The impact of football betting on Delaware gaming was positive, though practically negligible and negative for gaming revenue in its first full season.  However, the data also show that the football lottery also increased monthly revenue-per slot machine. By examining revenue from both Delaware Park and its closest gaming competitor (Harrah's Chester - a mere 20 minutes away), one can see a definite pattern that translated into an overall decline in gaming revenue consequent to adding the sports lottery, beginning in September 2009.

 Delaware Park's gaming revenue declined significantly between 2008 and 2009 for the months of September, October, November to December.  For example, in October 2009, Del. Park's VLTs netted $17.3 million, a decline of 6% from October 2008, when the racino's slots netted $18.4%.  By comparison, Harrah's Chester actually increased its gross terminal revenue between from October 2008 to October 2009 by 3.8%, pulling in $25.6 million in October 2009, an increase from $24.7 million in October 2008. Overall, Harrah's Chester increased its gaming revenue from Fall 2008 to Fall 2009, where Delaware Park declined.

Net Gaming Revenues, Delaware Park & Harrah's Chester-Fall2009:

However, while Delaware Park's sports betting scheme may not have increased overall gaming revenue, it apparently contributed to higher win-per-unit amounts.  Perhaps to make room for the sports lottery facilities and enlarged sports bar, Delaware Park actually lowered its total number of VLTs to 2,963 in Oct. 2009: down from 3,179 terminals in Oct. 2008.  Consequently, its win-per-terminal for Oct. 2009 was $5,822, a .8% increase over OCt. 2008.  

Other Fall months saw even bigger gains in win-per-unit, December 2009 win-per-unit was $5,484 up a full 13% over Dec. 2008's win-per-unit amount of $4,856.  Meanwhile, Harrah's Chester win-per-unit declined in each of the four fall months between 2008 and 2009.   For example, while each of Delaware Park's terminals was spinning with decidedly more cash in Dec. 2009 (13% up), Harrah's Chester's slot machines were somewhat quieter: dropping 6.8% in win-per-unit.  Yet, the increased revenue per unit didn't nearly make up for the overall loss in gaming revenue experienced by Delaware Park in the Fall months.

Monthly win-per-unit, Delaware Park and Harrah's Chester:

But what about the sports lottery?  It did bring in additional revenue for the racino, but not nearly enough to offset the decline on the VLT side.  Never once did Delaware Park even break $1 million in net proceeds from the lottery, and that was before the state took out its 60% share.   The single best month of the four-month span was December, when the total net proceeds of the sports lottery was $627,016.  In other words, the sports lottery revenue amounts were barely high enough to notice in the balance sheet.  The sports lottery revenues certainly didn't come close to make up for the decline in overall gaming revenue experienced by Delaware Park from Fall 2008 to Fall 2009. 

Did it even cover the increased capital and labor costs associated with starting and running the operation?  That's a good question that I can't answer at this point, though if my speculation is accurate that terminals were removed to clear the way for the new facilities, than the data suggest the investment didn't pay off -- by a significant margin.

What does this all mean?  Here are a few key points:

• despite the ballyhoo, Delaware's sports lottery didn't end up contributing much revenue to Delaware gaming or the state
• the three-game parlay bets-only system probably kept down the volume of new gamblers coming into the casino; the appeals court decision on this was a huge revenue blow to Delaware Park - and to Delaware-though it is currently under appeal (I don't expect a reversal)
• Delaware Park's overall revenue decline compared to Harrah's Chester despite the addition of sports betting suggests that the northern Delaware gaming market is ill-suited for additional facilities at this point, especially with a new Penn National Hollywood casino opening up in 2010 in Perryville, Maryland (@45 minutes from Wilmington)
• Delaware's current sports lottery may have added a few jobs and provided some extra buzz for DE gaming, but without changes in the system, not nearly enough to really change regional market dynamics

Into Delaware...the state Senate may vote on the bill as early as tomorrow, sending it to the governor to sign.  The tax is relatively high for table games (29%) -- much higher than Pennsylvania's 16%, but the fees are also lower and could be as low as $5 million for the three racinos if they reach a certain quote for capital improvements.

