Delayed Sports Betting Could Cost Rhode Island Millions

Saturday, September 01, 2018

Rachel Nunes, Contributor

 

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Sports betting delay could cost RI millions

Rhode Island's sports betting rollout delay has the potential to cost the state millions of dollars in revenue, despite insistence from the Department of Revenue that it will not be the case.

"We're maintaining our fiscal year 2019 revenue projection of $23.5 million at this time," said Paul Grimaldi, the Chief of Information at the Rhode Island Department of Revenue. Data from Nevada show that Rhode Island will lose millions by missing the October 1 launch date and will adversely impact the Rhode Island state budget.

On August 24, IGT announced a five-year partnership with the state to implement sports betting in the state's two Twin River locations in Tiverton and Lincoln, with operations "expected to go live by mid-November."

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Sports betting was legalized as part of the state budget in June with an October 1, 2018 start date. But, Governor Gina Raimondo announced with her budget that the October 1 was key to maximizing revenue and beating other states to market. This latest delay has the potential to cost the state millions in revenue during the hottest sports gambling months of the year.

Potentially Devastating Loss in State Revenue

During September and October of 2017, statewide reports from the Nevada Gaming Control Board and Gaming Commission show that Nevada casinos took in a combined $56.4 million in sports betting revenue from football alone, 73 percent of the annual total for the sport.

"November is pretty deep into the football season, so there's definitely a large potential for loss in Rhode Island, though it's impossible to say for sure," said Dr. David Schwartz, Director of the Center for Gaming Research at the University of Nevada, Las Vegas.

"Football betting seasons are generally big revenue drivers," Schwartz told GoLocal is a phone interview on Friday.

Early fall is the only time of year when all major sports are being played congruently. Both major league and college football kick off in early September. Major League Soccer playoffs run through the end of October. 

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Major League Baseball playoffs also begin in early October, along with the National Hockey League season kickoff on October 4. National Basketball Association preseason games start September 28, with the regular season kicking off October 16. By pushing sports betting off until November, Rhode Island loses the opportunity to gain revenue from all of these sources.

Across other sports, the state of Nevada took in just under five percent of total basketball betting revenue and 27 percent of baseball betting revenue in September and October of 2017.

IGT and its partner William Hill is being blamed for the delay. Grimaldi said the company needed more time to build and test the systems needed for sports betting, as well as to train employees.

"It's not what the state wanted, but it's necessary to ensure quality. The systems will be tested by a third-party and approved by a letter of integrity," Grimaldi said. "It's too early to say how much of an impact it will have on year-long totals. We just don't know how popular it will be. If there's another big year and the Patriots make it to the Superbowl, we could more than make up any lost revenue on that day."

Grimaldi added that adjusted revenue projections would not be available until at least November, following the bi-annual Revenue Estimating Conference. The current $23.5 million figure was drawn from an estimate that claimed sports betting wagers could exceed $800 million in the state.

Sports Betting Across the Northeast

Once put into place, sports betting will only be available in Rhode Island at Twin River Casino's two locations, unlike in other states, where online gambling is allowed.

Rhode Island will not be the first state in the Northeast to offer sports betting. Neighboring Massachusetts and Connecticut have both introduced sports betting legislation. Outside New England, New York, Delaware, New Jersey, Pennsylvania, and West Virginia have all passed laws legalizing sports betting.

 

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