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Despite opposition, Delaware might bring back sports betting

USA Today - USA

Legal, lottery-style betting on pro and college sports events might be coming to Delaware, where several recent developments could prompt lawmakers to activate the state's exemption from the 1992 federal law that generally bans such gambling.

A governor who opposed sports betting has departed after serving the maximum two four-year terms. The state projects an estimated $600 million budget deficit for the fiscal year that begins July 1. And the pillars of its gaming industry — horse racing and slot machines — are up against challenges from the introduction, or approval, of slot machines in Pennsylvania and Maryland.

"This year is different," state House Speaker Pete Schwartzkopf said.

Delaware's House of Representatives passed a sports-betting bill last year 28-10, but it didn't get past a state Senate committee because of disagreements over operational details and then-Gov. Ruth Ann Minner's opposition.

Schwartzkopf and Senate Majority Leader Tony DeLuca say a sports-betting bill will be introduced after legislators reconvene March 17, following six weeks of budget hearings. "A properly written bill stands a pretty good chance" of becoming law, Schwartzkopf said.

Gov. Jack Markell has asked the state's finance office to talk with companies that would be interested in running a sports lottery about the amounts of direct and ancillary revenue this type of betting could produce, spokesman Joe Rogalsky said.

Delaware, Montana, Nevada and Oregon have exceptions to the federal sports-betting ban because they had forms of legalized pro and college sports betting before or close to the time when legislation was introduced in 1991. Nevada was the only state with largely unlimited sports betting. Delaware and Oregon had operated sports lotteries, so named because they require players to wager on more than one outcome in a single bet known as a parlay; this creates more of an element of chance than is involved with betting on a single outcome in a sporting event.

Parlay betting on NFL games under the lottery system was allowed in Oregon from 1989 until 2006, when state lawmakers voted to end it.

It wasn't because of pressure from the NFL. And it wasn't because bettor interest had declined; in 2006, sales for the so-called sports lottery increased for a fifth consecutive year and set a record of $14 million.

"The rationale was that the state could realize more economic benefit from hosting NCAA (basketball) tournament games — specifically men's games," Oregon Lottery spokesman Chuck Baumann says.

And, Baumann says, the NCAA Division I men's basketball committee had made clear that if sports betting existed in Oregon, tournament games would not. In March, first- and second-round games will be played in Portland, the state's first men's tournament games since 1983.

As lawmakers in Delaware consider allowing pro and college sports parlay betting, they say they aren't worrying much about pressure from the NCAA, NFL or any other sports organization.

And such opposition will come "vigorously," says Laird Stabler, a lobbyist in Delaware who represents the NFL, NBA, Major League Baseball and the NCAA, "all of which strongly oppose states legalizing, and thereby promoting, betting on their sporting events."

But there are no venues in Delaware large enough for an event such as the NCAA men's basketball tournament, and legislators, facing a projected $600 million deficit for fiscal 2010 and threats to the state's lucrative gaming industry, are unlikely to be swayed by impact on possible NCAA postseason home games for the University of Delaware or Delaware State, says DeLuca.

"We have seen lobbying for the NFL come in," says DeLuca, referring to last year when the state House of Representatives approved sports-betting legislation that had faltered in the Senate. "They say they don't want to be associated with gambling. With no disrespect intended, I think that boat has already sailed."

DeLuca and Schwartzkopf say the primary obstacles to passage of a bill by legislators are mechanical issues: whether sports betting would be limited to casinos at the state's three horse racing tracks; the cost of licensing and specifics of how the betting would work.

"There are all kinds of people with vested interests," DeLuca says. "And I'm sure there will be lively debate, but I would say (a bill) is going to be successful."

This is not only a function of potential revenue gain, Schwartzkopf says, but also prevention of projected revenue loss. Delaware has a lottery, slot machines and horse racing. In fiscal 2008, it got more than $250 million of its $3.3 billion budget from slots and the lottery — $213 million from slots. That makes the lottery and slots the state's No. 4 income source to personal income taxes, franchise taxes and abandoned property.

Pennsylvania introduced slot machines in 2007. Maryland voters in November approved slots, which could start operating in 2010. Delaware has avoided large revenue losses to Pennsylvania by adding machines, extending hours and using promotions, says Thomas J. Cook, the state's deputy secretary of finance. Without sports betting, Cook says, Delaware could lose $70 million a year in revenue once Maryland's slots are fully operational.

Stabler says he questions the degree to which sports betting in Delaware could offset that.

"Even without the (budget) deficit, we have to stay competitive," Schwartzkopf says. "The bottom line with sports betting is that only Delaware can do it east of the Mississippi (federal law also allows it in Nevada and Montana). Sports betting can draw people away from the other states. And while there is money to be made on sports betting, the real dollars are in the carryover to casinos" in slot play and meals.

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