Unlike PA - where horseracing interests opposed table games- there's a nice bonus for the horseracing industry: 4.5% ot the new revenues.   The state projects 700 more gaming jobs and 40 more regulatory positions from adding table games, according to this Delaware Online piece.

I like the progress on gaming for Delaware (though not the splits), and once again appreciate the efforts of the legislature and pro-gaming governor.  However, the racinos are happy -- after the diminished returns on sports betting.  Meanwhile, there's growing momentum in Maryland to catch up: a logical move -- I've been saying (and writing ) for two years that there never was much logic to the slots-only approach, and finally -- finally - that perspective has gained some real political traction.   However, with 2010 being a state election year-- don't expect much progress in Maryland until at least 2011.

Update 1/29/10: This is a done deal -- Delaware will get table games: play should begin in May.

The state appealed to the full US 3rd Court of Appeals on the panel's ruling three weeks ago that forced three-game parlay batting.  Delaware racinos would love, love to offer single-game bets & so would  state officials seeking to maximize revenues.  

Apparently, opening weekend of the NFL did bring in sports bettors for the new sports bars/book joints in Delaware Park and other places, though exact revenues won't be shared until later this week.  After a few weeks, we should start to see whether the existing system is really bringing in enough people to justify the costs.

The whole thing is really ridiculous and amplifies the need for Congressional action.  Let the people bet already: there's zero justification for allowing one state (Nevada) such a monopoly and all it does is perpetuate un-regulated, illegal betting via the 'net & shady bookies.  Same applies to the electronic transaction restriction on Internet gaming that has effectively taken the US out of the growing world market for Internet gaming (as operators, at least).   

Ouch -- this really hurts if you are a Delaware racino operator already invested in the sports betting system or the state counting on increased gaming revenue with sports betting.  The Third Circuit Court of Appeals just issued a full ruling that Delaware can't do anything beyond the sports lottery it offered in 1976 with its new sports betting scheme - in order to comply with the 1992 federal law. 

This means that all the racinos can offer is parlay betting that depends on the outcomes of three separate NFL football games, exaclty like the failed 1976 lottery.  This makes the whole scheme basically a pure lottery, with little or no handicapping skill involved.  And, there's obviously no lottery past football season.  In my view, this takes almost the entire fun away from casual sports bettors by creating such a high threshold for winning.  Even people who do this professionally can't easily win three games out of three.  

Of course, Delaware's bad news is good news for its mid-Atlantic competitors, which should be able to safely assume that the sports lottery won't peel much (if any) of their gaming business away.  But this is bad news for gaming operations in the overall competition  for entertainment and recreation dollars.  The ruling also suggests that it is high time that Congress re-consider the issue of sports betting at the federal level: well beyond Rep. Barney Frank's efforts to re-visit the ban on online transactions as they apply to Internet poker. 

Why should Nevada have a virtual monopoly on legal sports betting in the United States?  Get rid of it and states like Delaware and New Jersey can adopt it for economic reasons as their populations decide.  There's no logical reason for the prohibition and many good reasons to eliminate it, beginning with the fact that legalization will make regulation and revenue-generation via taxation possible.   

Update 1: This is such a loss for the three DE racinos, that I think there's a good chance they might conclude that the whole venture just isn't worth the investment -- or will be ready to pull the plug quickly after football season begins.  So, basically: the racinos will probably end up with new sports bars, not betting parlors.

Update 2: This could also impact Delaware's probably table games operations -- which are being reviewed and increasingly likely.  One possibility is that this decision actually helps the racinos in getting a more favorable split from the state on table games revenue, as they can now justifiably argue that the increased traffic (and revenue) they expected via the sports lottery is no more.

A federal appeals court gave a big victory to the sports leagues against Delaware's sports lottery plan.  A three-judge panel blocked the state from opening up its sports betting parlors on September 1 AND declared that the state's single game wagering plan was likely a violation of the 1992 federal act banning sports betting in all but four states. 

