DELAWARE - Bet on it: New push for sports gambling

[clevfan]

January 5, 2009


Bet on it: New push for sports gambling

Under new governor, chances of legalization could improve

By GINGER GIBSON and SEAN O'SULLIVAN
The News Journal

The chances for sports betting to be legalized in Delaware should improve when Gov. Ruth Ann Minner leaves office on Jan. 20, lawmakers say.

That's because the fight to add it to the state's gambling scene hit a snag when Minner announced in 2007 that she would veto any legislation to legalize it.

With a new administration set to take office, House Speaker Bob Gilligan, D-Sherwood Park, believes betting could be approved this legislative session, though it's unclear how it could help ease the state's expected $560 million budget shortfall.

"If we're going to do it, we're going to do it quickly," Gilligan said.

Many interviewed around Wilmington's Trolley Square Saturday said the state might as well legalize sports betting because the state already has taken the plunge with slot machines.

"Why not?" asked Ed Wolkind, 63, of Wilmington as he sat at the bar in Kid Sheleen's, football and basketball playing on the televisions around him. "It is a free country, we should have the option."

He said he expects it would bring in money, if for no other reason than it is something novel. "Let's try it," he said.

The previous version of the legislation to legalize sports betting -- House Bill 190 -- died in Sen. Nancy Cook's Finance Committee after it was approved in the House.

But Senate Speaker Pro Tempore Thurman Adams, D-Bridgeville, who decides which committees hear bills, said earlier this year that he expects it will get a Senate hearing, signaling the clearing of another hurdle.

One of the last obstacles is winning the approval of Gov.-elect Jack Markell, who takes office on Jan. 20 and remains undecided about the effort.

"I need to understand the costs and the benefits," Markell said. "It's something that I'll consider."

House Minority Leader Richard Cathcart, R-Middletown, said he expects the bill to be considered in the Legislature, but is unsure about passage.

"Gov. Minner will no longer be around and the threat of veto she hung over the Legislature's head is no longer going to be there," Cathcart said.

Larry Pelegrin, 64, of Wilmington, who was making a run to an ATM in Trolley Square Saturday, said the state should "absolutely" approve the measure.

He said Delaware already "cleared the moral hurdle" regarding gambling by legalizing slots and the lottery.

Sports betting "is an opportunity," he said, and is likely to bring in more money. "In these times, it is something you can't ignore."

Jesse Will, 25, of Wilmington said it is not as if people don't gamble on sports; it is just done illegally right now and the state can't touch that revenue.

"I don't see too much harm," added Joel Marcus, 38, of Newark. "And maybe if you legalize it and regulate it, you take some of the criminal element out of it."

Michelle Cooper, 26, and several friends who said they were headed to Delaware Park Saturday, fully supported adding sports betting and table games.

"Bring it on," said one.

"I won't have to go to a bookie and be worried he'll break my legs," said Chris Baker, 33, of Wilmington.

Back at Kid Sheleen's, a man who did not want to give his name said it seemed like a bad idea given the current economy. "It will push people further into debt," he said.

Economic result in dispute

Despite its improved chance for passage, sports betting won't solve the state's fiscal problems, lawmakers and other officials said. Even if it generates revenue, it will take months to set up before it starts to produce returns.

Sen. Patricia Blevins, D-Elsmere, said she hasn't seen a large push to get sports betting approved because most lawmakers have been occupied with the budget.

"I don't know that it's a huge revenue producer, but I might be able to be convinced," she said.

UD economics professors James Butkiewicz and Bill Latham released a report last summer that said a sports lottery would give the state an additional $1 million to $3.3 million per year.

Their findings disagree with The Governor's Task Force Report, which said sports betting would add $22.5 million to $30.6 million to state revenues in the first year alone.

They also dispute a report released by the state's gaming industry that said sports betting could bring in as much as $71 million.

Some national gaming experts said Delaware should approve sports betting if for no other reason than upping the state's "attraction factor" to gamblers.

Sports betting is the state's "ace in the hole" because Delaware is grandfathered under a national law preventing that kind of wagering, so Maryland and Pennsylvania can't offer it, said Roger Gros of the trade publication Global Gaming Business in 2004.

It gives people a reason to drive past nearby casinos to your casinos, he said.

