Delaware's legislation to formalize the recommendation of the state Internet Sports Lottery Legislative Working Group, allowing multiple online sportsbook platforms, is advancing in the General Assembly.
State Representative Franklin Cooke (D-District 16) presented House Bill 365 in April together with Representative William Bush (D-District 29). The proposal aims to end the Delaware Lottery's exclusive control over online sports betting by allowing up to five more 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 mentioned that residents of Delaware still travel to nearby states like Maryland, Pennsylvania, and New Jersey to use their favored mobile applications.
Income Forecasts
Last year, the Delaware Lottery collaborated with Rush Street Interactive, the online gaming division of Chicago’s Rush Street Gaming, after its former partner, 888 Holdings, exited the market.
Rush's BetRivers mobile application now operates iGaming and online sports wagering for the state. Rush additionally manages retail sports betting at the three physical casinos in the state and other retail wagering venues.
Since BetRivers took over the online gaming operations, revenue has surged. Rush and some state officials argue that altering the operational model by introducing more sports betting companies would lead to a decrease in net revenue 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 legislators against Cooke’s bill argue that welcoming more operators would financially harm the state, since BetRivers, which operates for the lottery, must share roughly 58% of its gross revenue with the lottery, primarily benefiting the General Fund and the horse racing sector. Cooke's legislation suggests a $500K licensing fee for a license that lasts five years, imposing a 19.5% tax on gross sportsbook profits, allocating 18% to the lottery and 1.5% to horsemen.
Possible Lawsuit
Cooke contends that the state could gain higher revenue from an expanded online sports betting market, since BetRivers' lower name recognition in comparison to DraftKings, FanDuel, BetMGM, and Caesars Sportsbook might deter certain bettors. State fiscal officials, however, project that the state could experience a $3 million decrease in its yearly sports betting tax revenue if the lottery loses its exclusivity.
Rush Street may contest the state law if HB 365 is enacted. The legislation passed the House Administration Committee last week and is now being examined by the House Appropriations Committee.
Last year, Rush was the only bidder for the online gaming lottery contract. The agreement will last for five years. It was not revealed if Rush made an initial payment to the lottery for the iGaming and sports betting rights.