Delaware Advances House Bill 365 to Open Sports Betting Market for Increased Competition

Delaware lawmakers are advancing House Bill 365, which aims to create an open sports betting market in the state. Sponsored by Representatives Franklin Cooke and William Bush, this bill has progressed to the House Appropriations Committee following a review by the istration Committee.

The Journey of Sports Betting in Delaware

Delaware made headlines in 2018 as one of the first states outside of Nevada to legalize retail single-game sports betting. Initially, the state-operated under an exclusive partnership with 888 Holdings, offering both retail and online sports wagering. This exclusive arrangement set Delaware apart but also limited the market to a single operator.

In a significant shift last year, Rush Street Interactive (RSI) took over from 888 Holdings, entering a five-year contract to make its BetRivers brand the sole provider of sports betting and iGaming in Delaware. This transition has involved substantial operational costs, including expenses for hosting servers, advertising, and geolocation services, amounting to $2.2 million since RSI became the state’s vendor.

Introduced in April, House Bill 365 aims to amend Delaware’s current gaming laws, which restrict sports betting operations to a single exclusive operator. The proposed bill seeks to open the market, allowing multiple operators to enter and compete. Proponents of the bill, including Representatives Cooke and Bush, believe this move will generate additional tax revenue and reduce the costs associated with having an exclusive operator.

The bill proposes a new framework where sports betting operators can partner with video lottery agents. These agents would be authorized to form agreements with up to two online sportsbooks. To participate, operators would need to pay a $500,000 license fee for a five-year term. License renewals would cost $250,000 for another five years. The proceeds from these licensing fees would go to Delaware’s General Fund.

Beyond the licensing fees, HB 365 also introduces an 18% tax on adjusted gross receipts from sports betting operators. The tax revenue would be funneled into the state’s Lottery Fund, with part allocated to the Division of Substance Abuse and Mental Health and the Delaware Thoroughbred Racing Commission. ers of the bill argue that this structure will provide a steady stream of revenue for the state, funding important public services and initiatives.

and Opposition

The bill has received backing from the Internet Sports Lottery Legislative Working Group, a bipartisan coalition that sees the potential for economic growth and enhanced market competitiveness. ers believe that opening the market will not only attract more operators but also improve the quality of services offered to consumers. They argue that increased competition will drive innovation and provide a better overall betting experience for Delaware residents.

However, RSI, the current exclusive operator, has expressed concerns about the bill. The company has invested heavily in its role as the sole provider and worries about the financial and regulatory implications of opening the market to competitors. RSI argues that its existing commitments and the potential disruption from new entrants could undermine the stability of the market and question the projected revenue benefits.

As House Bill 365 moves through the legislative process, its potential to reshape Delaware’s sports betting landscape remains a topic of significant interest. The bill aims to create a more dynamic and competitive environment, which could lead to increased tax revenues and reduced operational costs for the state. However, the transition from an exclusive operator model to an open market is complex and will require careful consideration of various stakeholders’ interests.

The debate surrounding HB 365 highlights the challenges and opportunities inherent in regulating and expanding the sports betting market. As Delaware continues to evolve its approach to gaming, the outcomes of this legislative effort will be closely watched by policymakers, industry players, and consumers alike. The future of sports betting in Delaware may hinge on finding a balance that promotes competition, ensures regulatory stability, and maximizes economic benefits for the state.

Cooke during an istration Committee meeting on Wednesday said: “Delaware has had mobile sports betting through the BetRivers platform for more than four months. Despite what you’ve been told it is not producing significant revenue for the state. The state of Delaware earned $8.5 million in the fiscal year of 2023 without mobile sports betting.”

Source:

”Bill to create open sports betting market in Delaware advances”, SBC Americas. May 24, 2024.