Impact from Md. uncertain

David Gregor, an analyst with the state's Finance office, said revenue estimates for gambling -- including slots, the lottery and racetracks -- are declining in short- and long-term estimates made by the Delaware Economic and Financial Advisory Council, or DEFAC.

Gregor said his office has done no additional estimates on what kind of revenue sports betting could produce.

Until the legislation is actually signed into law, DEFAC won't include sports betting in its estimates, Gregor said.

DEFAC dropped the gambling revenue estimate for the current fiscal year three times because of the sagging economy, he said. The amount of play at state casinos in November was down 5.8 percent compared to last year.

The long-term estimates are even lower, Gregor said, because the state estimates about $70 million will be lost when Maryland institutes its recently approved slot machines.

Maryland also provides a tricky variable in estimating gambling revenues, he said, because there is no way to tell when they'll be up and running. The most conservative estimates have the new slots impacting Delaware in late 2010.

"When Pennsylvania did it, we thought we were fairly smart but maybe a little conservative on the timetable," Gregor said. "They surprised us and they took forever to get up and running."

State Rep. Greg Lavelle, R-Sharpley, said sports betting may gain some support if it's pitched as a way to increase competition since Maryland's approval of slots.

He also said he's not philosophically opposed to allowing more gambling in the state.

"You can't be a little pregnant. You gamble or you don't," Lavelle said, adding he wouldn't be opposed to adding table games to casinos.

When trying to estimate how much money sports betting could bring to the state, forecasters also have to consider whether new sports bettors also will be inclined to play the slots.

Sports betting also will require participants to make a double bet, wagering on the game's outcome and a more random variable, such as yardage in football or walked runners in baseball.

"There is a strange quirk that people have to make a double bet," Gilligan said.

[clevfan]

Delaware may trump slots with sports betting

Wednesday, Jan. 7, 2009
By ALAN BRODY
Southern Maryland Newspapers
Staff writer

Before Maryland sees a penny from slot machines, Delaware may up the ante in the regional race for gaming revenues by approving sports betting at its three racinos as soon as this year.

That could mean less money than anticipated for education, the thoroughbred industry and other beneficiaries of legalized gambling in Maryland, prompting fresh criticism of slots, which voters approved in November.

"That will all serve to diminish Maryland's share of the regional market," said House Minority Leader Anthony J. O'Donnell (R-Calvert, St. Mary's). "In the recent referendum, the pro-slots campaign so exaggerated and elevated the expectations that when it doesn't promise the new and improved deliverance of all maladies, people are going to be very, very disappointed, and it's probably going to put, in my opinion, some of the state's priorities at risk."

The game of one-upmanship in casino entertainment is predictable, observers said, especially as states seek any revenue generators to combat massive budget shortfalls.

Legislative analysts in Maryland project slots could generate $1.36 billion by fiscal 2013, with roughly half going to schools. But none of that money is earmarked to help the state erase a projected $2 billion deficit for the fiscal year that begins July 1.

In Delaware, the gap is projected to reach $560 million by fiscal 2010. Sports betting is expected to be a hot topic when the General Assembly convenes Jan. 13, a day before Maryland lawmakers begin their 90-day session in Annapolis. Gov.-elect Jack A. Markell has signaled that he will sign legislation to authorize wagering at tracks in Wilmington, Dover and Harrington, if the legislature passes it.

"I don't think it has to do with what other states around us our doing," said Senate President Pro Tempore Thurman Adams Jr. (D), who lives about 15 miles from Midway Slots and Simulcast in Harrington. "It's based primarily on what it would return in benefits if it's passed as far as the finances."

But increased competition from surrounding states is another driving factor. Delaware legalized slot machines in 1994 at its three racetracks to prop up its thoroughbred industry and competes with Atlantic City casinos for gambling revenue. The 2004 passage of slots in Pennsylvania raised the stakes, and Maryland expects to have the first of its five slots parlors up and running by 2011.

Although a 1992 federal law prohibits betting on sporting events, Delaware is one of four states that have a "grandfather" exemption because it tinkered with a sports lottery in the 1970s. Nevada, currently the only state that operates legal sports books, Oregon and Montana, also are exempt from the federal ban.

