Delaware Moves Forward on Sports Betting

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Published on:
Aug/26/2009

By Suzette Parmley and Joelle Farrell, Philadelphia Inquirer

Delaware officials and casino operators are forging ahead to begin parlay betting on NFL games by early next month, but what form it will take remains unclear.

A three-judge panel of the U.S. Court of Appeals for the Third Circuit ruled Monday in favor of four professional leagues and the NCAA that Delaware's plans to add single-game sports betting violated a 1992 federal ban on sports gambling.

Generally, a parlay is a bet on two or more games, and the bettor must be correct on every game to win the wager. Such bets are less appealing to most gamblers than wagers on individual games.

Stunned by the decision, the state is making the most of what it can offer, said a spokesman for Delaware Gov. Jack Markell.

"Come next month, Delaware will have the only sports lottery east of the Mississippi," Joe Rogalsky said yesterday. "The exact form it will take is something that the State Lottery Office is working on now.

"We will know more in the next few days after the state has had time to review the Circuit Court's written opinion, which has not been released yet," he said. "The casinos, like the governor and the Legislature, are disappointed. But the state is going to work with them to make sure the Sports Lottery is as successful as possible."

Rogalsky said Markell and the state's attorneys will review the court's opinion, then decide whether to appeal the ruling to the full appeals court and, if necessary, the U.S. Supreme Court.

U.S. Sen. Thomas Carper (D., Del.) said the state should appeal the decision to the entire 12-judge court because the state's budget situation is so dire.

Delaware hoped sports betting would generate about $53 million in its first year to help plug a nearly $800 million budget deficit.

"On a per-capita basis, our budget hole is deeper than almost any other state's," said Carper, who was the state's governor in the 1990s. He vetoed legislation legalizing slot machines at racetracks because he said its terms were not generous enough to the state, then allowed a rewritten bill to become law without his signature.

Delaware's acting secretary of finance, Tom Cook, said the state will not necessarily lose the entire $53 million. Of that amount, he said, $17 million was directly associated with sports betting. "We'll have a sports lottery offering, so we're not going to lose all of the $17 million," he said.

In addition, about $32 million of the $53 million was from the increased percentage that the state is getting from video lottery machines. Recent legislation increased the state tax from 37 percent to 43.5 percent on the machines, he said. The remaining $4 million was from licensing fees assessed to the video lottery agents.

The state's three casinos had invested millions of dollars to build the facilities to accommodate sports betting Sept. 1. The NFL regular season begins Sept. 10

As late as Friday, crews were working feverishly inside Dover Downs Hotel and Casino installing plasma screen TVs and lighting in what was to be its new 7,500-square foot sportsbook next to the casino floor.

"It's a complete shocker," Ed Sutor, chief executive officer of Dover Downs, said yesterday. "We did not expect this at all."

The Delaware casinos say they now plan to begin taking parlay bets on NFL games on Sept. 8, but they need more clarity from the court.

"What they stopped was head-to-head, single-game bets, and maybe betting on other sports," Sutor said. "We do not know if we're allowed to do the same for the other pro sports and college games."

Delaware used a similar gaming scheme for one NFL season in 1976, but it was discontinued after disappointing results. The state and other operators took their cuts before the prize amounts were determined, and the prizes tended to be small, sometimes as little as a $2 return on a $2 bet.

The sports lottery that year grossed just $725,000, said Vernon Kirk, deputy director of the Delaware State Lottery. The state kept 30 percent, or $217,500.

After four months, it was discontinued.

The NFL sued to stop Delaware's gambling plans in 1976, but a federal court ruled against the NFL and decided that the sports lottery would not damage the reputation of the NFL. On Monday, the court of appeals did not rule on the issue of whether gambling would do "irreparable harm," to the leagues, as they suggest.

Sports gambling is considered the most popular form of betting in the country, and most of it is done illegally. About $2.6 billion was bet legally in Nevada in 2008, according to the American Gaming Association. A 1999 federal study estimated that as much as $380 billion was bet illegally each year.

Single-game bets make up 70 to 80 percent of all sports gambling in Nevada, and about 65 percent of that revenue is on NFL games, according to affidavits filed by the casinos in Delaware.

"We were expecting huge crowds," said Sutor of Dover Downs. "I would think it is not as big now . . . Single-game betting is very popular in Nevada."

Meanwhile, New Jersey - watching Delaware's plight - still has its sights on offering sports betting, too.

State Sen. Ray Lesniak (D., Union), who filed a lawsuit in March challenging the constitutionality of the federal ban on sports betting in other states, said Delaware's loss doesn't affect New Jersey's case because it was argued on different grounds.

"We offered them our research and work product to raise the constitutional issues, but they [Delaware officials] wanted to rely exclusively on the interpretation of the federal statute allowing them to have limited forms of sports betting," Lesniak said. "They rolled the dice and lost."

Lesniak said the 11 Atlantic City casinos - with the exception of the three Trump casinos - have been noncommittal on sports betting because most have parent companies and properties based in Las Vegas, which has exclusivity on single-game betting.

"They have the Nevada market," Lesniak said. "I wish they would stand alongside us in New Jersey, but that's their decision."

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