Delaware Online Gambling Falls 27% In May

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Wednesday, July 2nd, 2014 | Written by Stephen Smith

The Delaware Lottery has released its latest online gambling results for May, revealing a dramatic 27% drop in revenues to $175,601 compared to its record high of $240,496 in April. Worryingly, both online casino games and poker reported declines last month.

Casino games down 47%

In May, Delaware‘s online table games may have generated a record $9,026,528 in betting, up 66%, but overall net revenue from those games plummeted by 47% to $72,537, compared to the $137,203 taken in April.

Since launching its first site back in November 2013, Delaware‘s internet revenues had been increasing each month, but whereas online poker has show a steady decline, online casino games have provide the growth potential for the industry. In April, for instance, the 6% rise in igaming revenues was solely down to the positive result provided by online casino products, even as poker revenues dropped from $84,391 in March to just $74,078 in April.

The sudden contraction in Delaware’s online casino market therefore represents a serious risk to its nascent overall igaming market that already has shown itself small and insignificant. In addition, just 342 players signed up for new account in May, down 16% from April, with sign-ups having steadily declined over the past six months.

Nevertheless, it should be noted that the summer months are traditionally notorious for producing big falls in online gambling traffic.

Online poker down 22%

Online poker revenue from the state’s three licensed racinos also was down by 22% to $57,470, representing a $16,608 fall from the previous month. Commenting on the figures, pokerfuse.com also drew attention to poker’s waning daily averages, explaining:

“The numbers are slightly more dramatic when compared on a per day basis. Daily online poker revenues in the state were $1,853.87 in May compared to $2,469.27 in April (a 24.92% slide).”

Out of three racinos operating online gambling sites in The Diamond State, Delaware Park still continues to be the dominant player with a 62% of the online poker market, although this figures is down from the 69% share it enjoyed in April. Dover Downs, on the other hand, saw its market share improve 8 points to 32%, while Harrington remained fairly steady at 6%.

The story so far

In Delaware, the state receives 43.5% of internet slots revenues and 29.4% from online table games, with the first $3.75 million in revenue then channeled into state coffers. Pre-regulation, Delaware had predicted an additional $7.5 million in tax revenue for fiscal year 2014, but thus far online gambling has yet to contribute to the state budget.

Although high start-up costs have been cited as contributing to Delaware’s lower than expected results, the high tax burden has also ensured the state’s igaming operators have been less inclined to spend extra money promoting their products.

In addition, across the USA’s three regulated online gaming states preregulation projections have proven to be highly unreliable and inflated. New Jersey, for instance, touted $1 billion revenues and $180 million annual tax collections before reality eventually showed the figure to be but a tenth of that amount.

Online poker not the winner everyone expected

Despite three US states adopting online gambling regulation in 2013, no other states have since come forward to join the exclusive group. Without doubt many where hoping impressive results from Nevada, Delaware and New Jersey would have made it easier for them to persuade legislators to adopt online poker regulation, but as Poker Players Alliance Executive Director John Pappas commented recently:

“We need to be realistic when talking to lawmakers about what can be expected from iPoker revenue, particularly when looking at a state-by-state deal where individual states are operating. Until they can have interstate liquidity, I think they will always have lower-than-expected revenues.”

Online gambling a better bet

Nevertheless, online casino games are generally viewed as a more lucrative proposition than online poker games. Casing point, Delaware initially reported stronger earnings from internet poker than it did for online casinos when it first launched 6 months ago but over the past three months that trend has now fully reversed. Likewise, in May New Jersey online casino games produced $8,196,276 in revenue compared to just $2,273,657 for online poker.

One may then wonder why states such as California and Pennsylvania are currently considering poker-only legislation limiting gambling to online poker alone. One reason is that land-based casino interest groups are less worried about the potential “cannibalization” of their poker room business as opposed to their lucrative casino gambling games. Another reason was summed up by Sarah Coffey in her article on ifrahonigaming.com, which explained:

“Some states considering poker-only legislation view it as a test run to see how the well the state can implement online gaming safely and responsibly before adding casino games to the mix. Nevada and Pennsylvania have said that they see online poker as a potential first step into online gaming rather than a final one. We believe that many poker-only states will find themselves adding casino games down the line when they see how much potential revenue they’re leaving on the table.”