Delaware Lottery Selects Rush Street As Online Gaming Vendor
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Rush Street Interactive has been selected as the Delaware State Lottery’s vendor for the state’s online gaming business, according to a joint press release issued on Thursday.
Under the deal, RSI will provide the Delaware Lottery with online gaming services for an initial period of five years. From there, the agreement will be renewable for a series of one-year terms, potentially comprising an additional five years.
RSI’s selection is hardly a surprise in light of an iGB report that surfaced last week which indicated that 888 Holdings withdrew from consideration earlier in the spring. The withdrawal left RSI as the lone bidder for the multi-year contract.
The Delaware Lottery sought a vendor to implement a comprehensive internet wagering and services solution, according to a Request For Proposal issued by the state in January. The primary vendor has the option of operating its own Player Account Management (PAM) platform, along with other managed services such as promotional and bonus engines. Alternatively, the winning bidder was given the option of subcontracting the services with a litany of third-party providers, according to the RFP.
The lottery sought a bidder with the capability of supporting a wide range of online games from multiple vendors, including casino table games, video lottery games, bingo, keno, and poker, among others.
“Rush Street Interactive has established itself as a leading innovator in the industry, and is a respected iGaming and sports betting company,” Helene Keeley, director of the Delaware Lottery, said in the press release. “We are impressed not only with RSI’s successes in other jurisdictions, including neighboring New Jersey and Pennsylvania, but also its strong commitment to responsible gambling practices.”
Financial terms of the deal were not disclosed. On the digital side, Rush Street Interactive operates BetRivers Casino.
Some ambiguities on RSI’s poker launch
Rush Street will supplant 888 Casino, which won the initial contract to power the Delaware Lottery’s iGaming offerings in 2013. Over the last decade, 888 ran online casino and online poker operations for the lottery. The gaming operator also operated an OpenBet-powered retail sportsbook for the agency.
By 2015, Delaware entered into an online poker liquidity sharing agreement with Nevada. Two years later, New Jersey joined the interstate liquidity pool, followed by Michigan in 2022. Delaware’s three racinos – Delaware Park, Bally’s Downs, and Harrington Raceway — are also regulated online casinos.
The trio of tracks, under state law, are permitted to offer online casino games and online poker.
While RSI has announced plans to eventually launch an online poker platform, the company did not provide details on timing in Thursday’s press release. Last year, Rush Street CEO Richard Schwartz indicated that the company had plans to develop an online poker product through Run It Once Poker (RIO), an entity acquired by Rush Street in March 2022. Rush Street also acquired Poker Night in America last year, a popular poker show that airs nationally on CBS Sports Network.
Although the Delaware Lottery hinted that the state targeted Nov. 1 as its goal for the new iGaming rollout, it did not disclose an actual date on Thursday. At first, the transition from 888 to Rush Street could lead to a temporary liquidity depletion for the online poker pool.
Schwartz spent a considerable amount of time discussing online gaming on the company’s second-quarter earnings call earlier this month, but he did not address the company’s developments with its poker products. During the call, Schwartz noted that RSI believes it has improved customer engagement and retention with features such as slot tournaments, bingo, and wheel spins.
Though RSI lags behind the market’s top operators in sports betting, it is arguably one of the nation’s leaders in online gaming.
“This partnership is yet another significant milestone for RSI, as the confidence of a state-backed organization, such as the Delaware Lottery, further validates the trust that lottery officials have in our award-winning online platform and customer service,” said Schwartz in a statement.
Sports betting implications
While Delaware became the first state after the Supreme Court’s PASPA decision to legalize sports betting, the state has yet to legalize online sports wagering. With the launch of online sports wagering in Maryland last November, Delaware is the only state in the mid-Atlantic region that does not allow customers to place legal sports bets on their phones.
The RFP provides the Delaware Lottery with an opportunity to add online sports betting at some point in the future. Although an internet sports lottery legislative working group met in the Delaware General Assembly this June, efforts to pass an online sports wagering bill during the 2023 legislative session were unsuccessful.
During the RFP process, the lottery sought a full-service provider with the capability to handle a wide range of core sports betting offerings. In addition, the lottery expressed desire for a sports betting platform that could add special game formats such as a “quick pick” contest, as well as statewide games such as handicapping or survivor/elimination pools.
Other attributes sought by the lottery for the sports betting platform:
- Event creation
- Market creation
- Odds compilation
- Risk management
- Bet settlement
- Content management
- Fraud detection, including collusion, syndicate players, and other general player abuse
Rush Street traded at $4.16 a share in Thursday morning’s session, down approximately 3%. The company is still up about 15% year-to-date.