From a report at Delawareonline.com:

The panel was only expected to rule Monday on the issue of a temporary order to stop Delaware from launching sports betting with single-game wagers against a point spread and bets on all sports except pro football while the leagues’ federal lawsuit moved through the court system.

 However, during the oral arguments, members of the three-judge panel indicated there appeared to be no factual dispute between the state and the sports leagues and it was a simple matter of law that they could resolve at this stage.

 And after leaving the bench and conferring together for about 40 minutes, the three judges -- McKee, Julio Fuentes and Thomas Hardiman -- returned to the bench and announced that not only did they think there was a “likelihood” the leagues would prevail at trial, but had decided the state’s plan violated the Professional and Amateur Sports Protection Act of 1992.

So, the whole venture is thrown into question now -- single game wagering is where 80% of the sports betting revenue is.  Without it, the appeal is much less to bettors.  This isn't over of course -- I expect the state to appeal, probably to the Supreme Court, if necessary, but the sweeping decision above doesn't bode well for the appeal: it was unanimous on the panel & the decision is stunningly clear vs. the state.  But, who knows what could happen higher up -- there may be a states' rights argument here, for example -- that could be attractive to other judges.  

Of course, Delaware's loss is others' gain: esp. in PA, NJ, MD -- as the gaming industry in each mid-Atlantic state fights for a competitive edge over its regional neighbors.

There's been a  flurry of legal activity on sports betting in Delaware as the racinos gear up with their betting parlors and we edge closer to the beginning of football season.  Last week, the sports leagues (led by the NFL) appealed an Aug. 5 decision in which a federal judge had cleared the way for single-game and parlay betting to begin in September. In response, the state shot back with an 11-page filing in opposition to the suit.  From the Delaware News-Journal:

In its 11-page answer to the lawsuit filed July 24 by four national professional sports leagues and the National Collegiate Athletic Association, attorneys for the state deny all allegations that the planned "sports lottery" at Delaware racinos is illegal under federal or state law. They also spell out in the response filed late last week in U.S. District Court in Wilmington three affirmative defenses against the civil claims.

Now, the federal  3rd Court of Appeals is set to hold a heaing on the matter on August 24..  The leagues involved are the NFL, Major League Baseball, the NBA, NHL and NCAA.  Mainly, the sporting folks are trying hard to get an injunction to stop the sports lottery from going ahead as planned while the lawsuit plays out, with a trial date established for December 7.  

Meanwhile, the state has filed a creative response to the leagues' arguments.  One excellent point is that there are already plenty of ties between pro sports and casinos, including partial ownership of casinos by several team owners and advertising deals with casinos.  The latter point is especially strong-- casino advertising has been ubiquitous in recent years for both NYC baseball teams, for example.  In fact, an NBA-affiliated team (the WNBA Connecticut Sun) even plays home games at a casino arena (Mohegan Sun). 

Overall, the argument underlines the blatant hypocrisy of the legal case against Delaware by demonstrating how much sports already profits via legal gambling.  There's no evidence (that I've seen) that legal sports betting in Nevada has any impact on  the integrity of pro and college sports, so why would this suddenly occur if you allowed it in Delaware?  The gambling scandal involving NBA referee Tim Donaghy a few years ago happened regardless of the current ban.  A legalized system would increase the possibility of this type of scandal....how? 

The league's objections are farcical really, if you think of how much sports interest is generated by gambling.  President Obama openly participated in a March Madness pool at work.  I don't recall hearing about any NCAA objection then that he was tacitly supporting gambling on college basketball....A tremendous amount of un-regulated sports gambling already takes place and there's no sign its lessening. 

Then, there's the state-federal issue: is it not rather heavy-handed to take legal action in a federal court against a democratic action by a state and an action which was already vetted in the state's highest court?  Yes-- federal courts can certainly intervene against unconstitutional actions by states, but should be wary of overturning a process achieved via democratic process, via legislative representation if there's no clear breach of federal rights that protect individuals.  Where's the breach on liberties here? 

