Regional sports-betting competition from New Jersey and Pennsylvania cut into Delaware's 2019 sales (the handle) and revenue (the hold) as the state continues to study the lucrative online betting market that the other two states have embraced.
Delaware looks at betting results on a fiscal-year basis (July 1-June 30) but because Delaware was the first state outside of Nevada to offer single-game betting, launching its program in June 2018, it can compare parts of 2019 to 2018.
Casino and retail outlet sales fell 24.2% to $80.8 million for the last six months of the 2019 calendar year, compared to July-December 2018. But thanks in large part to higher volumes of parlay card wagering and "spectacularly good football results to date," the hold (the amount remaining after paying winners that goes to stakeholders) actually increased $240,000 to $20.2 million, said Vernon Kirk, director of the Delaware Lottery, which manages sports betting in Delaware.
A portion of the hold gets deposited into the state's General Fund, which helps to pay for public safety, public education, and health/social services.
"We anticipated the handle would be down this year given the regional competition having a full year to catch up," Kirk said. "Retailer parlay card sales have remained very robust since we launched full-scale sports betting. We attribute that to two primary factors. First, because Delaware had three-game [minimum] NFL parlay card wagering since 2009, our customers were very familiar with that type of wagering and really enjoyed it. And, second, with the restriction to wagering on NFL games-only removed, we added college football to our cards. That gave bettors a lot more games to select from and retailers the opportunity to sell cards for Saturday as well as Sunday."
Frank Fantini, CEO of Dover-based Fantini Research said the Delaware handle "has been down considerably since Pennsylvania launched online gaming last summer, suggesting both that this young business segment already is maturing and that Delaware is losing customers to its big northern neighbor having lost the duopoly it enjoyed with New Jersey for about a year. The relative underperformance of Delaware Park, which is so close to Pennsylvania, is further evidence of that."
Parlay cards are sold at retail locations such as Grotto's Pizza and liquor stores. For retail parlay cards from July through December of 2019, sales were $27.4 million with a profit of $11.2 million, compared to the sales from the same six-month period in 2018 of $28.4 million with a profit of $11.0 million. Fantini said he sees college parlays as "another product, but not a game-changer."
But the elephant in the room for Delaware is the potential that online betting offers. As much as 85% of all bets placed in markets with mobile betting are done so online, a ratio that has only gone up as markets mature. Seven states took sports bets in 2018, after the Supreme Court struck down the federal ban. Four (New Jersey, West Virginia, Pennsylvania, Rhode Island) saw their monthly average handles increase from last year compared to the year prior. Not coincidently, all four offered online sports bets in 2019 "“ and saw their figures spike even further once mobile wagering began.
Delaware was one of only two states to report revenue declines from 2018 to 2019, according to the gambling.com website. In Delaware, the revenue report shows that the September handle fell from $14.4 million in 2018 to $10.2 million in 2019; October fell from $16.5 million to $10.8 million; November fell from $16.9 million to $10.3 million; and December fell from $16.1 million to $13.3 million.
Kirk said adding mobile betting isn't as easy as it sounds, especially in a state that thrives on the parlay card sales.
"There are also substantial additional costs associated with mobile that are not currently incurring such as geolocation, ID verification, payment vendors and processors; 24/7 customer support; fraud monitoring; and mobile platform fees," Kirk said. "In order to keep pace with the competition, mobile sports betting of some form or another in the future is inevitable; we just don't have a timetable at the moment."
"We have to balance mobile versus our very robust parlay card retailer handle," Kirk added. "Will we do better with more volume "“ a finite number considering the size of Delaware "“ but a lower hold if parlay card participation by the retailer network declines precipitously? That's a strong possibility."
"Online and mobile betting has the potential to be huge," Fantini said, adding that while he's not as familiar with Delaware's political situation online betting is a "natural extension and probably will come to just about every state that allows retail betting."
In Pennsylvania for the month of November alone, online sports betting accounted for 84.3% of the state's total handle. Mobile raked in $266 million, pushing the state total to $316.5 million.
"Look at Pennsylvania. Before launching online betting, handle was under $50 million a month. Now it's around a quarter-billion dollars. Likewise, New Jersey has spiked with online-mobile gaming. Online now represents 85% of the New Jersey handle and more than 80% of the PA handle."
Fantini put the numbers in context, pointing out that New Jersey's per capita handle is more than $70, Pennsylvania's is around $25 and growing, and Delaware is around $17. He did note that New Jersey's numbers are skewed by New Yorkers betting across the Hudson River at the Meadowlands, an advantage that he predicts will disappear as New York authorizes online sports betting, perhaps as quickly as this year.
By Max Osborne