Delaware Moves on Online Gaming at Racetracks

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The Delaware Lottery has issued a request for proposal for its planned Internet gaming system.

A 2012 law aimed at making Delaware's three racetrack casinos more competitive in the Mid-Atlantic region centered on Internet casino games operated by the racetracks. It also expanded limited sports betting to restaurants and bars in the state and authorized keno.

The RFP was issued Jan. 31, with proposals due by March 15. Lottery officials said they want Internet gaming operating no later than Sept. 30 of this year.

The Delaware Lottery oversees video lottery terminals and table games at the three racetrack casinos: Delaware Park, Dover Downs Hotel & Casino, and Harrington Raceway & Casino. The agency will be solely responsible for selection of the primary vendor for Internet gaming, which under current laws will be limited to individuals in Delaware.

Each casino is expected to have its own "branded website," according to the RFP.

Thoroughbred and Standardbred racing in Delaware currently receive a cut of revenue from VLTs, table games, and sports betting. The 2012 law didn't include a dedicated percentage from Internet gaming, but the racing industry is negotiating with state officials and racetracks on a percentage.

Thoroughbred racing in the state receives 9% of VLT revenue, 4.5% from table games, and 9.6% of the sports betting take. Last year's law includes language that gives racing the same percentage from sports bets made at locations other than the three racetracks.

From August through December last year, the three tracks generated $1.3 million in net revenue from sports betting. Track commissions totaled $524,000, while purses earned $127,000 ($87,000 at Delaware Park).

Because of federal law, Delaware can offer only parlay bets on NFL games. It isn't permitted to offer betting on the Super Bowl, for example.

Internet gambling is a gray area, but the objective for Delaware and other states is to eventually offer bets across state lines. With a total population of less than one million, Delaware isn't expecting a windfall from online gaming.

The Delaware Lottery in its RFP includes "revenue assumptions" for online gaming but tells potential vendors the information shouldn't be used as a projection based on numerous factors. The annual revenue assumptions are $7.7 million from VLTs, $7.7 million from table games, $5.5 million from poker, and $1.1 million from bingo—for a total of $22 million.

Neighboring New Jersey is expected to soon pass legislation authorizing the Atlantic City casinos to offer online gaming, though it appears Delaware will offer it first. There currently are no provisions for horse racing to benefit from online gaming hosted by the casinos.