In some ways, the sports betting opponents remind me a little of anti-gaming extremists who try to stop gaming regularly by calling casinos "predatory," for example.  We're currently seeing this play out in Anne Arundel County, over Maryland's largest allowed casino.  But, the prohibitionists shouldn't win with hypocrisy and outrageous invective.   Hopefully, the courts will see through this stuff and allow people to legally bet on sports in Delaware next month: let the spread bets begin!

From espn.com, the NFL, NBA, NHL, NCAA & Major League Baseball (MLB) combined forces to sue Delaware today in federal court to stop the state's proposed sports betting plan.  Wow.  That's quite an array lined up to stop people from placing a few bets on some games.

I'm not surprised-- been anticipating this since the Delaware Supreme Court ruled parlay-betting constitutional back in May.  The crux of the case has been -- all along - whether single-game betting is more of a game of skill than chance.  The state's high court passed on that key question in  its May decision. 

I can understand the leagues' collective qualms, but as I've posted before, with so much sports betting going on anyways, what's really the point here?  Don't the leagues' collectively already have enough integrity issues on their plates such that this action seems unlikely to suddenly make them so pure in the public mind?  And, please, with NFL-lottery tie ins, etc. etc. -- there is some hypocrisy here?  See my GA post of June 8 for more on this-- NASCAR's gaming-friendly approach makes a lot more sense to me: should be what the other leagues emulate.

At least, this is the word according to the Delaware's lottery official.  This is important, seeing as the state's Supreme Court only sanctioned parlay bets (though it was silent on single games).  The single-game bets may still face legal action vs. the NFL and other leagues, which aren't happy with the entire sports betting system about to be enrolled.  Meanwhile, the Delaware racinos are getting ready, anticipating both the sports betting and a likley move towards table games next year.  Delaware is leaping forward in the mid-Atlantic competition for gamblers' dollars.  From the Press of Atlantic City article on this:

Analysts believe sports betting and table games will allow Delaware to siphon customers away from the Atlantic City casinos. Sutor, a former Atlantic City gaming executive, said the main benefit for Delaware will be to draw more gamblers from its primary feeder markets in Maryland, Washington, D.C., and Virginia. "We don't get a lot of business now from Atlantic City," he said. "However, I think sports betting will attract some new people. It's a new product, and I think people in Philadelphia and perhaps as far away as New York will come down to Delaware to try it."

It is way too early to evaluate the Maryland gaming project.  After all, the licenses haven't even been issued, and we're probably still at least 12-24 months away from the first person to put some money into a new Maryland video lottery terminal.  However, there are certainly some issues that have arisen since the state's legislature first approved the referendum in November 2007.  In today's Baltimore Sun, I elaborated on them.

My argument focused on two key points:

• Maryland's gaming tax is too high  at 67% & needs to be reviewed by the legislature
• neighboring states are expanding their gaming offerings & the mid-Atlantic gaming marketplace is becoming increasingly competitive

Based on these points, I urged the legislature to review the gaming statute, even while the Location Commission does its important work of vetting the current license applicants.  From my op ed:

The success of Maryland's slot machines - or video lottery terminals, as they're officially known - for raising state revenue is tied to the ability of the gaming operators to make money. The state should be doing everything possible to ensure this success, beyond the careful vetting system under way by the Video Lottery Facilities Location Commission.

Doing some research today, I found more pieces which support my argument from around casino nation:

• Colorado: a recent change in legislation that allowed 24/7 gaming and expanded table games led to a $3 million capital injection by 3 casinos and the creation of 750 new jobs, according to the Colorado Gaming Association.
• Delaware: developers are working up proposals for two new casino complexes in the southern part of the state: Delmar (on the MD/DE border) & Millsboro.  Of course, they could only go forward with legislative approval.  A committee report on gaming expansion is due by October 15.  Both proposed casino sites are close to Ocean City, MD & Dover, DE. 
• Kansas: Penn National has put forth  $564 million, 2,000 slot-machine proposal for a casino complex outside Kansas City.  The Kansas Lottery Commission will soon make a license decision.  The Penn National proposal also includes 58 table games.
• Rhode Island: One of Rhode Island's two racinos - Twin River- just filed for bankruptcy.  Rhode Island requires money-losing dog racing at the site and has a 73% gaming tax -  the highest in the United States, according to the American Gaming Association.  

