Seasonal lulls come with the territory in sports betting
In June 2018, Gov. John Carney visited Dover Downs Hotel & Casino to place a bet on the Phillies vs. the Cubs. That $10 wager marked the beginning of full-scale sports gambling in the state – which was among the first to legalize the practice following a U.S. Supreme Court ruling that lifted a federal ban.
One year later, state officials have been “pleasantly surprised by the proceeds,” said Vernon Kirk, director of the Delaware Lottery. “Our average hold has been a little higher than we anticipated.”
The hold is the amount left over for the various stakeholders, including the state, the casinos and the racetracks.
In calendar year 2019, net proceeds so far have totaled $3,720,445. Half of that amount goes to the state, 40% to the casinos, and 10% to “purse increases,” which goes to paying horse racers.
This positive outlook hasn’t stopped industry trackers – which have kept a close eye on Delaware as an early adopter – from reporting every slump or uptick in the monthly betting numbers.
LegalSportsBetting.com, for instance, recently noted that the state faced its “lowest month on record for legal sports betting in Delaware” in April, and even suggested that it needed to up its game in May.
While proceeds did drop in April, this kind of quick-hit analysis tells an incomplete story. For one, seasonal fluctuations come with the territory, according to Delaware-based gambling industry expert Frank Fantini.
“When the NFL is in season, that’s going to draw a lot more betting,” said Fantini, a former reporter and founder of Fantini Research.” Then you have individual events that will drive play, the most recent being March Madness.”
He added that most states saw a drop between March and April, as bettors cooled off after binge-watching (and binge-betting) the NAACP Championship. In Delaware, net gambling proceeds in March were $1,644,164, compared to $615,772 in April. The total amount wagered dropped from $10,483,128 to $6,088,183.
For context, the biggest month in 2019 was still January – the heart of football season – with $11,940,123 wagered.
Kirk chalks up the drop in April to March Madness as well, but says it’s still too early to put these numbers into perspective. “This is our first March and April, so we don’t have other years to compare it to,” he says. “Our sample is too small.”
Volume alone doesn’t account for the disparity. The Delaware Lottery’s profit margin dropped from 15 percent in March to 10 percent in April, according to Kirk.
The other variable, naturally, is chance. “Look, it’s gambling,” Kirk said. “Sometimes we make money. Sometimes we lose money.” He added that the whole system is at the “mercy of how well the bettors do or don’t do.”
In the long term, Kirk is more concerned about what the wider adoption of sports betting will mean for Delaware.
“Based on what we’ve seen so far, we would temper our judgment with the fact that we had very little competition this first year,” he said. “Regional competition is just beginning to ramp up, and we expect that to have a negative impact on betting.”
o far, among neighboring states, New Jersey has legalized sports betting and kicked off a limited program; Pennsylvania recently passed a legalization bill; and Maryland has yet to legalize but has a bill introduced in the state legislature.
Fantini says the way to stay ahead is implement online sports betting. Delaware currently allows online gambling, such as poker, but it has not created an online system for sports betting, which he says has proven to be a cash-cow for other states.
“Delaware could more than triple its sports betting revenue by allowing online sports betting,” Fantini said.
State officials have looked into online sports betting, which is currently legal, but the jury is out on whether it’s coming to Delaware anytime soon.
“We’ve considered it,” Kirk said. We’ve listened to some proposals by some vendors.”
So far, state officials have held off, due to concerns about cutting into current gambling revenues.
Kirk says vendors charge high fees for managing the digital infrastructure of sports betting, which requires operators to take on considerable liability.
“I’m not sure that we would make more money online,” Kirk said. “That’s not a given for me.”
– By Alex Vuocolo