Bally’s Casino Dover is currently one of only three places when sports bets can be taken in Delaware, but that would change with mobile sports betting. DBT PHOTO BY JACOB OWENS
DOVER – The First State is inching closer to offering mobile sports betting after it recently bid out a contract that would pave the way for real-time betting from a gambler’s fingertips.
Delaware made history as the first state outside of Nevada to offer single-game sports wagering after the fall of the Professional & Amateur Sports Protection Act (PAPSA) in a 2018 Supreme Court ruling. It was able to make that history because for nearly a decade it had offered parlay bets on the NFL due to a grandfathering under PAPSA.
The Delaware Lottery, which regulates the state’s casinos, set up sportsbooks at the Delaware Park, Dover Downs and Harrington Raceway casinos, drawing bettors from around the region to make their first legal wagers.
In the nearly five years since Gov. John Carney put down a successful $10 bet on the Phillies though, Delaware has quickly been outpaced to offer the most common and popular form of sports gambling: mobile sports gambling.
Just weeks after Delaware took the first single-game bet, New Jersey did the same and before the end of 2018, had launched online sportsbooks. In 2019, Pennsylvania followed suit with its own and in November, Maryland essentially boxed in Delaware by launching its offering.
Today, it’s common for Delaware bettors who live near state borders to drive across the line to place bets from their phone – but that may soon change.
An opportunity
The Delaware Lottery recently issued a request for proposals (RFP) for a new five-contract for its online gambling offerings, also known as igaming.
For a decade, the state has contracted global online betting giant 888 to run its digital poker, slots and table games. Online sports betting has never been among the options, however, despite being legal since 2018.
The reasons for the inactivity? In part, it’s due to how Delaware established gambling.
While gambling may be established simply through licensure and regulation of gambling companies, as some states have, Delaware is one of only three states where it operates under the state lottery. That seemingly insignificant detail is anything but, explained Delaware Finance Secretary Rick Geisenberger, whose department oversees the state lottery and casinos.
Under Delaware’s Constitution and state statutes, the lottery is required to operate “in a manner which will produce the greatest income for the state.” Because of that requirement, finance and lottery leaders have been hesitant to wade into mobile betting which has typically produced a smaller percentage return on revenue for states than its in-person counterpart, where parlays are more likely to be made and more likely to provide income to the state. That concern is coupled with Delaware’s much smaller population that its neighbors, further diluting its ability to drive wagers and income.
“There’s a whole debate out there that says that these are all different betters, but there’s certainly going to be some cannibalization . There is an argument that mobile sports betting will expand the pie somewhat, but it’s certainly not going to make up the difference between a 5% and 6% straight bet hold and a 25% average parlay hold,” Geisenberger told Delaware Business Times. “I don’t know that we can offer [mobile betting] in the same way that the neighboring states have offered it.”
Yet in 2021, state casino sportsbooks produced a total handle, or dollars wagered, of $89 million, and the lottery walked away with net proceeds of about $11.2 million after paying out winners and vendors. But through the first half of 2022, the handle was dropping and the state was likely to only see a payout of $10 million or less, according to lottery data.
Meanwhile, the annual handle in gambling mecca New Jersey grew to $10.9 billion, with only $800,000 coming from in-person wagering last year. It’s revenue brought in more than $100 million for state coffers.
With the Delaware’s igaming contract expiring this October, lottery officials felt it was time to explore mobile.
What’s possible?
The new RFP aims to have a contractor in place as early as Nov. 1, and the bid submission deadline is Feb. 17.
The state is issuing a five-year contract with five additional one-year extensions possible, and it is seeking a primary vendor that would administer and maintain the online wagering system. That vendor could also operate gaming vendors for the poker, sports betting and table games, but it is also possible that third-party companies that don’t have a full suite of offerings could integrate with a partner, Geisenberger said.
The latter scenario is how the state is operating, with 888 acting as a game vendor under a primary vendor, Light & Wonder (formally known as Scientific Games).
Today, most of the major sports gambling companies from FanDuel to DraftKings, Caesars Sportsbook to BetMGM, and Bally’s to 888, have some degree of vertical integration, making them likely interested in the opportunity. With a single license to offer the online sportsbook through the state lottery though, the key question is what the cost of implementation and proposed vendor splits will be.
Among the gaming vendors likely to bid is the current one.
“888 has enjoyed a long-standing, mutually beneficial relationship with the state of Delaware and we look forward to the continued opportunity to work with the state throughout the process,” Howard Mittman, president of 888 US/SI Sportsbook, said in a statement.
In the end, an RFP to launch mobile sports betting is the biggest step the state has taken yet to reach this point. For Delaware, it could represent a gamble of its own as to whether a smaller return on a larger number of bets will pay off in revenue, but for state gamblers and football fans, it may be worth the risk.