In different ways, each of the above developments bolsters the case I made today in the Baltimore Sun.  Maryland gaming faces significant and increasing regional competition.  Yet the tax rate and other restrictions may very well make it difficult for Maryland operators to compete. 

For example, Maryland's gaming statute severely restricts the Worcester County site (Ocean Downs, probably) in ways that will make it hard to compete with Dover Downs or a new casino in the vicinity.  As currently written, there can be no hotel, no convention center, no live music, no floor shows and no dancing (no dancing!), no live performances of any kind, except that the facility will be able to have "a single piano that is played by an individual."  Yay -- here's hoping Billy Joel or Elton John will drop by!  All the Maryland casinos will be restricted to operating from 8AM to 2AM: no 24/7 gaming.  Time for another look:  Maryland casinos need to be able to compete with casinos in other states.

Note: Rest in peace Farrah Fawcett & Michael Jackson.  I grew up in the 1970s & 1980s -- today was a sad day for me.  Here's a great piece on the meaning of Farah and Michael for Generation X.

Lately, I've been reading a lot about table games in the mid-Atlantic, been asked about them by reporters, and otherwise been thinking about them.  So, today's posting is a brief run-down on current developments in some mid-Atlantic states and some commentary.  Here goes: 

• Delaware: a legislative committee has apparently reccommended them, pending a study result and there's a strong possibility that they could be up and running by January 2010.  The Delaware racinos already offer electronic table games.  
• Pennsylvania: There's strong momentum building for table games.  The Pennsylvania House's Gaming Oversight Committee is currently holding hearings on the prospect and the House's Democratic whip has introduced a legalization bill.  Republican leadership has also indicated support. A recent poll showed that Pennsylvanians support table games by a significant margin:  60% for them, 35% against them.  Pennsylvania casinos already offer electronic table games.
• West Virginia: Three racinos in West Virginia already have table games, but they do not include the successful Charles Town Races and Slots in Jefferson County (eastern panhandle).  However, that may change as local legislators are looking into a local referendum that may allow them, as approved in a West Virginia special session.  A legislator from Jefferson County also works at Charles Town Races and Slots, which probably helps her appreciate the coming competitive threat posed by Maryland slots.
• New York: New York's State Senate recently passed a bill allowing electronic table games at the state's eight racinos (presumably before the Senate's partisan squabble for control).  However, the House did not pass the bill before the Assembly adjourned on Monday.  But it probably doesn't matter, as there appear to be no legal obstacles to them regardless of legislation.  This means that operators can install electronic table games without formal legislative approval.
• Maryland: There's no official investigation, study, proposal, etc. that I'm aware of -- though there's been some discussion about them, as Delaware and Pennsylvania move forward.  Mainly, the governor wants to see the current process for establishing the VLT-only casinos unfold according to statute.  There's some ambiguity as to whether the Maryland gaming law would allow electronic table games. 

Everybody's responding to everybody else right now with regards to table games, with the notable exception of Maryland -- brand new to the mid-Atlantic gaming club.  Interstate competition and budget cuts are clearly driving the debate.  I generally don't like gaming arguments based on plugging a budget gap because of its variability.  I think it much better to envision additional revenue for programs instead & promote gaming as an economic engine and entertainment option.   

Lawmakers and industry people are certainly right to focus on table games as way to stay competitive in an increasingly competitive environment, assuming they have local support.  Atlantic City have been increasing their revenues from table games in recent years, with Borgata's success and impact on the town.   Data from the New Jersey Casino Control Commission showed that in May 2009, table games accounted for approximately 30% of casino "win" compared to 20% of casino "win" in May 2004. 

Whether or not the renewed popularity of table games will hold in time for the various mid-Atlantic states to benefit is, of course, not guaranteed.  However, I do think it is telling that both Harrah's & Borgata-- two casinos doing relatively well in the 'Great Recession'- have both employed a table games strategy for success (Borgata started earlier).