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As lawmakers return to Delaware’s capital in Dover early next month, among the issues on their agenda will be how to move forward with the final recommendations issued by the Internet Sports Lottery Legislative Working Group on the future of online sports betting.
“It is really important that we look at the future and today,” said state Representative Franklin Cooke, a Democrat and member of the task force.
“It’s a challenge. We have a lot of things heading to our legislative session and it is very important that we look at this very closely.”
Cooke stressed that compromise was needed among lawmakers from both parties so they can “come together and get this thing on the road.”
Although Delaware was the first state outside of Nevada to launch full sports betting following the U.S. Supreme Court’s decision to overturn the federal ban on sports wagering in May 2018, the market remains limited to retail sportsbooks at three casinos, as well as sports lottery parlay wagers at retail outlets.
Members of the state's General Assembly last year passed House Resolution 6 to establish a panel to review online sports betting.
The resolution called for a review of policy options before the Delaware Lottery awarded any new contract to a vendor to provide its internet gaming platform. Under the resolution, the House panel’s recommendations were due by June 30, 2023.
The task force’s nine-page report was not released until December 1.
While the task force delayed its recommendations, the Delaware Lottery, citing state procurement laws, named Rush Street Interactive (RSI) in August as the state’s exclusive online gaming and sports betting vendor.
That contract now conflicts with the working group’s final report, which recommends Delaware legalize online sports betting but allow multiple operators, or skins, that are tethered to the state's three land-based casinos.
“From my perspective, what we did is what we were asked to,” said Democratic state Representative William Bush, who chaired the November 29 meeting at which the working group approved the five recommendations.
The working group also recommended Delaware protect its horseracing industry and purse contributions, and that the state should provide additional resources for treatment and prevention of problem gambling.
These five recommendations are not final. It will be up to the state legislature to determine which recommendations to implement.
“It is quite clear that the absence of online sports wagering is detrimental to our revenue in Delaware when our surrounding states have online sports wagering,” the final report reads.
For the first five months of the 2023-2024 fiscal year, sports wagers have totaled $31.07m, with net proceeds of $4.74m, and the state receiving just over $1.48m, according to data compiled by the Delaware Lottery.
Vixio GamblingCompliance’s U.S. Sports Betting and iGaming Forecasting Dashboard estimates that Delaware will record around $11m in gross revenue in 2023, down from more than double that total before Maryland launched legal sports wagering in late 2021.
Revenue could grow to $37m in 2024 and as much as $108m in 2027 should the state legalize mobile sports betting, according to Vixio forecasts.
Bush said the group based its recommendations on current operating models in Maryland, New Jersey and Pennsylvania, which allow multiple online sports-betting operators.
The report said Delaware should consider allowing up to two mobile sports-betting skins per casino, or up to six in total.
Under a 2021 state law that legalized sports betting, Maryland regulators were mandated to award up to 60 mobile wagering licenses and 30 retail sportsbook licenses. Currently, there are 13 retail locations and 12 mobile operators, with several licenses either being awarded but not yet launched or in the pipeline.
Bush noted that in Pennsylvania and New Jersey, all the operators are tethered to a casino, with one skin allowed in Pennsylvania and three skins in New Jersey.
“We have gone through and really looked at the numbers in … all the states that surround us and it appears there is a lot of growth that is occurring,” Bush said. “I think the expectations are it is going to continue.”
Bush explained their research included looking at mobile wagering tax rates in neighboring states, even though the report does not suggest a tax rate for legal mobile wagering in Delaware. In Maryland, mobile sports-betting gross revenue is taxed at 15 percent, New Jersey is 14.25 percent and Pennsylvania has an effective tax rate of 36 percent.
“It’s very important to look at the tax rate, but also the determination of gross gaming revenue that would be included and whether promotional play is included and other things along those lines,” Bush told his colleagues during last month’s working group meeting.
Besides Bush and Cooke, the working group included state Representatives Michael Smith and Timothy Dukes, both Republican members of the Delaware General Assembly. Dukes did not attend the November 29 meeting where members unanimously approved the recommendation that the legislature legalize online sports betting in 2024.
