Delaware Realizes $1 Million+ From June Sports Bets

Delaware

The State of Delaware took in more than $7 million in sports bets between June 5th-24th, realizing $1,000,247 in revenue over the 20-day span. Delaware sports fans placed +/- 70,000 wagers at the state’s land-based racinos (i.e. no mobile), with the average bet worth $100. 75% of the dollars placed were on baseball games, with the World Cup (10%) and NBA Finals (8%) also drawing heavy action. The First State became the 1st state (besides Nevada) to offer single game sports wagering following SCOTUS’ May ruling to overturn PASPA.

Howie Long-Short: +/-$1 million in revenue equates to a 14% hold, far higher than the 5.5% Nevada has averaged dating back to ’92. Those results were “pleasantly surprising” to DE Lottery Director Vernon Kirk, who acknowledged that he’d “be surprised if it (the handle) stayed that strong.”

I asked Dustin Gouker, Managing Editor of Legal Sports Report why he thought the handle was so high; he said, “it’s too early to read too much into the hold. It’s a small sample size and it may simply be lots of bettors that are not terribly savvy, trying to figure out wagering.”

Just one of DE’s land-based racinos is publicly traded, Dover Downs Hotel & Casino, a subsidiary of Dover Downs Gaming & Entertainment (DDE); the company netted $57,293 in June from sports bets. However, all 3 of the state’s sports betting contractors are publicly listed. Scientific Games (SGMS), William Hill (WIMHY) and StadiumTech (a subsidiary of GVC Holdings, OTC: GMVHF) combined to take in $125,000 (12.5% of gross revenue) in DE sports gambling revenue for the 3-week period ending on June 24th (fiscal month).

Fan Marino: A recent white paper from GamblingCompliance projected the U.S. legal sports betting market would be “worth between $3.1-$5.2 billion in annual revenue by 2023.” The report also predicted that 25-37 states will “have lawful wagering within 5 years”, that New York would become the largest sports betting market (generating $700 million/year in annual gross gaming revenue) and that NY would become the “first state to grant leagues a cut of betting handle and require use of their data.” While those last 2 prognostications may be true, they likely won’t come to fruition before 2019; state legislators failed to pass a bill before adjourning the session. Governor Cuomo is on record doubting that a sports betting bill would pass this year.

Interested in Sports Business? Sign-up for our free daily email newsletter list, here!

Delaware Casinos to Begin Taking Sports Bets Tomorrow

dover-downs-gaming

Delaware (not New Jersey) will become the first state outside Nevada to take sports bets following the May 14 SCOTUS decision to overturn PASPA. Delaware’s three land-based casinos (i.e. no mobile, online) open their sportsbooks for business at 1:30p on Tuesday, June 5. The state will enable single game betting (i.e. no in-game bets) and “championship wagering” on various sports/leagues for the first time. Delaware bettors have been able to place multi-game parlay wagers (min. three games) through the state’s lottery system on the NFL games since ’09, the state had the parlays grandfathered in when PASPA was enacted in 1992. The New Jersey state legislature is scheduled to vote on their sports betting bill later this week (June 7). Mississippi, Pennsylvania and West Virginia are also expected to begin offering sports betting before the start of football season.

Howie Long-Short: Delaware Park, Dover Downs Hotel & Casino and Harrington Raceway & Casino are the properties that will begin to take sports bets. Delaware Park and Harrington Raceway are privately owned, but Dover Downs Hotel & Casino is a subsidiary of Dover Downs Gaming & Entertainment (DDE). Back in late April, DDE reported $17.7 million in Q1 ’18 gaming profits (on $34.13 million in revenue) – but a pre-tax quarterly loss of $361,000. Why? The state’s gaming tax structure had them paying out $18.1 million “to the State and Horsemen.” The industry is lobbying for a “casino relief bill” (recently passed by Delaware State Senate) that would reduce their obligation to the state. DDE shares are up 31% (to $1.95) since SCOTUS’ May 14thdecision.

DDE isn’t the only way to invest in Delaware sports betting, Scientific Games the state’s primary sports betting contractor is also publicly traded (SGMS). The company is entitled to 15.6% of the net take with the balance split between state, casinos and horse racing industry.

