Delaware considers sports betting to protect revenues

Mar 4, 2003 5:37 AM

When the Congress voted to prohibit sports betting in all but four states ”” Nevada, Oregon, Montana and Delaware ”” no one anticipated that competitive circumstances would push Delaware into the business.

But, that’s what is happening.

Nevada has been the national sports betting leader with about $2 billion wagered annually. Oregon, with its "Sports Action" parlay tickets available only during the football season, has struggled to top $9.9 million. And Montana and Delaware have been non-players.

Instead, Delaware turned to "racinos," permitting the state’s three racetracks to install slot machines. Not only has the move been nearly 20 times more lucrative than initially expected, Delaware has become a model for other state that have contemplated similar moves.

The Delaware popularity is responsible for two of its neighbors ”” Pennsylvania and Maryland ”” considering passing legislation to permit their tracks to go into the slot machine business. In other words, these two states would become major competitors to little Delaware.

When the slots legislation was debated in 1995, advocates estimated the state would reap a paltry $11 million in annual revenue. However, slots at Delaware Park, Dover Downs and Harrington Raceway have grown each year to reach last year’s total of $193 million in state revenue.

The dollars are so important to the state that legislators are now looking for alternative means to maintain that flow of dollars.

So, they are looking at sports betting since the state retains that window of opportunity granted by the Congress.

A 10-member task force of government and racinos workers has been asked to consider the feasibility of sports betting. The task force will attempt to determine how much revenue the activity would generate.

The sports betting suggestion is being supported by track operators even though as Denis McGlynn of Dover Downs remarked, "It won’t be the second coming of slots."

Another delay

Apparently the New Mexico political problems surrounding the issuance of a racing license for a new racetrack in Hobbs still haven’t been resolved. The newly-appointed racing commission announced last week that the matter has been tabled until its March or April meetings.

A hearing involving the application of R.D. Hubbard, owner of Riudoso Downs, was postponed when the commission members announced that no action would be taken while its chairman, Jack Cole, was absent for health reasons.

Neither was action taken on the request of Las Vegas entrepreneur Shawn Scott for a re-hearing of his application.

Still pending is a third application from Ken Newton former owner of the now-closed Downs of Santa Fe.

And rumors have been circulating that the commission is awaiting the applications of at least two other groups.

California dilemma

Without admitting that he made a serious mistake by not insisting on environmental protections when he negotiated gaming compacts with 61 Native American tribes three years ago, California Gov. Gray Davis is looking to renegotiate the agreements.

Also, Davis would like to get a commitment for $1.5 billion by offering to permit the casinos to have more slot machines instead of the 2,000 currently limited.

Although some of the smaller tribes have indicated they would along with Gray’s requests, at least for talking purposes, the major tribes have not been receptive.

In fact, one tribal leader said the Davis recommendations are not worth "the paper they are written on."

The Insider

Federal lawyers have entered the case involving Iowa’s different tax rates for casinos and racinos by siding with the state against the recent state Supreme Court ruling striking down a state law permitting different rates.

The United Methodist Church has entered into the debate regarding racetrack slots in Maryland by urging its preachers to develop a religious movement against the gambling effort.

In Kentucky, tracks are now saying, again, "wait ”˜til next year." Their efforts to get slots approval is dead for this year with proponents already planning next year’s effort.

While Nevada waited for someone to cash in on the Megabucks jackpot of $35 million or more, Mississippi saw its record Megabucks jackpot of $12.8 million go to a Gulfport, Miss., player. There are 52 Megabucks machines linked within 22 casinos in Mississippi

Isle of Capri Inc. (ISLE) has rebranded its players club into IsleOne Marketing System that allows players to earn miles as well as bonus points.

The slots bill filed in Pennsylvania will permit the tracks to keep 45% of the revenues with the state getting 30%; purses, 21.5% and the breed development program, 1.5%.

Bruce Turner, CEO of GTECH Holdings Corp. (GTK) has predicted that the company will earn $2.30 to $2.35 during fiscal 2003.

Mississippi Gaming Commission has approved Mikohn Gaming Corp. (MIKN) slot machine Yahtzee for installation in Mississippi casinos.

Maine has approved two referendum questions for the November ballot that would permit Indian casinos and racetrack slots.

Prominent Connecticut Senators Chris Dodd and Joe Lieberman are pressuring the U.S. Bureau of Indian Affairs to freeze all pending recognitions of Indian tribes until the review process can be changed.

Wall Streeters indicated over the weekend that Donald Trump has been successful in lining up investors to contribute to his $475 million debt offering.

Concord Gaming Corporation (CGAM) announced it had opened its Golden Gulch Casino in Rapid City, South Dakota.

Blaylock & Partners’ equity analysts have initiated coverage of Park Place Entertainment Corp. (PPE) with a "hold" rating.