Delaware Gambling Regulation

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Gambling Legislation imageLocated in the northeastern part of the Delmarva Peninsula, Delaware is the second-smallest and sixth-least-populated state in the US. It borders Pennsylvania to the north, New Jersey to the east, and Maryland to the west and south, with all three neighboring states boasting mature gaming industries. Despite its diminutive size, Delaware has carved out a niche for itself in this highly competitive hotbed of gambling activity.

Residents of the First State have access to almost every form of gambling you can imagine, including casino gaming, sports wagering, pari-mutuel betting, lotteries, and charitable gaming. Three commercial racinos operate legally as part of the state’s three thoroughbred racetracks, namely Harrington Raceway, Delaware Park in Wilmington, and Dover Downs in Dover.

The racinos provide a wide range of betting options to locals and visitors alike, including hundreds of slot machines, video lottery terminals, and table games like blackjack and roulette. The three commercial operators collectively employ more than 5,000 Delawareans and generate over $295 million in annual tax revenue. Tribal gambling is not yet available in the state.

Delaware is somewhat of a trailblazer when it comes to US online gaming, as it was among the first states to provide legal access to remote casino-style games. Residents can enjoy online slots and table games from the comfort of their homes via websites and mobile apps operated by the three land-based racinos. Daily fantasy sports also enjoy legal status here.

Legal gambling is run via the state-sanctioned Delaware Lottery, which regulates and licenses local industry participants. It is assisted in its regulatory work by the Delaware Division of Gaming Enforcement (DGE), which has exclusive jurisdiction over all criminal offenses associated with authorized gambling facilities. The DGE also has various other regulatory duties that aim to ensure and preserve the probity of the local gambling industry.

Gambling Laws in Delaware

True to its motto, “Liberty and Independence,” Delaware takes a relatively lenient stance on gaming. Its gambling laws are more liberal than most, as the state seeks to compete with neighboring Pennsylvania, Maryland, and New Jersey, all of which have thriving gaming markets. Even so, gambling is prohibited unless operators obtain the required authorization to offer their services within state borders.

Delaware State Constitution
Delaware Criminal Code
1994 Horse Racing Redevelopment Act
House Bill 310 of 2010
Online Gambling Regulations

Sports Betting Regulations in Delaware

Sports Betting Regulations imageDelaware lives up to its official nickname, becoming the first state to authorize legal sports wagering after the repeal of the federal ban under PASPA (Professional and Amateur Sports Protection Act) in 2018. The state lottery operator regulates and controls sports wagering, which is confined to the three racinos for the time being.

Residents can also bet on sports at over one hundred retail locations, but the options there are limited solely to collegiate and professional football parlays. The retail sportsbooks in the racinos offer a more diverse range of options, including point spreads, moneyline bets, teasers, futures, round robins, and propositions.

The retail sportsbooks are taxed at a rate of 50% on their sports wagering revenue. Residents of the First State cannot place bets on events that involve local college teams, although betting on collegiate games is generally permitted. Retail locations and racinos are not required to pay integrity fees to professional sports leagues.

License Types and Requirements in Delaware

1Operator Licenses

The Dover Downs, Harrington, and Wilmington race tracks hold operator licenses allowing them to offer a broad range of products, including video lottery terminals, sports wagering, slots, and table games within their facilities. The tracks were initially subject to a license fee of $13.25 million for table game operations, but these fees were eliminated after legislative changes in 2018.

2Supplier Licenses

Only licensed vendors may supply gaming equipment to authorized gambling operators in Delaware. Approved suppliers must pay a $4,000 fee for an initial license valid for two years. After that period, they can renew the license for $4,000.

Renewal is required every three years thereafter. All products offered by supplier licensees must be approved by the state-sanctioned lottery operator. Vendor license holders must also maintain detailed operational records to present to the Delaware Lottery upon request.

3Non-Gaming Service Provider Licenses

Non-gaming service supplier licenses are granted to entities or persons that provide ancillary goods and services to gambling operators in Delaware. Licensure is required if the value of those goods or services exceeds a certain threshold. Initial non-gaming licenses cost $2,000 and remain valid for three years, with renewal available for the same fee afterward.

4Employee Licenses

Under Delaware law, certain individuals employed in the gaming industry must also obtain licenses. Key employee licenses are required for persons in supervisory roles such as executives, managers, or directors. The category also includes cashier and shift supervisors, pit bosses, and credit executives. These permits are initially valid for two years and may be renewed for an additional three years at a cost of $500.

Employees whose positions involve maintaining, servicing, or repairing gaming machines or equipment need gaming employee licenses. Dealers, surveillance staff, cashiers, floor persons, and counting room employees also fall into this category. Gaming employee permits are valid for three years and can be renewed for four more years after expiration.

