The Delaware Lottery will have a new iGaming provider after current provider 888 Holdings withdrew from the bidding process back in May.
While media reports suggest that Rush Street Interactive (RSI) and 888 are competing for the bid, the Chicago-based operator is actually the only remaining candidate looking to bid to operate the online casino and poker offering in Delaware.
888 ends its longstanding partnership with the Delaware Lottery
Sources close to the process suggest there were a number of delays and challenges, ultimately leaving bidders with just weeks to respond to a complex series of requests. This included a number of mobile sports betting integrations, although state laws only allow in-person betting. iGB has contacted the lottery for comment.
Efforts to regulate mobile betting made progress in the 2023 legislative session but ultimately failed. This in turn required changes to the tendering process.
888 won the Delaware Lottery’s iGaming bid in 2013. The company operates online casino and lottery poker, as well as a sportsbook operated by OpenBet.
The SI sportsbook extended its contract for two years in 2020 after launching an interstate poker offering in 2018 connecting players in Delaware, New Jersey and Nevada, with Michigan joining in 2022.
Lack of communication, high costs, small market
However, it finally withdrew in May and RSI remained the only competitor. iGB understands the deal has not yet been signed, although an announcement is expected this week.
The SI sportsbook did not comment on its decision to withdraw.
However, sources suggest that a lack of communication from the lottery, a small addressable market and the costs associated with the technical specifications ultimately led 888 to withdraw its offer.
Confusion about the Delaware Lottery’s iGaming competition
The Request for Proposal (RFP) issued in January this year indicated a change in the lottery’s approach. It was looking for a provider that could also offer online sports betting as well as Icasino and poker, although this remains illegal in the state.
The tender acknowledges its uncertainty as to whether the partner could even start online betting. It could be relevant either from the start of the contract, “at some point in the future” or “not at all, i.e. outside the scope of this tender”, the document says.
Further confusion surrounded live casino games. The RFP sought information about partners’ experiences managing third-party content, including live dealer products, and then stated in an addendum that it had no intention of offering those games.
888 submitted a bid as incumbent along with Rush Street Interactive and Light & Wonder, as well as reg-tech specialists GeoComply and LexisNexis.
Live dealer specialist Evolution joined the fray, as did sports betting technology provider Kambi.
What does this mean for igaming in Delaware?
While RSI is performing strongly in the casino industry, there is no poker product yet. According to the operator’s website, a platform is under development.
However, the change will significantly reduce liquidity for poker. Delaware is currently part of the 888 interstate poker network, connecting the First State with New Jersey, Michigan and Nevada. The rules may need to be rewritten if it is removed from this network.
The go-live date for the new iGaming offering has yet to be confirmed. The Delaware Lottery has suggested that the launch must take place no later than November 1st. However, if development of an RSI-based offering is not completed, 888 may temporarily extend its current agreement to avoid loss of service.
Is it time to reset First State gambling?
Strategy and advisory consultant Brendan Bussmann of B Global Advisors argues that this should lead to a rethink of Delaware’s betting and igaming framework.
“It is disappointing to see an RFP process fail, but either the market expectations of potential bidders have clearly not been met or expectations have been set too high in what remains a relatively small market, further constrained by the legislative and regulatory structure he said iGB.
It may be time to start from scratch, he continued. “While that is not necessarily best for whichever party is left in the process, there must be a clear path to achieving their goals, which requires legislative action.
“It is better to expand the incumbent, set up the infrastructure and start again to meet stakeholder expectations.”
The betting and igaming market in Delaware remains small
While Delaware was the first state to introduce sports betting following the repeal of the Professional and Amateur Sports Protection Act (PASPA) in 2018, only in-person betting is permitted.
After launching in November 2022, Maryland is now the only state in the region without mobile betting.
Igaming, on the other hand, is available at the state’s three casinos – Delaware Park, Dover Downs (now Bally’s Downs) and Harrington Raceway. However, with around a million inhabitants, it is a small market; Monthly iGaming stakes average around $40 million, with revenue just over $1 million.
According to the most recent figures available, players wagered $37.9 million in June and generated net revenue of $1.1 million.
The Rush Street Interactive lottery experience
If, as expected, RSI is announced as the new company powering the Delaware Lottery’s iGaming offering, it will not be its first lottery partnership.
In August 2021, the company won a mobile and retail sports betting tender for the Connecticut Lottery. Signing a ten-year contract. However, in March of this year began to dissolve this partnershipalthough it will continue to push sports betting until a replacement provider is selected.
National brands like BetMGM and Caesars could bid for the contract, having missed out on RSI’s selection.