SPORTS BETTING IN DELAWARE?

20 April 2007

Another proposal for the benefit of the racino business

Over the weekend the US publication News Journal reported on suggestions by the racing industry in Delaware that legalising sports betting would be good for topping up state tax coffers....and getting gamblers to racinos and their slot parlours in the state.

Legalised sports betting, industry officials argued, could help the state fight back against the casinos opening across state lines. In a report published last week it was forecast that an additional $70 million in annual tax revenue could be generated if Delaware allowed its racinos to offer sports betting.

The report was commissioned by the Video Lottery Advisory Council, made up of casino executives, and written by an Atlantic City-based consultant.

Of that $70 million, sports betting itself would bring in $9.3 million, according to the study. The other revenue is based on the theory that those who come for sports betting will stay and play the slot machines.

Not all gambling experts agreed with the theory. Will Cummings, a Boston consultant said he didn't think sports betting would be a significant reason people would be attracted to a gambling venue. "That strikes me as being very aggressive," he opined.

Academic Bill Eadington, who heads up the Institute for the Study of Gambling and Commercial Gaming at the University of Nevada at Reno, said people who enjoy one style of gambling are typically loyal to that game, be it slots, poker, horse races or sports betting. "There isn't a lot of crossover," he said.

"They say they're going to spend a tremendous amount of money on slots while they're [the players] attracted by sports betting. There seems to be a logical flaw in that," Eadington said.

Cummings explained that eighty percent of a casino's business is typically generated by just 20 percent of its customers, so a few more casual visitors won't have a significant impact. "Devoted sports bettors can stay with their bookies or gamble over the Internet," he said.

The report was largely based on a survey conducted on 1 510 men living in Delaware and major metropolitan areas within 150 miles of the state, including New York, Philadelphia, Baltimore and Washington. It concluded that 13 percent of those surveyed would come to Delaware's racinos if they offered sports betting. 56 percent of those who currently visit Delaware racinos were interested in participating in sports betting. And 41 percent of gamblers who don't visit Delaware racinos said they would go to place sports bets.

Even 26 percent of non-gamblers surveyed, people who do not visit any casinos at all, expressed an interest in visiting a Delaware racino to bet on sports.

"By virtue of them placing sports wagers, patrons will stay in the racino for longer periods of time, giving them ample opportunity to play the slots or electronic tables," the report stated.

Based on past experience, Cummings described these type of studies as "overwhelmingly optimistic." It's easier for someone from New York to say they'll come to Delaware if it offers sports betting than it is for them to actually do it, he told a News Journal reporter.

"People anticipate they will do new activities at a rate much higher than at a rate borne out when you actually introduce the activity," he said. "They tend to be agreeable and answer the interviewer's questions in a positive instead of negative manner."

The chairman of the Video Lottery Advisory Council rejected Cumming's argument. "We expect some people will try to shoot holes in the report. But we're extremely confident in the methodology that was used and the experience of the people who created the report," he said. The chairman, who is Dover Downs Hotel and Casino's executive vice president, agreed with Eadington that people tend to be loyal to one form of gambling, but "there is crossover."

Delaware, which had a monopoly on the region's casino scene since the mid-1990s, has seen increasing competition from Pennsylvania. Casinos opened last year in Chester, Philadelphia and Wilkes-Barre. Another casino will open in Harrisburg later this year - just a short ride for Maryland residents.

The report cites a "resurgent" Atlantic City, which gained momentum from the lavish Borgata Hotel Casino & Spa until the Pennsylvania casinos captured some of the city's business. West Virginia just legalised table games, and Maryland is also considering slots.

Forces such as these sparked the reconsideration of sports betting in Delaware, the only state east of the Mississippi River that can even consider the practice. In 1992, a federal law made it illegal to bet on sports events except in states that already had legalised it. The exemption applied to Nevada, Montana, Oregon and Delaware.

This state had already permitted sports betting during a short-lived experiment in 1976. The state lottery director canceled the "Touchdown II" game the evening before the last regular-season games because a professional handicapper said publicly that the betting line listed locally was substantially different from the one in Las Vegas.

If large enough bets were made, and the games went according to Las Vegas predictions, it could have been financially devastating for the state. A record number of bets came in for that weekend's games.

The current proposal envisages private racinos conducting the betting.. Although they could lose money on any given Sunday, over the long run, the operators would be sure to make an average of 5 percent to 7 percent profit, it is predicted.

In Nevada, last year the state took in about $12 million in tax revenue off sports betting, according to Frank Streshley, senior analyst for the Nevada Gaming Control Board.

The Delaware survey suggested sports betting in Delaware would be similar to Las Vegas, except in that each wager would require betting on more than one sporting event, or more than one element of an event. No single head-to-head bets - wagers on the outcome of just one event - would be allowed. The betting would take place on-site at the Delaware racinos. [Ed. note - no online activity]

Eadington said people want to make head-to-head bets, and when they learn they can't do that, they'll be less likely to make a bet. Instead, they might casually make bets with friends or find some other way to wager, he said.

"Las Vegas does this about as well as you could: extensive sports book areas, gigantic TV screens, environments that are very attractive. And there's a limited amount of revenue generated, with much from the locals. Here, Delaware is going to have an inferior wagering product - they'll have to work with the existing facilities," Eadington said.

Sports betting revenues experienced what is probably a one-time bump over the last year because of a new federal law that cracks down on Internet gambling operations. Those sites are generally illegal for the operators and money middlemen, but legal for the users, Eadington said.

George Ignatin, a retired economics professor at the University of Alabama at Birmingham told News Journal that in competing for the sports betting dollar, Delaware would be competing with established illegal bookmakers. The bookmakers have an advantage because they don't require money down, just a phone call, Ignatin said. "It's very hard for the state to compete with that."

Online Casino News courtesy of InfoPowa

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