of IGT and TRWH or affiliates of TRWH and controlled by IGT or an affiliate of IGT;
3 and
4 (5) "Person" means a natural person, corporation, limited liability company, partnership
5 (general or limited), joint venture, estate, trust or unincorporated association, any federal, state,
6 county, or municipal government or any bureau, department or agency thereof, any fiduciary acting
7 in such capacity, on behalf of any of the foregoing, or any other legal or business entity or
8 organization.
9 SECTION 3. Authorization and empowerment of State Lottery Division with respect to
10 IGT. Notwithstanding any provisions of the general laws of the state or regulations adopted
11 thereunder to the contrary, including, without limitation, the provisions of Chapter 2 of Title 37,
12 Chapter 61 of Title 42, Chapter 64 of Title 42 and Chapter 148 of Title 42, the Division is hereby
13 authorized, empowered and directed:
14 (1) To enter into an amendment (the "IGT Master Contract Amendment") to the master
15 contract dated as of May 12, 2003 by and between the Division and IGT, as amended (authorized
16 pursuant to Chapter 33 of the 2003 Public Laws) (the "IGT Master Contract"), which would extend
17 the term of the IGT master contract by twenty (20) years to June 30, 2043 (the "Extended Expiration
18 Date") and would, among other matters:
19 (i) Extend the term of the On-Line Gaming Agreement dated as of January 29, 1997 by and
20 between IGT and the Division, as amended (including, without limitation, by Section 11 of the IGT
21 Master Contract) (the "On-Line Lottery Agreement"), for an additional twenty (20) years to the
22 Extended Expiration Date;
23 (ii) Extend the term of the Video Lottery Central Computer System Agreement dated as of
24 December 20, 2001 by and between IGT and the Division, as amended (including, without
25 limitation, by Section 12 of the IGT Master Contract) (the "Video Lottery Agreement"), for an
26 additional twenty (20) years to the Extended Expiration Date;
27 (iii) Extend the term of the Video Lottery Terminal Technology Provider License
28 Agreement dated as of September 28, 2000 by and between IGT and the Division, as amended
29 (including, without limitation, by Section 13 of the IGT Master Contract) (the "VLT Agreement"),
30 for an additional twenty (20) years to the Extended Expiration Date;
31 (iv) Extend the term of the Instant Ticket Vending Machine Agreement dated October 21,
32 1999 between IGT and the Division and IGT (the "Instant Ticket Vending Machine Agreement"),
33 as amended (including, without limitation, pursuant to Section 8.2 of the IGT Master Contract), for
34 an additional twenty (20) years to the Extended Expiration Date;
LC004693 - Page 2 of 21
 1 (v) Extend the term of the Instant Ticket Agreement dated as of June 30, 2016 by and
2 between the Division and IGT (the "Instant Ticket Agreement"), as amended, for twenty (20) years
3 to the Extended Expiration Date;
4 (vi) Extend the term of the Website Services Agreement dated as of January 9, 2019 by
5 and between the Division and IGT (the "Website Services Agreement") for twenty (20) years to the
6 Extended Expiration Date;
7 (vii) Provide for the purchase by IGT from the Division for the price of twenty-five million
8 dollars ($25,000,000) (the "Second Intangible Asset Purchase Price"), twelve million five hundred
9 thousand dollars ($12,500,000) of which shall be paid on or before June 30, 2022 and twelve
10 million five hundred dollars ($12,500,000) of which shall be paid on or before June 30, 2023, of
11 the right of IGT to be the exclusive provider to the Division of products and services pertaining to:
12 (A) Online lottery systems, online lottery terminals and related equipment;
13 (B) Central communication systems;
14 (C) Video lottery terminals for the period commencing on January 1, 2022 (the "JV
15 Effective Date") and expiring on the Extended Expiration Date (with such exclusive rights to be
16 exercised solely through the joint venture pursuant to the assignment effected by the Assignment
17 and Assumption Agreement (as defined in Section 3(b) of this act) for the period commencing on
18 the JV Effective Date and expiring on the Extended Expiration Date);
19 (D) Instant ticket vending machines;
20 (E) Instant tickets; and
21 (F) The processing of on line, instant ticket and video lottery transactions; and
22 (viii) Provide that:
23 (A) The compensation rates payable by the Division pursuant to the On-Line Lottery
24 Agreement shall be as follows:
25 Annual Sales Rate
26 Sales to $275 million 5.00%
