DELAWARE VOICE
By Chip Flowers
Last Tuesday, the U.S. Court of Appeals for the Third Circuit dealt a near-fatal blow to the prospect of Delaware extending its sports betting beyond National Football League parlay bets. The decision leaves Delaware with only one remaining legal option — a direct appeal to the U.S. Supreme Court — which most observers believe could have a negative outcome even in the unlikely event that the Supreme Court elects to consider the case.
After months of expensive legal maneuvering, hardening positions, and sanctions from collegiate sporting authorities, a critical opportunity has now arisen to broker a deal with the professional leagues and the National Collegiate Athletic Association that could have a significant economic benefit for Delaware. After all, until the Supreme Court makes its final determination on the state’s appeal, both sides stand to lose. So, from an economic and financial perspective, both sides might now pause (and take a break from paying legal fees) and seek a deal that could benefit everyone — the professional and collegiate sporting authorities, the state, racinos and most important, Delaware citizens.
Before any deal can be achieved, the parties must understand two factors. One, the risk of an unfavorable outcome increases for all parties if this political debate continues in the legal forum. Two, cooperation, not opposition, should serve as the key to resolving the predicament. Failure to understand these factors could undermine any hope for a negotiated settlement.
While I am not privy to the internal discussions among the involved parties, I wish to offer a few ideas that could serve as the cornerstone of a deal that could satisfy all interests.
First, recognizing that the professional and collegiate sports associations oppose sports betting, an economic value has been created by their desire to restrict the activity. In other words, those associations could benefit by making an annual payment to Delaware in exchange for eliminating sports betting or restricting the type of sports betting permitted. Delaware now expects to receive only $6.7 million per year in direct and associated revenue from sports betting. That’s about $210,000 per NFL team. If the amount were spread among all major pro sports franchises (not to mention NASCAR and the NCAA), the annual expense could drop to under $50,000 per team — a figure so small that a pro franchise would have an economic incentive to sign the deal rather than risk being thrown for a loss in court.
Second, to make the deal more attractive to Delawareans and a Legislature in desperate need of revenue sources, the pro leagues could offer to hold certain events in Delaware, for example, preseason games or the NFL scouting combine. Such measures would bring in jobs, stimulate local businesses, and serve a growing market for sports, while simultaneously increasing state revenues.
Third, the state could dedicate a portion of any annual payment as compensation to the racinos for some of the $15 million they invested in facility improvements in anticipation of sports gambling revenues. There’s no reason for the racinos to recover their entire investment, as some of these facilities can be converted into sports bars, restaurants and extra square footage for table games (each adding economic benefit to the state). But there’s good reason to consider some compensation for costs that can’t easily be recouped.
Fourth, the NCAA would remove the gambling-related ban it imposed this year on Delaware schools hosting collegiate playoff events.
Finally, there’s the issue of legal fees, since the professional leagues and the NCAA did spend significant money fighting Delaware in court. If the leagues and NCAA are amenable to negotiating rather than litigating, the state could offer them a credit against the annual payment to partially offset their legal fees. Such a credit could “encourage” lawyers for the professional and collegiate sports associations to advise their clients not to oppose the deal.
Suggestions like these could provide a way to put this unfortunate saga behind us. While opportunities may have been missed, we must not pass up this final chance for a negotiated settlement.
Given the state’s winless legal record in sports betting, we have nothing to lose by negotiating a deal that could accomplish our goals and shift our energies and resources to more important matters facing the people of the First State.
