HB 365

Abstract

This Act is enabling legislation that establishes the framework and requirements for a competitive mobile sports wagering market in Delaware under the authority of the Lottery Director. Sports wagering is now legal in 38 states, and 29 states have legalized mobile sports wagering using computers or other Internet-connected devices, including the neighboring states of Maryland, Pennsylvania, and New Jersey. Pursuant to this Act, the Lottery Director is authorized and directed to commence the Internet sports lottery by administering a solicitation and request for applications process to license qualified operators that have entered into a market access agreement with one of Delaware’s existing video lottery agents. Each video lottery agent is authorized to partner with a maximum of two prospective Internet sports lottery operators, and certain minimum requirements for applicants are established in the legislation as part of the criteria the Lottery Director will develop to evaluate proposals from applicants. The Lottery Director may disqualify applicants that fail to provide required information. Further, the Director is not required to license applicants that are deemed not to be qualified. Licensed Internet sports lottery operators are required to pay a $500,000 fee for an initial 5-year license to offer Internet sports lottery games in Delaware, and operators must return proceeds from their operations at a rate of 18% of the operator’s monthly adjusted gross sports lottery receipts. Licensed operators will also contribute 1.5% of their monthly adjusted gross sports lottery receipts to purses for allocation under the direction of the Delaware Thoroughbred Racing Commission or the Delaware Harness Racing Commission, as applicable. Licensed Internet sports lottery operators must also contribute additional purses to cover any deficit in the event total purse revenues in any fiscal year from all sports lottery and Internet sports lottery operations are less than the total purses paid in the last 12 months prior to the start of the Internet sports lottery. Licensing fees collected from operators are allocated to the General Fund. Proceeds returned to the State by Internet sports lottery are allocated first to the Lottery Office’s costs and administrative expenses. Thereafter, $400,000 or 3.5% of the proceeds returned to the State, whichever is greater, is allocated to DSAMH for programs for the treatment, education, and assistance of compulsive gamblers and problem gambling. The balance of the proceeds remaining are allocated to the State Lottery Fund for the benefit of the State. The Act provides the Lottery Director with authority to regulate and provide for the security and effective administration of the Internet sports lottery. Minimum duties of licensed Internet sport lottery operators are established in the Act, including, among other requirements: (i) employing a monitoring system to identify betting irregularities; (ii) reporting suspicious activity to the Director; (iii) maintaining sufficient cash balances and daily records of receipts; and (iv) keeping current in all payments and obligations to the Director. Violations are subject to enforcement under existing statutory provisions. The Act directs the Lottery Director to implement the Internet sports lottery as soon as reasonably possible, but not later than 150 days after enactment. The Lottery Director is authorized to issue conditional or probationary licenses during initial implementation of the Internet sports lottery and may issue emergency regulations to the extent necessary to implement the Act. Final regulations for the Internet sports lottery are to be promulgated within 1 year after enactment. Finally, Section 8 of the Act provides that the Act’s provisions do not apply to any vendor awarded a contract by the Lottery Office to provide an online casino and sports gaming platform for Delaware’s three licensed video lottery agents pursuant to that certain Request for Proposal issued by the Lottery Office on January 12, 2023, entitled “Internet Wagering System and Services Solution [FIN23001-IWSSS]” or any renewal or successor contract thereto. This Act expands the definition of “Sports lottery” to include amateur and electronic sporting events. This Act requires a 3/5 vote because it creates a fee.