Rhode Island’s job bet depended on one studio succeeding
Rhode Island’s deal with 38 Studios was meant to turn a video-game company into an anchor for a growing technology sector. The state offered a $75 million loan through its economic-development agency, with public backing behind the financing. In return, the company was expected to move to Rhode Island and create hundreds of jobs.
That structure made the promised jobs and the company’s ability to repay closely linked. A loan can be repaid from a borrower’s future income; if the borrower fails, a public guarantee can leave taxpayers responsible for the financing instead. The state was not simply buying a game—it was taking on risk in hopes that the company would grow into a durable local employer.
One release could not carry the whole plan
38 Studios released Kingdoms of Amalur: Reckoning in 2012, a large fantasy role-playing game. But the company’s broader ambitions required continuing investment: games of this scale take years to build, and a studio needs enough revenue or new financing to keep its staff and projects going between releases. A single launch, even a substantial one, could not guarantee that cash flow.
The studio ran out of money and filed for bankruptcy in 2012. With the borrower unable to repay, the public backing became a real obligation rather than a safeguard on paper. Rhode Island was left servicing the debt and dealing with the fallout, while the anticipated employment boom never took shape.
The cost of forecasting growth
The episode exposed a difficult tradeoff in economic-development policy: governments may accept financial risk to attract a company, but projected jobs are not the same as reliable revenue. In this case, the state’s return depended on a young game studio surviving long enough to deliver both. When it failed, the company disappeared; the public commitment did not.
