Corruption in Rhode Island: Shady Bargain in Online Gambling

“Rhode Island Ethics” is nothing short of a joke, especially if we consider the state’s rampant corruption in the gambling industry. The Ethics Commission of the state is frequently considered a lapdog instead of a watchdog. Now, the Democratic Governor of the state Gina Raimondo is being called out for her corrupt ties with gambling.

Raimondo has an unusually close relationship with International Game Technology (IGT), and even fellow Democrat Nicholas Mattiello calls it “incestuous.” She went on to give IGT a no-bid contract worth $1 billion to run the lottery service in the state for 20 years. No-bid contracts not just eliminate competition but reek of corruption as well, especially when a Governor ties a company to the lottery for a whopping two decades.

It is also important to note that IGT’s Rhode Island performance is underwhelming than its peers. Other companies with similar contracts in other states have performed considerably better than IGT. Slot machines operated by SGI recorded 56% higher profits, but IGT ended up with a $31,000 lower revenue per machine for Rhode Island. In the last fiscal alone, IGT’s questionable performance has cost state taxpayers about $25 million.

But Rhode Island’s bid to attract online gambling revenue is not uncommon. Most US states are rushing to create online gambling regulations in hopes of larger revenues. The PASPA strike down in 2018 has now opened a larger avenue for online gambling companies to work in the US. Unfortunately, most of these companies are registered and licensed abroad and do not have what it takes to operate in a highly regulated market like the US.

Shady practices by overseas firms are quite common. For instance, Gaming Innovative Group was slapped with a $5 million fine in Sweden for providing sports betting options to minors. Firms paid over £4.5 million in fines to the UK Gambling Commission (UKGC) for failing to prevent money laundering and providing safe gambling options to users. Norwegian authorities went as far ahead as to ban six gaming firms based in Malta over corruption charges. The Chinese app store of Apple removed thousands of apps providing gambling services because of a targeted state media campaign against the companies.

With the bad repute of online gambling firms and rampant corruption in Rhode Island, it would be interesting to check if gambling stops being a burden on the taxpayers anytime soon.