Expanded sports betting coming to a track near you
Delaware is moving quickly to offer betting on single NFL and NBA and other sports events.
“The state wants to be ready to go early June,” said Ed Sutor, chief executive officer of Dover Downs Hotel & Casino. “Hopefully we're the first in the country to get it open.”
Only a few days after the U.S. Supreme Court's May 14 decision allowing full-scale sports betting across the country, Delaware officials said they were ready to take advantage of the ruling and the new potential revenue source.
“We are confident that Delaware has the legal and regulatory authority to authorize sports gaming in Delaware,” said Delaware Finance Secretary Rick Geisenberger in a May 17 statement. The state is preparing to launch full-scale gaming in June. “The Delaware Lottery has had plans in place for months,” he said.
Delaware Lottery Director Vernon Kirk said full-scale gambling, which includes betting on single games, will be limited to Delaware's three racetracks – Delaware Park, Dover Downs and Harrington Raceway. About 105 sports retailers, such as convenience stores, will continue to sell NFL parlays which require a better to choose three winning teams in order to win. Those retailers will be allowed to sell college football parlays or a combination of NFL and college parlays, Kirk said.
Sutor said casino employees began sports-betting training May 21, primarily learning new terminology used in single bets.
The competition is sure to be swift. New Jersey is poised to benefit after taking its case for expanded gambling to the U.S. Supreme Court, which ultimately ruled in New Jersey's favor and opened gambling opportunities across the country. The U.S. Supreme Court's decision overturned the federal Professional and Amateur Sports Protection Act, which had prohibited gambling on single events except in Nevada, and had allowed sports betting in only four states. Since 2009, Delaware has been the only state east of the Mississippi River allowed to offer NFL parlay betting – an opportunity grandfathered in because Delaware had passed a gambling law in the 1970s and briefly offered gambling in 1976.
NFL parlay bets were first allowed at the state's three horse racing tracks and later expanded in 2012 to include convenience stores and other retailers. With the Supreme Court's latest decision, Delaware betters will be able to wager single bets on all professional and college sports. The only exception is gambling on Delaware colleges, which legislators in the 1970s prohibited under Delaware law.
Sutor said state coffers stand to gain the most from gambling revenue – using a formula created in the 1990s when slot machines were first added to Delaware's three racetracks. The original slot machine bill allowed slot machines only at Delaware's three racetracks in an effort to bolster Delaware's struggling horse racing industry. Under Delaware law, 50 percent of proceeds from sports betting goes to the state's general fund. Another 10 percent supplements purses for Delaware-owned racehorses at the state's standardbred and thoroughbred tracks, leaving 40 percent for the tracks.
Over the years, gambling has expanded to table games and roulette, but by law those games are restricted to the three racetracks. Single sports bets will also be limited to the three racetracks.
For fiscal year 2018, Kirk said, sports betting has so far brought in $46.4 million in sales, up from $46.1 million in 2017.
A small percentage
Sutor said the amount of money a casino can make from single bets is smaller than money made from parlay bets. For parlay bets, he said, the house wins 30 percent of money wagered – a similar win percentage shown in Las Vegas, according to gambling industry reports. Las Vegas statistics on single game bets shows the win percentage for casinos drops to about 5 percent. Out of those win amounts, Sutor said, the state and horse racing purses get a 60 percent cut. On top of that, he said, a risk manager underwriting single bets will also receive a percentage.
“We'd have to do six times the amount of activity on single bets to equal what one bet on a parlay would do,” he said.
On the horizon, Sutor said, he expects the NFL, NBA and other professional sports organizations will also want some of the profits from sports betting. He said he expects professional sports organizations will lobby Congress for a piece of the action. “They don't want us to do it without them getting something,” he said.
Sutor said expanded sports betting is not expected to bring in the tens of millions of dollars that slot machines and table games brought to the state.
“It's not going to be a game-changer for the casinos,” he said. “We're hoping there are side benefits, but from the activity of sports betting itself, it's insignificant.”
With an eye on U.S. Securities and Exchange Commission rules that prevent a public company from disclosing inside information, Sutor said Dover Downs Hotel & Casino does not break out the amount of revenue generated by sports betting. He would not say what percentage of Dover Downs’ $34 million gaming revenue reported for the first quarter of 2018 came from sports betting, or by how much full-scale sports betting would increase Dover Downs' $43 million first-quarter earnings. In a March press release, Dover Downs Gaming & Entertainment reported a $361,000 loss compared to first-quarter earnings in 2017.
Using Nevada as an example – up to now the only state with full-scale gambling – Sutor said Nevada's sports gambling revenue is about 2 percent of its total gambling revenue. And that's with a tax structure that is one-tenth of Delaware's, he said.
Still, Sutor said, he welcomes expanded sports betting to Delaware.
“Are we happy to have it? Yes, because it will attract people. There is excitement for it,” he said. “It's a good deal for the state. We're going to cooperate and do everything that we can to drive business to sports betting.”
