DOVER, Del. — Gov. John Carney reached into his pocket shortly before 1:30 p.m. Tuesday and pulled out a folded bill.
“This $10 bill is going to bring our Phillies back,” he said.
He walked over to a teller at the Dover Downs sportsbook and placed the first legal sports wager in the state of Delaware, betting on the Phillies to beat the Cubs later that night, and ushering in a new era for sports gamblers in the United States. Delaware became the first state to start accepting sports wagers since the Supreme Court overturned a federal law last month that largely outlawed sports betting outside of Nevada, and others are already racing to follow suit.
“Gloating in this business doesn’t last very long,” said Carney, the state’s first-term Democratic governor. “We’re happy to be first today. … I don’t expect we’ll be the only one for very long. But today it feels pretty good to be first.”
The Supreme Court decision is expected to have far-reaching effects — experts suggest that illegal betting in the United States is a $50 billion to $150 billion industry — but for the time-being, Delaware will be the only new state in the sports gambling business. Tuesday’s early start means that sports gamblers in the Mid-Atlantic could be a short drive away wagering on a variety of sporting events, from the NBA Finals to the World Cup, from Major League Baseball to the Capitals’ pursuit of the Stanley Cup.
While three casinos started accepting sports bets Tuesday — Dover Downs, Delaware Park and Harrington Raceway & Casino — gaming officials in Delaware have no illusions about the potential impact of sports gaming. State lawmakers across the nation might be hurrying to craft legislation that opens betting windows, but sports wagering in Delaware “is not a moneymaker under the best of conditions,” said Denis McGlynn, CEO of Dover Downs.
In fact, casino operators in Delaware had been bracing themselves for the Supreme Court’s decision because it could actually have a negative impact on the gaming business here.
A decade ago, the state tried clearing a path for the first fully operational sportsbooks on the East Coast, but a three-judge panel of the U.S. Court of Appeals for the 3rd Circuit limited the state’s betting options, allowing only parlay wagers on NFL games, which require gamblers to choose the winners of at least three games. That made Delaware the only state east of the Rocky Mountains that allowed any legal form wagering on NFL games, giving the state a small monopoly on sports gambling and drawing in visitors from nearby states to lay down bets.
The concern in Delaware is that the parlay money will disappear as bettors start gravitating to single-game bets, which pay out at higher margins. And once neighboring states such as New Jersey, Pennsylvania and Maryland open their own sports betting windows, out-of-towners will no longer bother driving across state lines to place bets.
James Butkiewicz, the chair of University of Delaware’s economics department who has studied the state’s gaming industry, said the long-term impact could negligible.
“Delaware does have an advantage right now to the extent that other states aren’t quite ready to do this,” he said.
Monmouth Park, a racetrack on the New Jersey shore, was angling to be the first to take advantage of the change in federal law and originally announced a start date of May 28, which was delayed when lawmakers sought to further review state regulations. Track officials were hoping the governor might sign a bill bolstering the laws covering gambling in New Jersey, possibly allowing the state’s betting windows to open Friday.
Delaware was first out of the gates because state officials decided they didn’t need to tweak existing laws to account for the Supreme Court decision. Sports wagering in Delaware will effectively be administered by the Delaware Lottery, which previously ran the parlay bets and oversees the state’s casino gaming. Much of the infrastructure was already in place, and casino and gaming authorities have spent the past couple of weeks training staff, learning the gambling terminology, software and the new menu of betting options.
The parlay business was reliable if not lucrative. Last year Delaware saw a record 3,276,000 wagers — a total of $46.4 million. That money generated $8.6 million for the state, $1.94 million for the casinos and $1.6 million for other retailers that sold parlay tickets. State gaming officials are expecting to lose much of that business to single-game bets. Parlays have a higher-risk and produce 30 percent profit margins. Casino officials expect to see a much higher volume of single-game bets, but those only generate a 5 percent margin.
“It’s not a big opportunity,” said Bill Fasy, president of Delaware Park. “I hope we can get out of it what parlay was providing. It’s a much different margin, though.”
McGlynn pointed out that casinos in the state are also effectively taxed at a much higher rate and have to turn over 50 percent of their sports gambling revenue to the state and 10 percent to Delaware horsemen for track purses. By comparison, Las Vegas casinos are taxed at a 6.75 percent rate. New Jersey will have an 8.75 percent rate for sports gambling. In any case, sports betting represents only 2 percent of the overall gaming revenue in Las Vegas.
“We’ve been doing everything we can to manage everybody’s expectations,” McGlynn said. “They hear billions of dollars, but they don’t understand that’s just the amount that’s bet. The amount that’s won at the end of the day by the house is just 5 percent. And that number has to be divided up by a whole number of people. It makes it difficult for anybody to really make money.”
While Tuesday’s news was still celebrated at the three racetracks and casinos, gambling officials in Delaware are only anticipating a temporary boost, hoping they’ve created an added value for tourists. In the short term, Delaware will attempt to lure as many out-of-state gamblers as possible before its neighbors start taking bets. The state might only beat New Jersey to the punch by a couple of days. Pennsylvania could aim to open sports books before football season. The Maryland legislature is out of session and might send the issue to voters before allowing its casinos to offer sports betting.
“I think it’s important to be first to market,” Fasy said. “I think as a promotional opportunity. Anybody with a business, you want to open before anyone else. You want to do it quickly and establish loyalty.”
On Tuesday afternoon, Carney placed his ceremonial first bet under the glowing sportsbook sign at Dover Downs, and sports fans began to trickle to the front of the sportsbook. Stu Feiner, a colorful and well-known professional gambler for more than three decades, raced ahead of the others, dropping $500 each on the Pirates, Reds, Orioles and Padres to win games Tuesday night.
Wearing a shirt that read “I’ll kill your bookmaker,” he turned around and flashed his four legal betting slips to the crowd.
“We’re ready to roll!” he barked in his Long Island accent. “If sports gambling ain’t fun, then don’t do it baby.”
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