Delaware lawmakers are nudging a bill that would create a competitive market for online sports betting in the First State closer to the legislative finish line.
House Bill 365 was reported out of the chamber's administration committee this week and assigned to the appropriations committee for its next stop.
The bill would allow the state's three casinos to partner with up to two online sports betting operators apiece, meaning there could be six additional mobile wagering providers in the state.
“There is substantial consumer demand for multiple operators,” said Democratic Rep. Franklin Cooke, H.B. 365’s chief sponsor, during the committee meeting on Wednesday. “Delaware residents are still driving across the border into Maryland, Pennsylvania, and New Jersey to access their favorite mobile apps.”
Welcome to Delaware. Here's some competition.
Currently, there is just one legal online sports wagering operator in Delaware: BetRivers, the owner of which was the only and winning bidder for a contract last year to provide online gaming for the Delaware Lottery for at least five years. BetRivers officially launched online sport betting and internet casino gambling in Delaware in January.
But H.B. 365 would invite into the state a handful of competitors for BetRivers, which says it is already on pace to both meet and exceed all projections for online sports betting in the state for this and subsequent years. A fiscal note for the bill also forecast it would cost the state's general fund $2.7 million, $3 million, and $3.1 million over the next three years.
“Because we are capturing the current market, the state stands to lose millions of dollars changing models,” said Adam Marchuk, vice president of government affairs for BetRivers-owner Rush Street Interactive Inc.
Members of the House administration committee voted to advance H.B. 365 anyway, despite the warnings about the financial fallout, by a 4-1 vote.
While the bill still has a way to go before the Delaware General Assembly adjourns at the end of June, it is making progress. It would cost online sportsbook operators a $500,000 fee for a five-year Delaware sports betting license, in addition to 18% of their adjusted revenue. Furthermore, operators would have to chip in 1.5% of their monthly revenue for horse-racing purses.
Adjusted revenue would be total wagers minus winnings paid to customers, excise tax payments to the federal government, and free bets and other promotional credits provided to users. However, those promotional deductions for operators could only equal up to 2.5% of handle until July 1, 2025, and then up to 2% after that point.
Homework done
The legislation also has the added support of the efforts of a working group that convened last year to study online sports betting, which Cooke was a member of.
The working group released a report in December that said the state “needs to have an online sport lottery” and that it “needs to have multiple online sports lottery operators (skins).”
Cooke said his bill is the product of the working group’s findings and recommendations.
Its preamble declares lawmakers find that “authorizing an Internet sports lottery under the provisions set forth herein will help assure Delaware’s lottery offerings remain competitive with neighboring states; offer Delaware residents a legal, regulated market in which to engage in online sports lottery games; draw consumers from neighboring states and the illicit, offshore sports wagering market; provide consumer convenience, protections, and safeguards; and produce additional revenue for the State.”
