2023 marks the tenth anniversary of legal online gambling in the US. In 2013, three states unveiled regulated online poker rooms, two of which also elected to allow casino games. In New Jersey and Delaware, some paperwork will be needed to keep them going for another decade.
Each of the three states took a different approach. Nevada, fearing the impact that full iGaming would have on its retail casinos, decided to allow online poker only. Delaware opted for a state monopoly, with a single operator working in conjunction with the lottery. On the other hand, New Jersey launched a private market that has served as a template for other states’ legislative efforts in recent years.
Ten years is an important milestone in its own right. But for the latter two states, it’s more than just a nice, round number.
Way back in the 20th century, subscribers to printed publications used to receive renewal notices in the mail. If you didn’t fill out the card and mail it back, your magazines would stop coming. Similarly, both Delaware and New Jersey’s online gambling plans have an expiry date attached, and it’s this year.
In New Jersey’s case, the law itself is set to lapse. Lawmakers will need to pass a new bill to extend it. The situation is different in Delaware. It is the contract with the lottery’s supplier, 888 Holdings, that’s reaching the end of its term. That means a more complicated process to extend online gambling, as it needs to allow other potential suppliers to place competing bids.
Here’s to Another Ten Years in New Jersey
New Jersey online casinos launched in November 2013. For that reason, November is also the month in which the current law will expire.
There’s a lot we now take for granted about how regulated online gambling works in the US. However, back in 2013, New Jersey had no precedent to follow. Its lawmakers had to figure out from scratch how to set things up such that they would work in the US.
The Garden State’s most important contribution may have been the retail-online partnership model. Requiring online casino companies to host their servers on the physical premises of Atlantic City’s brick-and-mortar casinos is an idea that’s now replicated in almost any iGaming bill, as well as in many states’ online sports betting laws. As well as helping to ensure the security of the servers, it forced online operators into partnerships with the retail industry, quelling the latter’s fears about online competition.
Looking at the market’s success, it’s not hard to see why other states have emulated it. New Jersey online casinos have sustained double-digit annual growth percentages throughout those ten years. In 2014, its first full year, New Jersey iGaming (including poker) produced $124 million in gross gaming revenue. In 2022, the number was $1.66 billion, a 13-fold increase in the span of nine years.
As of the end of 2022, the market has generated a total of $5.5 billion in gross revenue and $820 million in state tax.
Legislative Expiry Dates as a Safety Net
However, back in 2013, it wasn’t a sure thing that online gambling would work out for New Jersey. Knowing that repealing laws can be even more complicated than passing them, lawmakers added a ten-year time limit to the bill as a safeguard.
Fortunately, signing on for another ten years will be simple. Senator James Beach has already introduced Bill S3075 to do so. The only change it makes is to the phrase “shall expire 10 years following the operative date,” replacing the 1o with a 20.
With no significant opposition to renewal in the legislature – and a massive loss of employment and tax revenue looming should it fail – the bill should be a shoo-in to pass. That means we’ll be back in 2033 to do the same thing again.
Will 888 Continue to Hold a Delaware Monopoly?
Delaware sits at the opposite end of the spectrum in terms of the success of its market. Its contribution to total figures for the US market is essentially a rounding error. It didn’t even see its first month with $1 million in gross iGaming revenue until retail casinos shut down in 2020 due to the COVID-19 pandemic.
In part, that’s because of its low population. However, even accounting for that, it trails far behind every other online casino state in per capita gross revenue. The lottery monopoly model allows the state to claim almost two-thirds of that for its coffers, yet New Jersey, with a 15% tax rate, collects about three times as much per capita.
It’s hard not to conclude that the lack of competition in the marketplace is at fault. However, without new legislation, that aspect of the market won’t change.
Delaware contracts with its chosen supplier for a minimum of five years, with an additional five years of contract extensions at the lottery’s discretion. Like New Jersey, it will reach the expiry date of its final extension this year.
Public policy requires that the Delaware State Lottery initiate a public bidding process rather than simply deciding whether or not to stick with 888 Holdings. To that end, it issued a Request for Proposals (RFP) on Jan 12. It will continue accepting such proposals until Feb 17. Vendor presentations will follow, and staff will make their recommendation to the Lottery Director by Apr 14.
It’s rare but not unheard of for state lotteries and other public entities to change suppliers in cases like this. If the lottery selects a new supplier, the company must be ready to roll the new platform out by Nov 1.
Possible Impacts on Delaware Online Poker
If Delaware does change suppliers, the impact on casino users should be minimal. The contract includes the requirement that the existing supplier assists with the transition in the final year should the lottery select a different supplier.
Therefore, the sites – one each for the state’s three racetracks – would remain the same, and players would keep their logins and balances. The look and feel of each site might change, as would the selection of games.
However, the impact on poker players would be more dramatic. That’s due to Delaware’s participation in the Multi-State Internet Poker Agreement.
888’s software powers WSOP‘s poker product. Therefore, Delaware poker players currently play on what was until recently the only interstate network in the US, spanning Nevada, Delaware and New Jersey.
The RFP indicates that any potential supplier must be able to offer poker, though this could come by way of a subcontract. Aside from WSOP, only two online poker operators legally serve the US.
Hypothetically, if Flutter were to win the bidding, Delaware residents would be playing on PokerStars rather than WSOP. Otherwise, the winning bidder could subcontract to either 888 (keeping players on the WSOP network) or Entain (switching them to BetMGM Poker). It’s unlikely that the lottery would consider a proposal involving the launch of a standalone brand because Delaware lacks the population to support a non-networked poker room.
This is all highly speculative, however. At the end of the day, it seems most likely that the lottery will stick with 888 rather than invite complications with a change.
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