Fan Marino: Bettors will be able to wager on baseball, football, basketball, hockey, golf, soccer and auto racing, but are not currently permitted to place bets on college basketball or college football games; it’s expected that will change eventually. For the State of Delaware to maximize gaming revenues, it’ll have to — college basketball and college football generate more revenue for Nevada sportsbooks than any other sport. It should be noted that games involving Delaware based teams will be off the boards at all three casinos.

Interested in Sports Business? Sports Finance? Sign-up for our free daily email newsletter list, here!

SCOTUS Strikes Down PASPA in Historic Ruling, Legalized Sports Betting to Spread Nationwide

Scotus

In a historic announcement, the SCOTUS ruled (6-3) to strike down PASPA; the national law preventing individual states (save Nevada) from offering betting on the outcome of a single sporting event. Justice Samuel Alito wrote, “Congress can regulate sports directly, but if it elects not to do so, each state is free to act on its own. Our job is to interpret the law Congress has enacted and decide whether it is consistent with the Constitution. PASPA is not.” The ruling effectively places the decision to authorize sports betting in the hands of the individual states. Several have already passed legislation (NJ + PA, CT, WV & MS), with upwards of 27 others expected to offer wagering on sporting events within 5 years. It’s important to note that federal law prohibits wagering across state lines, so gamblers will have to be physically located in a state that has passed sports betting regulation to legally place a bet on a game; even with online and mobile betting available elsewhere in the country.

Howie Long-Short: A fall ’17 study by Eilers & Krejcik estimated that if sports betting were to be legalized on a nationwide basis, it would generate $7.1 billion annually in new revenue at casinos & racetracks. That figure grows to $16 billion per year, when you count the revenue generated from gaming websites and mobile apps; so, it’s easy to understand the enthusiasm surrounding the announcement. Interestingly, English bookmakers William Hill (WIMHY, +14.39% to $17.73) and Paddy Power Betfair (PDYPY, +12.56% to $55.20) were Monday’s biggest winners; though, Scientific Games Corp. (SGMS, +11.15%), Stars Group, Inc. (TSG, +8.97%), Caesars Entertainment Corporation (CZR, +5.46%), Churchill Downs, Inc. (CHDN, +4.87%), Penn National Gaming (PENN, +4.68%), Boyd Gaming (BYD, +3.06%), Pinnacle Entertainment (PNK, +1.88%) and MGM Resorts International (MGM, +1.64%) all finished up on the day as well.

We’re not surprised that William Hill (WIMHY) had the biggest pop among the companies listed above, as we told you on April 24th that no European gaming company was better positioned to capitalize on legalized sports betting, in the United States, than they are. Back in ’13, the company bought the rights to run the sportsbook (and split profits 50/50) at Monmouth Park (NJ), if ever permitted by law, for $1 million; a remarkably shrewd investment considering the minimal capital investment required and the potential payoff they’ll now realize (+/-$750 million/year in sports betting revenue). The company has since announced plans to add a 2nd $5 million sportsbook on the premises. WIMHY will be the first sports book in NJ to accept bets, with Monmouth Park expecting to open its doors within 2 weeks; though residents in Mississippi, Delaware and West Virginia can all expect to be able to place bets at their local casinos by the first Sunday of the NFL season.

Fan Marino: MLB put out a statement saying the decision would have “profound effects” on the sport, but no one is more bullish on legalized sports betting than Dallas Mavericks owner Mark Cuban. Cuban believes that “everybody who owns a top-four professional sports team just basically saw the value of their team double at least.”

I asked SportsHandle.com Editor-in-Chief Brett Smiley for his thoughts on Cuban’s remarks?

Brett: Cuban’s guesstimate strikes me as a bit of an exaggeration, but there’s wide recognition amongst the leagues and owners that legal sports betting will increase ratings, increase revenue and create more opportunities. Sports bettors are more engaged and for longer periods of time. There will be other opportunities to sell data, partnerships, sponsorships and so forth.

It sounds like an exaggeration to me too, but if $300 billion were to be wagered annually and the leagues got their 1% “integrity fee” on a nationwide level (highly unlikely); they would be splitting $3 billion annually. Divvy up that newfound revenue between +/- 120 pro sports franchises and you’re adding $25 million in profit to each team’s bottom line. The Mavericks only generated $21 million in operating income last season. Sure, that’s a bunch of “ifs”, but once you add in all the other revenue streams that Brett referenced, Cuban may not end up being too far off.

Interested in Sports Business? Sports Finance? Sign-up for our free daily email newsletter list, here!