Located in the northeastern part of the Delmarva Peninsula, Delaware is the second-smallest and the 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 managed to carve out a niche for itself in this highly competitive hotbed for gambling activities.
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 race tracks, 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 over 5,000 Delawareans and fetch more than $295 million in annual tax revenue. Tribal gambling is yet unavailable 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 surroundings via websites and mobile apps operated by the three landbased racinos. Daily fantasy sports also enjoy a 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 is relatively lenient when it comes to gaming. Gambling laws are comparatively liberal here as the state strives to compete with its neighbors Pennsylvania, Maryland, and New Jersey, all of which boast thriving gaming markets. With that in mind, gambling is prohibited in this jurisdiction unless the operators have acquired the necessary authorization to legally distribute their services within state borders.
Sports Betting Regulations in Delaware
Delaware lives up to its official nickname as it became the first state to approve 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 50% rate imposed on their sports wagering revenue. Residents of the First State cannot punt 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
The Dover Downs, Harrington, and Wilmington race tracks hold operator licenses that enable 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 license fees of $13.25 million for the operation of table games but these were dropped as a result of legislative changes enforced in 2018.
Only licensed vendors can supply gaming equipment to authorized gambling operators in Delaware. Approved suppliers are expected to pay $4,000 in fees for their initial licenses that have a validity of two years. After the initial licenses expire, the suppliers can renew them at the cost of $4,000.
Renewal is then required once every three years. All products offered by supplier licensees must be approved by the state-sanctioned lottery operator. Vendor license holders must also maintain detailed records of their operations to present to the Delaware Lottery if necessary.
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 on condition the value of said goods or services exceeds a certain threshold. Initial non-gaming licenses cost $2,000 and have a duration of three years, with the option of renewal for the same amount afterward.
Under Delaware law, certain individuals employed in the gaming industry are also subject to licensure. Key employee licenses are necessary for persons with supervisory capacities like executives, managers, or directors. The category also comprises cashier and shift supervisors, pit bosses, and credit executives. Their initial permits are valid for two years, after which time they can renew them for an additional period of three years at the cost of $500.
Employees whose positions involve maintaining, servicing, or repairing gaming machines or equipment require gaming employee licenses. Dealers, surveillance members, cashiers, floor persons, and counting room employees also belong to this category. Gaming employee permits have an initial validity of three years and can be renewed for four more years after expiry.
And finally, there are the gaming room service employee licenses granted to staff members who have access to the gaming floor and restricted gaming areas but are not directly involved in the gaming services. Such licenses have an initial validity term of five years and employees can then renew them for six more years.
When filing their applications, key gaming and gaming employees must provide a set of their fingerprints, along with copies of identification documents such as a birth certificate, a driver’s license, or government-issued ID.
The applicants must provide compelling evidence to prove their suitability and qualifications. Those with past convictions should prove to the local regulators they have successfully and fully rehabilitated. The nature and severity of their offenses also bear consideration.
Gambling Taxes in Delaware
All licensed gaming operations in the state must pay taxes on their table games and video lottery revenue. To begin with, 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 regulatory body collects and uses the funds from the machines for various purposes.
2VLT Revenue Allocation
The biggest cut of the revenue, or 42%, is returned to the three race tracks in the form of commissions for offering the games. Roughly 40% goes toward the State General Fund under Title 29 of the Delaware Code and is used for the funding of various state services like public schools, libraries, and so on. Around 10% is used for boosting the horse race purses, while the remainder is intended for maintenance and improvement of the games.
3Table Games and Sports Wagering Taxes
Table games are not exempt from taxation, either. Licensed operators who offer them are taxed at a rate of 15.5% plus 4.5% purse supplements. Section 4815(c)(1) of the Delaware Code outlines the allocation of funds generated from sports wagering activities. Approximately half of the proceeds go toward the State General Fund, 40% goes back to the race tracks, and the remaining 10% is used for the increase of the racing purses.
4Online Gambling Taxes
The tax rates and revenue allocation of the funds generated from online table games, slots, and lotteries almost coincide with those imposed on their landbased counterparts. Thus, remote table games are taxed at 15.5% in addition to the 4.5% tax for purse supplements. As for slots and lotteries, the tax rates are 42.5% plus 10% for purse supplements. The State General Fund should receive at least 30% of the overall lottery revenue.
The proceeds from online lotteries and table games are deposited into the State Internet Lottery Fund. The first batch of $3.75 million in proceeds is annually transferred to the state coffers, while the remainder is allocated between the General Fund (39%), the pari-mutuel facilities (43%), the horse racing purses (10%), and the licensed vendors (8%).
5Taxes on Player Winnings
According to the official website of the Delaware Lottery, sports lottery winnings in excess of $600 or 300 times the bet are considered reportable income. Respectively, if the reportable profits are higher than $5,000, they are subject to federal withholding taxes at a rate of 24%. There are no withholding taxes on gamblers’ profits on a state level.
Responsible Gambling in Delaware
Being one of the first states to regulate online casino gaming, Delaware has adopted various regulatory policies to ensure the local adult population gambles responsibly. Section 4815(b)(2)(c) of the Delaware Code mandates that $1 million or 1% of the slot revenue collected by the state (whichever amount is higher) should go toward the local Department of Health and Social Services and the Division of Substance Abuse and Mental Health.
A portion of this money is also allocated for the treatment and support of gambling addicts and their relatives. In addition, $250,000 or 1% of the proceeds from table games are used to facilitate responsible gambling.
Gambling Advertising Policies and Restrictions
Delaware 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. This is to say marketing materials should not deceive players into thinking the odds of winning outcomes are higher than they are in reality.
All marketing materials require the approval of the Delaware Lottery to ensure they are appropriate and accurate. More importantly, the advertisements should contain links leading to websites that provide information on treatment, prevention, and assistance for those addicted to gambling and their close relatives. The operators must remove self-excluded gamblers from all forms of marketing and promotions.
Delaware Gambling Regulators
From everything we have written so far, you can probably tell the state-sanctioned lottery operator exercises what looks like a monopoly on the local gambling industry. Not only does it own all video lottery terminals authorized in the state, but it has also selected the platform providers online gambling operators must team up with. Given all this, it only makes sense the Delaware Lottery Commission also has the mandate to regulate all forms of gambling within the state.
The gambling industry of Delaware is relatively small in size but this is unsurprising considering the acreage of the state itself and its population, which is a little over one million. Another factor that influences and probably impedes further growth is the regulatory and licensing structure the state uses.
Casino gambling and sports wagering in all forms are pretty much run via 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 all forms of gambling you can think of in both terrestrial and remote format.