27 Sales from above $275 million to $400 million 4.00%
28 Sales above $400 million 5.00%; and
29 (B) The compensation rates payable by the Division pursuant to the Video Lottery
30 Agreement, the VLT Agreement, the Instant Ticket Vending Machine Agreement, the Instant
31 Ticket Agreement and the Website Services Agreement shall remain unchanged;
32 (ix) Obligate IGT to, among other matters:
33 (A) Invest or cause to be invested by an affiliate or an eligible third party in the aggregate
34 at least one hundred fifty million dollars ($150,000,000) in the state (the "Second Investment
LC004693 - Page 3 of 21
 1 Obligation") in connection with acquiring interests in real property, leasehold improvements of real
2 property and assets acquired in connection with the performance of obligations under the IGT
3 Master Contract, as amended by the IGT Master Contract Amendment (the "IGT Amended Master
4 Contract"), including, without limitation: (1) The second intangible asset purchase price; (2) Video
5 lottery terminals purchased by IGT and affiliates of IGT during the period commencing on July 1,
6 2019 and expiring on December 31, 2021; (3) Video lottery terminals purchased by the joint
7 venture during the period commencing on the JV Effective Date and expiring on the Extended
8 Expiration Date (including, without limitation, video lottery terminals sold by IGT and other
9 affiliates of IGT); and (4) Goods acquired in connection with the business operations of IGT or any
10 affiliate in the state interests in real property, improving real property and performing its obligations
11 under including, without limitation, the provision of goods in connection with the business
12 operations of IGT or any affiliate in the state (the "Investment Obligation Assets");
13 (B) Employ, cause to be employed by an affiliate or cause to be self-employed in the state
14 during each calendar year commencing with 2020 at least one thousand one hundred (1,100) full-
15 time equivalent employees at compensation rates not less than one hundred fifty percent (150%) of
16 the minimum wage in effect from time to time pursuant to § 28-12-3 (the "Employment
17 Obligation");
18 (C) Expend an amount equal to the product of: (1) One thousand one hundred (1,100); (2)
19 Two thousand eighty (2,080); and (3) Two hundred fifty percent (250%) of the minimum wage in
20 effect from time to time pursuant to § 28-12-3 on taxable compensation for the full-time equivalent
21 employees employed or cause to be employed with respect to the Employment Obligation during
22 each calendar year commencing with 2020 (the "Taxable Compensation Obligation");
23 (D) Assume responsibility for the lottery related activities performed by lottery sales
24 representatives currently employed by the Division from the Division and in connection therewith
25 offer employment to such lottery sales representatives; and
26 (E) Grant the Division the option to make proposals to IGT that IGT locate in the state
27 certain employees not located in the state (the "Employee Location Obligation");
28 (x) Grant the Division the right to terminate the IGT Amended Master Contract if: (A) IGT
29 fails to perform the Second Investment Obligation; (B) IGT fails to perform the Employment
30 Obligation; (C) IGT fails to perform the Taxable Compensation Obligation; or (D) IGT fails to
31 perform the Employee Location Obligation in addition to any rights the Division has to terminate
32 the Video Lottery Agreement, the VLT Agreement, the Instant Ticket Vending Machine
33 Agreement, the Instant Ticket Agreement and the Website Services Agreement;
34 (xi) Provide that the provisions regarding the Video Lottery Terminal efficiency process
LC004693 - Page 4 of 21
 1 would be of no further force and effect for the period commencing on the JV Effective Date and
2 expiring on the Extended Expiration Date, subject to the provisions of Section 4 of this act; and
3 (xii) (A) Contain such other terms and conditions as the Division and IGT may agree; and
4 (B) To consent to: (I) The irrevocable assignment by IGT to the Joint Venture of: (aa) The right to
5 be the exclusive Technology Provider for the period commencing on the JV Effective Date and
6 expiring on the Extended Expiration Date; and (bb) The VLT Agreement, as modified solely by
7 the IGT Master Contract Amendment (the "Amended VLT Agreement"); and (II) The assumption
8 by the Joint Venture of the obligations of IGT under the Amended VLT Agreement pursuant to an
9 assignment and assumption agreement between IGT and the Joint Venture (the "Assignment and
