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Legislation in Delaware to codify the state Internet Sports Lottery Legislative Working Group’s recommendation that more than one online sportsbook platform be permitted is making progress in the General Assembly.
State Rep. Franklin Cooke (D-District 16) introduced House Bill 365 in April along with Rep. William Bush (D-District 29). The measure seeks to terminate the Delaware Lottery’s monopoly on online sports betting in favor of authorizing up to five additional sportsbook platforms.
This legislation will produce revenue for the state and assure that the Delaware Lottery office remains competitive with our neighboring states,” Cooke said. “There is substantial consumer demand for multiple operators.”
Cooke said Delawareans continue to drive into the border states of Maryland, Pennsylvania, and New Jersey to access their preferred mobile apps.
Revenue Projections
The Delaware Lottery partnered with Rush Street Interactive, the digital gaming unit of Chicago-based Rush Street Gaming, last year after the lottery’s previous partner, 888 Holdings, withdrew from the market.
Rush’s BetRivers mobile app now runs iGaming and online sports betting on behalf of the state. Rush also handles retail sports betting at the state’s three brick-and-mortar casinos and other retail wagering locations.
Since BetRivers assumed control of the online gaming business, revenue has soared. Changing the operational model by bringing in additional sports betting firms, Rush and some state officials contend, would result in a net revenue loss for the state.
“I’ve heard some criticisms of our performance, but we are on pace to meet and exceed all projections for the Delaware online sports betting market this year and for years to come,” Adam Marchuk, vice president of legal at Rush Street Interactive, told Delaware Public Media. “If the market is the same size, the state unquestionably makes more revenue — generates more revenue — under the single operator model, as reflected in the fiscal note.”
State lawmakers opposed to Cooke’s bill say the state would lose money by welcoming in more operators, as BetRivers operating on behalf of the lottery is required to share about 58% of its gross revenue with the lottery, which primarily benefits the General Fund and the horse racing industry. Cooke’s bill proposes a licensing fee of $500K for a five-year license, with gross sportsbook win taxed at 19.5%, with 18% reserved for the lottery and 1.5% for horsemen.
Lawsuit Likely
Cooke argues that the state would receive more revenue from a wider online sports betting market, as BetRivers’ lack of name recognition compared with DraftKings, FanDuel, BetMGM, and Caesars Sportsbook could be keeping some bettors away. State fiscal officers, however, estimate the state would see its annual sports betting tax benefit drop by $3 million if the lottery loses the exclusivity.
Rush Street could challenge the state law should HB 365 pass. The bill cleared the House Administration Committee last week and now is under review in the House Appropriations Committee.
Rush was the lone bidder last year for the lottery online gaming contract. The deal is to run for five years. It wasn’t disclosed whether Rush paid the lottery an upfront payment for the iGaming and sports betting rights.
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