RSI last bidder for Delaware Lottery RFP after 888 withdrew in May
While media reports suggest Rush Street Interactive (RSI) and 888 are competing for the tender, the Chicago-based operator is in fact the only candidate left bidding to power Delaware’s online casino and poker offering.
888 ends long partnership with Delaware Lottery
Sources close to the process suggest it faced a number of delays and challenges, which ultimately left bidders with just weeks to reply to a complex series of asks. This included a number of integrations for mobile sports betting, although state laws only permit in-person wagering. iGB contacted the lottery for comment.
Efforts to regulate mobile betting did progress in the 2023 legislative session, but ultimately failed to pass. This in turn necessitated changes to the tender process.
888 won the tender to power the Delaware Lottery’s igaming offering in 2013. It runs online casino and poker for the lottery, alongside an OpenBet-powered retail sportsbook.
The SI Sportsbook operator extended its contract for two years in 2020, after rolling out an interstate poker offering connecting players in Delaware, New Jersey and Nevada in 2018 with Michigan joining in 2022.
Lack of communication, high costs, small market
However it ultimately pulled out in May, leaving RSI as the only competitor. iGB understands its contract is not yet signed, although an announcement is expected this week.
The SI Sportsbook operator would not comment on its decision to pull out.
However sources suggest a lack of communication from the lottery, a small addressable market and costs associated with the technical specifications ultimately promoted 888 to retract its bid.
Confusion over Delaware Lottery’s igaming RFP
The request for proposals (RFP) issued in January this year suggested a change in the lottery’s approach. It sought a vendor that could also provide online sports betting as well as icasino and poker, despite the fact this remains illegal in the state.
The tender admits its uncertainty as to whether the partner could even launch online betting. It could be relevant either from the launch of the contract, “at some point in the future” or “not at all, ie outside the scope of this RFP” the document says.
Further confusion reigned over live casino games. The RFP sought information about partners’ experience in managing third party content including live dealer products, then said in an addendum it had no intention of offering these games.
888, as the incumbent, lodged a bid alongside Rush Street Interactive and Light & Wonder, as well as reg tech specialists GeoComply and LexisNexis.
Live dealer specialist Evolution joined the fray, as did sportsbook technology provider Kambi.
What does this mean for Delaware igaming?
While RSI performs strongly in the icasino vertical, it does not yet have a poker product. A platform is under development, per the operator’s website.
The change will significantly reduce liquidity for poker, however. Delaware currently forms part of 888’s interstate poker network, which connects the First State with New Jersey, Michigan and Nevada and rules may need to be rewritten if it is removed from that network.
The go-live date for the new igaming offering is yet to be confirmed. The Delaware Lottery suggested it must launch no later than 1 November, although if the development for an RSI-powered offering is not complete, 888 may temporarily extend its current agreement to avoid a loss of service.
Time to reset First State gambling?
Strategy and advisory consultant Brendan Bussmann of B Global Advisors argues this should prompt a rethink of Delaware’s betting and igaming framework.
“It’s disappointing to see an RFP process fall apart but either clearly market expectations were not met by potential bidders or expectations were placed too high on what will continue to be a relatively small market that is further limited by the legislative and regulatory structure,” he told iGB.
It may be time to start from scratch, he continued. “While that would not be necessarily the best for the one party left in the process, you need to have a clear path to accomplish their goals which will require legislative action.
“Better to extend the incumbent, get the infrastructure in place and start again from the beginning to achieve stakeholder expectations.”
Delaware’s betting and igaming market remains small
While Delaware was the first state to launch sports betting following the repeal of the Professional and Amateur Sports Protection Act (PASPA) in 2018, only in-person betting is permitted.
It is now the only state in the region without mobile wagering, after Maryland launched in November 2022.
Igaming, on the other hand, is available through the state’s three casinos – Delaware Park, Dover Downs (now Bally’s Downs) and Harrington Raceway. However, with a population of around a million it is a small market; monthly igaming stakes average around $40m, with revenue just over $1m.
For June, the most recent figures available, players staked $37.9m, generating net revenue of $1.1m.
Rush Street Interactive’s lottery experience
Should RSI, as expected, be announced as the new business powering the Delaware Lottery’s igaming offering it won’t be its first lottery partnership.
It won a tender to power mobile and retail sports betting for the Connecticut Lottery in August 2021, signing a ten-year agreement. However in March this year it began to wind down that partnership, although it will continue to power sports betting until a replacement vendor is selected.
National brands such as BetMGM and Caesars may bid for the contract, having missed out when RSI was selected.