Finally, there are gaming room service employee licenses, issued to staff members who have access to the gaming floor and restricted areas but are not directly involved in gaming operations. These licenses are valid for five years and can be renewed for an additional six years.

When submitting applications, key gaming and gaming employees must provide a set of fingerprints along with copies of identification documents such as a birth certificate, driver’s license, or other government-issued ID.

Applicants must also supply compelling evidence of their suitability and qualifications. Those with prior convictions must demonstrate to local regulators that they have been fully rehabilitated. The nature and severity of past offenses are also taken into account.


Gambling Taxes in Delaware

1Overview

All licensed gaming operations in the state must pay taxes on their table game and video lottery revenue. First, Delaware’s state-sanctioned lottery operator owns and leases all video lottery terminals to the three pari-mutuel horse racing facilities in the First State. The regulator collects the funds generated by these machines and allocates them for various purposes.

2VLT Revenue Allocation

The largest share of the revenue, or 42%, is returned to the three racetracks as commissions for offering the games. Roughly 40% goes to the State General Fund under Title 29 of the Delaware Code and supports various state services such as public schools and libraries. Around 10% is used to boost horse race purses, while the remainder is reserved for maintenance and improvement of the games.

3Table Games and Sports Wagering Taxes

Table games are not exempt from taxation. Licensed operators offering them are taxed at 15.5%, plus a 4.5% purse supplement. Section 4815(c)(1) of the Delaware Code details how funds from sports wagering are allocated. Approximately half of the proceeds go to the State General Fund, 40% return to the racetracks, and the remaining 10% increase racing purses.

4Online Gambling Taxes

The tax rates and revenue allocation for online table games, slots, and lotteries are nearly identical to those imposed on their land-based counterparts. Remote table games are taxed at 15.5%, plus a 4.5% purse supplement. Slots and lotteries are taxed at 42.5%, plus 10% for purse supplements. The State General Fund must receive at least 30% of total lottery revenue.

Proceeds from online lotteries and table games are deposited into the State Internet Lottery Fund. The first $3.75 million collected each year is transferred to state coffers, while the remainder is divided among the General Fund (39%), the pari-mutuel facilities (43%), horse racing purses (10%), and licensed vendors (8%).

5Taxes on Player Winnings

According to the Delaware Lottery, sports lottery winnings exceeding $600 or 300 times the wager are considered reportable income. If reportable profits exceed $5,000, they are subject to federal withholding at a rate of 24%. There are no state-level withholding taxes on gamblers’ winnings.


Responsible Gambling in Delaware

One of the first states to regulate online casino gaming, Delaware has adopted various policies to ensure its adult residents gamble responsibly. Section 4815(b)(2)(c) of the Delaware Code mandates that $1 million or 1% of slot revenue collected by the state (whichever is higher) be directed to the Department of Health and Social Services and the Division of Substance Abuse and Mental Health.

Part of this funding also supports treatment and assistance for gambling addicts and their families. Additionally, $250,000 or 1% of proceeds from table games is set aside to promote responsible gambling.

Identifying Problem Gamblers
Personalized Limits
In-Game and Platform Features
Self-Exclusion Policies
Age Requirements and Restrictions

Gambling Advertising Policies and Restrictions

Gambling policeies imageDelaware is somewhat liberal in its stance on gambling-related advertising. One of the few conditions licensed operators must meet is not to advertise their products in a misleading fashion. In other words, marketing materials should not deceive players into thinking the odds of winning are higher than they actually are.

All marketing materials require the approval of the Delaware Lottery to ensure they are appropriate and accurate. More importantly, advertisements should contain links to websites that provide information on treatment, prevention, and assistance for those addicted to gambling and their close relatives. Operators must remove self-excluded gamblers from all forms of marketing and promotions.

Delaware Gambling Regulators

Based on everything discussed so far, it is clear the state-sanctioned lottery operator effectively holds a monopoly over Delaware’s gambling industry. It not only owns every video lottery terminal authorized in the state but also chooses the platform providers that online gambling operators must use. Considering this, it makes sense that the Delaware Lottery Commission also has the mandate to regulate all forms of gambling within the state.

Delaware Lottery
Division of Gaming Enforcement

Conclusion

The gambling industry in Delaware is relatively small, which is unsurprising considering the state’s acreage and its population of a little over one million. Another factor that likely impedes further growth is the regulatory and licensing structure the state uses.

Casino gambling and sports wagering in all forms are essentially run through the state lottery operator, leading to an uncompetitive environment. The burden of high taxes does little to improve the situation. On the bright side, the state regulates nearly every form of gambling in both land-based and remote formats.