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Overview: Online Sports Betting In Delaware

Online Sports Betting In Delaware: Governor John Carney Makes Bet in 2018
Delaware has a long history of sports betting. It’s one of the four states with exemptions from PASPA, the law preventing states from legalizing sports betting. Delaware had a partial exemption, which allowed Delaware to offer NFL parlay bets. But thanks to a law it passed in 2009, Delaware got sports betting up and running the month after PASPA’s repeal. It was off to a head start but floundered the execution by making it a lottery-run industry. Limiting competition has depressed sports betting revenues. To be clear, Delaware has retail sports betting run by the state lottery but doesn’t have online sports betting. It’s also not pushing to introduce it anytime soon. If bettors like betting online, they’ll have to drive to New Jersey.

How Sports Betting Came To Delaware

Remember when the economy crashed in 2008? The housing bubble popped and started a chain reaction that decimated the economy. Many states were also looking for ways to generate revenue and power through the Great Recession. Since Delaware had an opening to PASPA, it tried legalizing sports betting. It had an $800 million deficit and hoped to make $50 million in the first year of sports betting. Every little bit counted when unemployment continued rising. However, the bill ran into serious legal problems. PASPA forbade states from legalizing sports betting, and Delaware had legalized it anyway. But Delaware already had a partial exemption from PASPA, so the Governor felt like he could legalize it in his state. The Third Circuit mostly disagreed with him. The Governor wanted Nevada-style sports betting, and Third Circuit left him without:
  • Game lines
  • Sports betting on any league besides the NFL
That gutted Delaware’s sports betting offerings throughout the 2010s. However, the law was limited in its application, not struck off the books. It was sitting there in Delaware’s lawbooks until 2018 when PASPA was ruled unconstitutional. (Unsurprisingly, the conservative-leaning court ruled in favor of states’ rights, allowing states to decide on sports betting legalization for themselves.) Consequently, the Third Circuit’s original restrictions were overruled. With a sports betting bill already signed, passed, and on the books, Delaware was perfectly positioned to launch sports betting within a month of PASPA’s repeal.

What About Online Sports Betting In Delaware?

Online sports betting wasn’t anywhere in Delaware’s original bill. But, given the legal environment in the late 2000s, that’s unsurprising. The most permissive sports betting industry at that time was Nevada, and it had restrictions that we gawk at today. Nevada didn’t have mobile sports betting until 2010, a year after Delaware legalized sports betting. (And who thought Delaware would release a Blackberry sportsbook before Nevada, anyway?) Online sports betting doesn’t appear in Delaware’s original bill, and that shouldn’t surprise anyone. Since it wasn’t in the bill that let Delaware launch so quickly, online sports betting hasn’t been offered in Delaware. Instead, bettors have to visit one of the three casinos offering sports betting. That’s not a huge deal in a small state like Delaware. But the industry has changed dramatically since 2009. Delaware is not at the forefront anymore. And it shows in the numbers.

Delaware’s Lagging Sports Betting Industry

Delaware’s sports betting industry is run by the lottery. That means, instead of private companies partnering with casinos and competing, the state lottery runs a sportsbook. In Delaware, 50% of gross gaming revenue goes to the state general fund. 40% goes to the racetrack, and 10% goes to the horse race purses. Since the state operates the sportsbooks, all the money goes to the state. However, the monopoly on the industry also decreases revenue. With one competitor and only three locations, sports betting isn’t going to rake in the big bucks. In 2020, Delaware only collected $8.3 million in sports betting taxes. That’s about one month of New Jersey’s sports betting tax revenue. Even though Delaware gets half of the sportsbook revenue, it’s taking half of a tiny pie. In contrast, New Jersey takes a smaller slice of a pie that dwarfs Delaware by several orders of magnitude. If Delaware wants to generate that kind of money from sports betting, it needs to change.

What’s Holding Delaware Sports Betting Back

Switching to a free-market model and introducing online sports betting would increase the tax revenue Delaware receives from sports betting. There’s precedent for both actions, too. Oregon is switching from a government-run sportsbook to a free-market model. Michigan also just had online sports betting come online, giving its sports betting revenues a much-needed lift. (Getting online sports betting in place before the Super Bowl didn’t hurt, either.) There’s currently no push to make either of these moves in Delaware. However, the conditions are ripe for industry reforms. Economic hardship is a good time to examine the budget and see where revenue can increase and expenses decrease. If sports betting reform comes to Delaware, it could be part of a push to recover from the pandemic’s economic challenges. It won’t be much by itself, but it could make a difference as part of a larger package of economic change.

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