10 Assumption Agreement").
11 SECTION 4. Additional provisions regarding the IGT Master Contract Amendment. The
12 IGT Master Contract Amendment shall also include provisions that require IGT to: (1) Regularly
13 update or replace hardware and software; (2) Annually replace a minimum of six percent (6%) of
14 the video lottery terminals; (3) Provide a minimum of five percent (5%) of the video lottery
15 terminals with premium or royalty games with such video lottery terminals performing at less than
16 one hundred fifty percent (150%) of floor average for any calendar year subject to review by the
17 Division for replacement or modification; (4) For the period commencing on the JV Effective Date
18 and expiring on the Extended Expiration Date, cause the Joint Venture to remove five percent (5%)
19 of the video lottery terminals provided as of December 31 of the preceding year supplied by each
20 supplier to the Joint Venture whose ratio of: (i) The ratio of: (A) The aggregate net terminal income
21 generated by the video lottery terminals supplied by such supplier and provided by the Joint
22 Venture during the first thirteen (13) weeks of each calendar year to (B) The aggregate net terminal
23 income generated by the video lottery terminals provided by the Joint Venture during such period
24 to; (ii) The ratio of: (A) The number of video lottery terminals supplied by such supplier and
25 provided by the Joint Venture to (B) The total number of video lottery terminals provided by the
26 Joint Venture is less than ninety seven percent (97%); provided, however, that video lottery
27 terminals manufactured by IGT or an affiliate of IGT shall not be subject to removal for calendar
28 years 2022, 2023 and 2024; and (5) Require IGT to waive its claims against the Division arising
29 from the promotional points programs for the video lottery terminal facilities up to twenty percent
30 (20%) of the amounts of net terminal income for the prior marketing year for the period
31 commencing on July 1, 2020 and expiring on the Extended Expiration Date.
32 SECTION 5. Sections 42-61.2-1 and 42-61.2-7 of the General Laws in Chapter 42-61.2
33 entitled “Video-Lottery Games, Table Games and Sports Wagering” is hereby amended to read as
34 follows:
LC004693 - Page 5 of 21
 1 42-61.2-1. Definitions.
2 For the purpose of this chapter, the following words shall mean:
3 (1) "Casino gaming" means any and all table and casino-style games played with cards,
4 dice, or equipment, for money, credit, or any representative of value; including, but not limited to,
5 roulette, blackjack, big six, craps, poker, baccarat, paigow, any banking or percentage game, or any
6 other game of device included within the definition of Class III gaming as that term is defined in
7 Section 2703(8) of Title 25 of the United States Code and that is approved by the state through the
8 division of state lottery.
9 (2) "Central communication system" means a system approved by the lottery division,
10 linking all video-lottery machines terminals at a licensee licensed video lottery retailer location to
11 provide auditing program information and any other information determined by the lottery division.
12 In addition, the central communications system must provide all computer hardware and related
13 software necessary for the establishment and implementation of a comprehensive system as
14 required by the lottery division. The central communications licensee may provide a maximum of
15 fifty percent (50%) of the video-lottery terminals.
16 (3) "Collegiate sports or athletic event" shall not include a collegiate sports contest or
17 collegiate athletic event that takes place in Rhode Island or a sports contest or athletic event in
18 which any Rhode Island college team participates regardless of where the event takes place.
19 (4) "Credit facilitator" means any employee of a licensed video-lottery retailer approved in
20 writing by the division whose responsibility is to, among other things, review applications for credit
21 by players, verify information on credit applications, grant, deny, and suspend credit, establish
22 credit limits, increase and decrease credit limits, and maintain credit files, all in accordance with
23 this chapter and rules and regulations approved by the division.
24 (5) "DBR" means the department of business regulation, division of gaming and athletics
25 licensing, and/or any successor in interest thereto.
26 (6) "Director" means the director of the division.
27 (7) "Division," "division of lottery," "division of lotteries," or "lottery division" means the
28 division of lotteries within the department of revenue and/or any successor in interest thereto.
29 (8) "Hosting facility" refers to Twin River and the Tiverton gaming facility.
30 (9) “IGT” means IGT Global Solutions Corporation, a Delaware corporation.
31 (9)(10) "Licensed video-lottery retailer" means a pari-mutuel licensee specifically licensed
32 by the director subject to the approval of the division to become a licensed video-lottery retailer.
33 (10)(11) "Net table-game revenue" means win from table games minus counterfeit
34 currency.
LC004693 - Page 6 of 21
 1 (11)(12) "Net terminal income" means currency placed into a video-lottery terminal less
2 credits redeemed for cash by players.
3 (12)(13) "Newport Grand" means Newport Grand, LLC, a Rhode Island limited-liability
4 company, successor to Newport Grand Jai Alai, LLC, and each permitted successor to and assignee
5 of Newport Grand, LLC under the Newport Grand Master Contract, including, but not limited to
6 without limitation, Premier Entertainment II, LLC and/or Twin River-Tiverton, LLC, as defined in
7 subsection (33) of this section, provided it is a pari-mutuel licensee as defined in § 42-61.2-1 et
8 seq.; provided, further,