Rhode Island Becomes 4th State to Legalize Sports Wagering, State to Keep 51% of Profits
Rhode Island has become the 4th state to legalize single game sports wagering after Governor Gina Raimondo signed a bill that ensures 51% of all sports gambling profits go to the state. The state did not authorize mobile or internet wagering, meaning bets will have to be placed at land-based casinos; Twin River Worldwide Holdings (privately-held) owns 2 in the state (one opens in Sept.). Rhode Island casinos are expected to begin taking sports bets on October 1st.
Howie Long-Short: Rhode Island sports fans will be excited about having the ability to bet legally, but the state won’t maximize revenues without accepting mobile or internet wagering; in fact, they’re unlikely to even hit budget projections. Governor Raimondo’s budget projects $23.5 million in revenue over the first 12 months. To generate that amount, the state’s 2 sportsbooks would have to generate +/- $900 million in wagers; that won’t happen. In 2017, Nevada was the only state (i.e. no competition like R.I will face from NJ, DE, WV, MS etc.) to offer single game sports betting, the state had mobile wagering and still generated just $5 billion in sports bets.
International Game Technology (U.K. based) has been selected (only company to formally submit a bid, also handles state lottery) as the state’s sports betting technology provider (powers MGM sportsbooks in Nevada). The company is entitled to 35% of all sports betting profits, meaning the state’s 2 casinos are keeping just $.17 of each dollar earned. International Game Technology, a component of the Russell 1000 index, trades on the NYSE under the symbol IGT. Shares have been on a steady decline (-16.4%) since the company posted a wider Q1 loss ($103 million to $54.8 million) than a year ago (see: $97 million foreign exchange loss) back on May 22nd, closing on Friday at $24.92.
Fan Marino: Any concerns about sports betting cannibalizing the horse racing industry were laid to rest following the first weekend of legalized sports betting in New Jersey. Monmouth Park Race Track reported the on-track handle for the 2 days (June 16-17) was up +18% YoY, as attendance rose +21% YoY. In fact, Monmouth Park owner Dennis Drazin believes sports betting offers the track’s horse racing business security, saying “we can increase our days, we can offer better purses, we can help the breeding industry come back.”
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