Lawmakers wager sports betting
could boost state's revenues
By Ron MacArthur
Cape Gazette staff
May 11, 2007
Some Delaware lawmakers are betting on a quirk in state law as a way to boost state revenue and perhaps help the ailing Transportation Trust Fund.
Delaware is one of only four states, and the only state east of Montana, grandfathered in a 1992 federal law prohibiting sports betting. Because Delaware allowed sports betting on college and professional games at the time the federal law passed, sports betting is still permitted in the state.
Tried once before back in the early 1970s, sports betting is one of the hot topics in the halls of the General Assembly, and legislation is expected to be introduced to bring it back.
Sen. George Bunting, D-Bethany Beach, tried and failed in 2005 to get sports betting legislation passed. He says there were two major reasons for its failure. Gov. Ruth Ann Minner was opposed to sports betting, and there was no dire picture being painted on the state’s financial canvas.
The financial picture has changed, and Bunting said he can see no other way to dramatically increase revenue. “In my 23 years in the Legislature, I’ve never seen finances as tough as they are at this present time. What can we do?” he asked.
Bunting says there may be more public support for expanding gambling in the state than the proposed revenue increases being debated in the General Assembly.
Betting
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He may be right. Two revenue enhancement bills, with increased fees or taxes, were tabled on Wednesday, May 9, in the House of Representatives. And the governor has been asked by Senate Republicans to trim from 5 percent to 10 percent, $150 million to $300 million, from her $3.5 billion budget for fiscal 2008.
House Bill 49, which would add 45 cents additional tax to a pack of cigarettes, and H.B. 50, which includes increased fees and taxes for the Transportation Trust Fund, were tabled.
Bunting said economic necessity may force a sports gambling bill to surface and be acted on in the General Assembly within the next two years. “I’m not a great fan of gambling. There is a lot of hypocrisy in it because sports betting is done all the time,” he said.
A New York study estimates that as much as $380 billion is bet illegally each year on sporting events. The 1992 Professional and Amateur Sports Protection Act banned betting on sports in 46 states. Delaware, Nevada, Oregon and Montana already had some form of sports betting in operation and were grandfathered in under the law.
Economic impact
A 50-page report, “Revenue & Economic Impact of Proposed Sports Betting Legislation in Delaware,” commissioned by the Video Lottery Advisory Council (VLAC) and conducted by Morowitz Gaming Advisors, estimated that as much as $70 million could be added to the state’s coffers annually - directly related to sports gambling.
The report estimates that sports betting would generate $26 million annually with a $169 million increase to the take at the three racinos each year. As many as 247 new jobs would be created at the racinos located in Harrington, Dover and Wilmington.
The state’s share of the additional revenue would be about $70 million annually.
In addition, the report concluded the following would be generated annually: $8 million in miscellaneous state taxes; $24 million in purse enhancements at the three horse tracks; $18 million in increased revenue to hotels and restaurants; $11 million in horse-racing revenue; $46 million in construction (one year only); and $116 million and nearly 1,400 new jobs in support services.
Ed Sutor, chairman of VLAC, said although the numbers seem lofty, they are realistic. The figures are based on interviews with more than 1,500 men within a 150-mile radius of Delaware, and the information was then applied to the population base, Sutor said.
Betting in Sussex
One plan being discussed would not only add sports betting at the state’s three racinos, but also provide sports betting parlors in the Rehoboth Beach, Bethany Beach and Seaford areas in Sussex County. Others have proposed to add sports betting at all lottery sales outlets. Sutor is not a fan of either proposal. He says sports betting should be limited to the three racino facilities. “Profits on sports betting are actually very small,” he said. “I don’t see how a stand-alone sports book would work without slots and the other amenities.
“It’s not the sports betting alone, it’s more of a marketing tool, and it’s what people do when they get here. Unless you have the slots, there is not enough there.”
He said payout on sports betting is nearly 95 percent.
He said adding off-track betting parlors is like “changing the rules in the middle of the game.”
Bunting said the details of how sports betting in Delaware would operate are still up in the air. “There are at least a half-dozen versions out there on how to do it,” he said.
He hinted that it may be time to seriously look at offerings in Sussex County. “With the tracks making the kind of money they are, they will protect their turf – I understand that,” he said. “But Sussex County has the population to make it go and there will be people coming from Maryland.”
Competition coming
Sutor said the General Assembly has a chance to get ahead of the curve in the competition for gambling dollars in the Mid-Atlantic region.
With casinos already opening in Pennsylvania, legislators in Maryland will soon allow slots in that state. About 40 percent of the people who gamble in the three racinos in Delaware come from Maryland, he said. Sports betting will help the state retain a strong competitive edge to keep people crossing state lines.
“We stand a much better chance if we act now and already have sports betting established, because no matter how badly Maryland wants sports betting, they can’t have it,” he said.
The council, formed in 2003 under House Bill 269, issued the following in its 2006 report: “The VLAC strongly recommends that in the light of the recent escalation of various gaming initiatives in nearby states, sports betting in Delaware should be elevated to an urgent status of consideration.”
The council estimates that the opening of slot operations in Pennsylvania will reduce projected fiscal 2007 revenue in Delaware by $10 million, and by $35 million in fiscal 2008.
In addition, with possible competition from Maryland, West Virginia legislators are considering table-game legislation.
Other recommendations to boost revenue at the racinos included the following:
• The elimination of Sunday-morning closings.
• Beginning the process of adding table games to the existing slot-machine offerings at the three racinos. This would require a constitutional amendment including a 75 percent approval of two consecutive legislatures.
• Allowing alcohol consumption at racinos during all operating hours.  |