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Delaware eyes legalizing sports betting

Oct 30, 2007 5:04 AM

Although Nevada has a monopoly on legal sports betting in the U.S., that could change if Delaware opts to use its "grandfather clause" and implements some form of sports betting.

Delaware is one of four states that were grandfathered exemptions to a 1992 federal law that banned sports betting.

In addition to Nevada and Delaware, the other two states are Oregon and Montana.

Legalized sports wagering isn’t a sure bet in Delaware, but it remains an ace in the hole for Delaware’s gambling industry.

"I do not think this is going to go off our list until it happens," Ed Sutor, president and chief executive officer of Dover Downs Inc., told members of the state Video Lottery Advisory Council earlier this month.

Sports betting will lead the VLAC’s list of recommendations for state officials to consider when the council submits its annual report, due Nov. 5. Other desired changes include removing a cap on promotional slot machine play, eliminating Sunday morning closings, and allowing alcohol to be served after 1 a.m.

Meanwhile, a Minner administration working group, at the direction of the General Assembly, is studying the possible reinstitution of sports betting in Delaware. It’s scheduled to report its findings by Dec. 21.

The group has looked at Delaware’s failed experiment with a sports lottery decades ago, as well as a recently ended sports lottery in Oregon. It is now studying how sports betting is conducted in Las Vegas and Windsor, Ontario, where sports wagering similar to that envisioned by proponents in Delaware began last year.

By virtue of its failed experiment with sports gaming in the late 1970s, Delaware is one of the four states that were grandfathered exemptions from a 1992 federal law banning sports gambling.

Faced with new slot machine competition in Pennsylvania, tables games in West Virginia, and the threat of slot machines in Maryland, Delaware officials have taken an increasingly hard look at reviving sports gaming, an option open to no other state east of the Mississippi River.

"I think there will be more support for it this year than perhaps in past years," said House Majority Leader Richard Cathcart, R-Middletown. "I think there will be a vote on it."

Unlike single-game betting allowed in Las Vegas, a Delaware sports lottery would require combination or parlay bets — selecting both a winning team and the total points scored by both teams, for example — to retain the element of chance from the original 1970s game.

"The lottery by its very nature can only do games of chance," Sutor explained.

Opponents of the idea have included Gov. Ruth Ann Minner, along with the National Football League, Major League Baseball, the NBA and the NCAA.

A state House of Representatives committee in June released a bill authorizing a sports lottery at Delaware’s three existing slot machine casinos that would allow adults to wager on professional and collegiate events, with the exception of those involving Delaware schools. The bill was not brought up for a floor vote. Lawmakers instead passed a resolution authorizing the budget office, finance director and controller general to conduct a study and submit a report to the legislature.

"I look forward to it," Sutor said. "If anybody does a reasonably intelligent job of doing a forecast, they’re going to end up with a report that shows this should be very attractive to the state."

Lawrence Klatzkin, a gambling industry analyst with Jefferies & Co., said approval of slot machines in neighboring Maryland, from which Dover Downs draws many of its customers, could spur Delaware officials to act.

"That would probably be a catalyst to Delaware passing sports betting," said Klatzkin, cautioning that slot machines in Maryland is hardly a done deal, even though Gov. Martin O’Malley supports the idea.

"It’s been said to be a sure thing now for six years running, so I’ve stopped betting on it," Klatzkin said.

Cathcart said sports betting would be a sustainable source of revenue for Delaware, but administration officials warn that it should not be seen as a panacea.

"Sports betting as we see is not the ultimate solution or the silver bullet, if there is enactment of Maryland slots," said deputy finance secretary Tom Cook.

Administration officials have expressed doubt about a study commissioned by the gambling industry suggesting that sports betting could boost Delaware’s lottery revenue by $70 million a year. They have noted that the professional football betting game that Oregon offered at more than 2,500 lottery outlets brought in only $12 million in total sales in its best year.

Cook suggested that proponents of sports betting in Delaware may be relying too heavily on "crossover play," believing that people who wager on sports will also spend their money on slot machines.

But Sutor said industry officials are confident that sports wagering at the three casinos would result in spinoff spending on slot machines, horse racing, restaurant meals and hotels.