Sports betting could help preserve some of the gaming revenues that Delaware expects to lose to Maryland when its 15,000 slot machines come online.

"What you have going on in the region is a gambling arms race, and this is part of that," said Scott Arceneaux, former senior adviser to the now-defunct Marylanders United to Stop Slots, repeating a refrain his group used during the campaign to defeat the slots referendum. "These destinations outside of Maryland aren't going to give up these gamblers without a fight, and this is going to be part of their effort to keep the folks that are going there [now] going there [in the future]."

But even if it is implemented, sports betting alone will not cure Delaware's fiscal ills. While almost $2.6 billion was wagered at the Nevada sports books in 2007, the gross gaming revenue totaled only $168 million, only 6.5 percent of the amount in play and a fraction of more than $12 billion in total casino revenues, according to the state's Gaming Control Board.

Still, the amount spent on sports gambling in Nevada has grown in each of the past five years, and the number of online sites has multiplied in recent years. Plus, Delaware could strike gold in an untapped sports betting market on the East Coast.

Estimates on how much the state would yield range from just $3 million a year to as much as $70 million annually, Adams said.

If approved, sports betting in Delaware will differ from that in Nevada. No straight bets on a single game or outcome may be placed. Only combination bets, known as parlays, can be wagered. They carry higher odds, but are more difficult to win.

It's too soon to know how much an impact legalized sports betting would have on Maryland slots revenues, but Mike Hopkins, executive director of the Maryland Racing Commission, acknowledged that it likely would sap money from the state's coffers and therefore potentially hurt the thoroughbred industry.

"Certainly, it's another opportunity for people to use their discretionary income on something different," he said.

The potential introduction of sports betting in Delaware and the possibility that other nearby gaming venues, such as Charles Town Races & Slots in West Virginia, will become full-blown casinos is a "valid fear" for Maryland even before the first slot machine is turned on, said Joseph S. Weinert, senior vice president for Spectrum Gaming Group LLC, an industry research firm in Linwood, N.J.

"That could put a dent in the Maryland [revenue] projections," he said, warning that the fiscal impact in states new to gaming is always difficult to predict.

Some lawmakers, however, don't see sports betting in Delaware as a threat to slots revenue in Maryland.

"I just don't think that people who sports bet are the same people who play slot machines," said Sen. James Brochin (D-Baltimore County). "I think it's a different caliber of bettor."

Outside competition will, however, require the license holders of facilities in Allegany, Anne Arundel, Cecil and Worcester counties and Baltimore city, to build top-notch venues that will keep Marylanders in-state and lure outsiders here.

"A lot of these folks who are slots players are tired of going out of state," Brochin said. "It's going to be incumbent on the people who get these licenses to build a venue that is an attractive and modern venue that's going to attract people to come in and play. And if they do, I think they're going to be fine, and the state's going to be fine."

As other states expand beyond slot machines — West Virginia introduced table games such as roulette, poker and blackjack at two racetracks in 2007 and another in 2008 — Maryland should resist the pressure to play catch-up, lawmakers said.

"To start a discussion of expansion would be tawdry at best," O'Donnell said.

Given how long it took to ratify slot machine gambling and the protections built into the legislation to guard against expanded gambling, such an effort seems improbable in the short term. Down the road, though, Weinert believes it's a possibility, just to keep pace with other states.

A bigger worry, said Sen. Nancy Jacobs (R-Harford, Cecil), is if the economy continues to slump over the next few years and slot machine revenues fall below projections.

Revenues at Atlantic City's eleven casinos have plummeted in recent months, mirroring a nationwide gambling industry downturn. It comes as New Jersey, too, faces dire budget woes — $1.2 billion for the current fiscal year and $5 billion the following year, according to Gov. Jon S. Corzine (D).

For the first 11 months of 2008, casino revenues are down 6.7 percent from last year, according to the state's Casino Control Commission. Slot machine proceeds have particularly slumped, down 8.9 percent through November. Overall gaming revenues fell 15.1 percent in September, the largest one-month fall since gambling came to the seaside resort in 1978.

"If we continue to stay in the downturn that we're in, less people are going to gamble," Jacobs said. "Right now, money is not discretionary for most of us. What money we have, we have to be saving and spending on things we need to have."

[howid]

"Why not?"

eh why not, eh?