Delaware lawmakers are looking to break away from the current monopoly system for online sports betting with a bill in the state’s General Assembly to establish a new multi-license system. While the state has benefited from the recent change of technology partner from 888 Holdings to Rush Street Interactive, some lawmakers believe a competitive market would result in even higher revenue. Under the proposal, Delaware’s three lottery-operated retail casinos could each partner with two sportsbook brands, meaning residents would have as many as six online betting sites to choose from.
The bill hasn’t come out of nowhere. Its sponsors, Reps. Franklin D. Cooke and William Bush, were part of the House Internet Sports Lottery Legislative Working Group. The General Assembly appointed the four-member task force in 2023 to evaluate and make recommendations on the future of sports betting in Delaware.
In the final report, published on Dec. 1, 2023, the task force compared Delaware’s system to neighboring Maryland, New Jersey, and Pennsylvania. It recommended that Delaware switch to a multi-license system. The change would generate more tax revenue and could decrease illegal gambling. The report states:
The success seen in states with multiple online operators suggests that Delaware could benefit from a similar approach, encouraging a more competitive and economically thriving sports wagering market.
Partner Switch Highlights That Product is Key
While Delaware was the first state to legalize sports betting outside Nevada in 2013, it opted for a monopoly system under the control of the Delaware State Lottery. For the first ten years, it had contracted with 888 Holdings to provide the technology. However, when the contract was up for renewal in 2023, the Lottery replaced 888 with Rush Street Interactive (RSI). RSI is the parent company of the BetRivers and PlaySugarHouse brands.
The switch to BetRivers instantly tripled the state’s online casino revenue. The combination of mobile betting and RSI’s platform also boosted sports betting in the state. The handle was $13.76 million in February, compared to $4.12 million in 2023. Meanwhile, with $17.08 million, January saw the highest handle since 2021, up from $8.46 million a year prior.
These results have shown Delaware policymakers that product selection can make a big difference. Clearly, many state residents prefer RSI’s product to 888’s. However, others may have different preferences. A competitive market would allow multiple brands to cater to varied tastes and, quite likely, further improvements in revenue.
Delaware Lottery Director Opposes Multi-Licensing Idea
HB 365 establishes the framework for a multi-license market under the authority of the Lottery Director. The Director will oversee the licensing process, establish requirements, and select qualified applicants. After licensing, the Director would be in charge of enforcing market regulations. Some other key points of the bill include:
- Sportsbooks must go live within 150 days of the law’s effective date.
- A $500,000 license fee for the initial five years.
- Operators will pay an 18% tax rate on gross receipts plus 1.5% for horse racing purses.
- Licensing fees will be allocated to the state’s General Fund, while tax revenue will be allocated for compulsive gambling programs and the State Lottery Fund.
- The Lottery Director may issue emergency regulations as necessary, and final rules must be implemented within one year of the bill’s enactment.
As with any proposal, HB 365 has opponents. These include current Lottery Director Helene Keeley. In December, Keeley said that the one-operator system is the best for the state, a sentiment she echoed after the bill’s introduction.
To have the multiple mobile sports gaming businesses to compete with ourselves — we don’t believe it’ll grow the pie, and we think it will hurt the taxpayers. Our job is to maximize the state revenues and, as written, House Bill 365 would reduce state revenues.
Keeley argued that Delaware’s current system of one operator for one million residents is equivalent to Pennsylvania’s ratio of 13 operators to 13 million residents. She also noted how much revenue has already grown—and continues to grow—since RSI took over. While the exact profit rate with RSI is confidential, the Lottery Director has said the state receives “significantly more than 15%.”
One risk of the multi-operator system is that the Delaware State Lottery will need to renegotiate its deal with RSI if the bill passes. To help with those negotiations, the task force had proposed that RSI might occupy one license at each casino. That would leave room for only three competitors. However, that proposal didn’t make it into the bill.
Could Delaware Have More Than One Online Casino?
If HB 365 were to pass and show favorable results, that could spark a conversation about Delaware’s online casino model. As with sports betting, Delaware has a monopoly system for iGaming. Although each retail casino has a separate online site, RSI supplies the technology for all three, making them effectively identical. That leaves little incentive for players to try different online casinos and no options for those who don’t like the RSI product.
Delaware’s online casinos have historically underperformed compared to other iGaming states. In 2023, the sites took a little over $14 million in revenue. In comparison, online casinos in West Virginia—the competitive iGaming market closest in population to Delaware—generated $157 million, more than five times higher per capita. So, although revenue has tripled in 2024 since RSI took over, Delaware still lags significantly behind West Virginia, and a lack of competition may be the reason. Without regulated alternatives, players unhappy with a monopoly product may turn back to the offshore black market.
There are positive examples of other jurisdictions switching from a monopoly to a multi-license system. Ontario, Canada, made the change about two years ago. The province saw a significant decline in the number of players using illegal offshore sites in its first year. Before the switch, estimates show that 70% of players used illegal sites. Meanwhile, over 85% were playing at legal online casinos one year into the new market. The move has also been financially successful, with the latest data showing online casinos reporting record revenue.
Other examples of successful switches include Denmark and Sweden. Both European countries saw a significant decrease in gambling activity on international sites. Sweden saw a drop from 56% to 9%, while in Denmark, the number dropped from 28% to 8%.
Given how long it has held its iGaming monopoly, the Lottery would likely object even more strongly to such a proposal. To overcome that, the sports betting effort would need to pass and have a dramatic and irrefutably positive impact on revenue so as to make counter-arguments difficult.
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