One Year Later And Little Joy For Delaware’s iGaming Industry

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Thursday, November 27th, 2014 | Written by Shane Larson

In November 2013, Delaware regulated online gaming and in its first month of operation the state generated a total $111,387 in revenues. The industry is now one year old, but unfortunately there appears to be little cause for celebrations after the Delaware Lottery revealed a mere $130,468 was collected in October 2014, representing its lowest revenue tally in a year.

Furthermore, the First State has now generated just $2 million over the past year, a figure that has fallen woefully short of predictions made pre-regulation, that optimistically forecast more than $5 million in annual state taxes, alone.

October’s Woeful Results

Delaware’s three online operators produced a combined $130,468 of revenues in October, down 10% compared to the previous month, with table games accounting for $46,130 of that tally, online poker just $28,509, and video lottery $55,828. Overall, table games were down by 21%, and online poker down by 12% compared to September, while Video lottery games improved by 2%, and now makes up 43% of the state’s iGaming market revenues.

Continuing to lead the way in October was Delaware Park with 58% of the market, although the facility also experienced a dramatic 16% month on month drop in revenues to $75,050, its lowest total since November 2013. Breaking the figures down, table games earned $35,329, poker earned $16,584 and video lottery earned $23,136.

In the meanwhile, Dover Downs reported a 10% drop in revenues to $30,383 compared to the same month last year, with table games generating $9,188 in revenues, poker $8,202, and video lottery $12,991.

Finally, Harrington Raceway bucked the downward trend and posted a 47% increase in revenues to $25,034 in October. While the venue’s video lottery offering generated $19,700 in revenues, its highest total ever, poker produced a paltry $3,721, and table games a negligible $1,611.

New Sign Ups Fall 88% Y-O-Y

Of great concern to Delaware’s one year old iGaming industry is the fact while November 2013 saw 2,654 people sign up for new online accounts, in October 2014 that number had fallen to a mere 315 new accounts. That’s an 88% drop year-over-year, and a 20% fall compared to the previous month. January this year is now the last time Delaware experienced monthly sign ups of more than 1,000 people.

Interstate Compact Not Until 2015

Consequently, a lack of liquidity continues to choke Delaware’s online poker market, and the situation looks unlikely to improve anytime soon after plans to form an interstate compact with Nevada have now been put on hold until next year. In the meantime, Nevada is also experiencing difficulties of its own, and this month the state’s first regulated online poker room Ultimate Poker shut down citing a lack of business, as well as the uncoordinated state of online poker in the US. As Ultimate Gaming Chairman Tom Breitling explained at the time:

“Moreover, the state-by-state approach to online gaming has created an extremely cost-prohibitive and challenging operating environment. These factors have combined to make the path to profitability very difficult and uncertain. Consequently, we have decided to cease operations.”

US iGaming Potentially Worth $5.2bn Per year

Delaware is currently one of three US states to have legalized online gaming in the country, the other two being Nevada and New Jersey. All three states, however, are struggling with an industry in turmoil since Black-Friday, and while Morgan Stanley has predicted that the US online gambling industry could be worth as much as $5.2 billion by 2020, in order for that to become a reality at least 20 or more states will have to legalize it over the next six years.

Delaware’s Casino Market In Trouble

Delaware’s state budget is heavily reliant of taxes collected from the state’s three casinos, and together with lottery proceeds accounts for around 6% of the annual budget. In fact, the importance of casino gambling for the state was emphasized in an article which appeared on delawareonline.com, which said:

“The state’s three casinos generate more state tax revenue than all of the state income tax paid by corporations operating in Delaware. And it rivals the amount generated by Delaware’s gross receipts tax, sometimes called the state’s hidden sales tax.. The state last year used almost $215 million in gaming revenue to pay its bills, including more than $62 million in gambling revenue from Dover Downs alone.”

However, just like other states in the US Delaware now has to cope with increasing competition from neighbouring states, and while in 1996 there were just 14 casinos in the Dover Downs’ market, that figure has now almost doubled as casino developments continue to increase in the region, and especially in Pennsylvania and Maryland.