Lack of Game Selection Hurting Delaware Internet Lottery Performance

October 13, 2014
Lack of Game Selection Hurting Delaware Internet Lottery Performance

Regulated online poker and casino games are nearly one year old in Delaware. Revenue has not met expectations. The issues with online poker can be attributed to the state’s poor liquidity. The pooling of players with Nevada in the near future should help cure this issue. The casino performance cannot be blamed on this.

Poor Performance for Internet Lottery Games Compared to Live Gaming

Delaware live gaming results in August saw a total of $40.3 million won at the tables and slot machines located at the state’s three racinos. Delaware’s internet gaming posted a win of about $173,000 in August. Online income was about .4% of what was earned at live casinos.

Compare that to New Jersey. Atlantic City won $294.5 million in August. Internet sites won $10.5 million during the same period. New Jersey gaming sites won 3.6% of the amount raked in by Atlantic City resorts. That is nine times higher than what Delaware sites took in on a percentage basis.

Table Games Provide Most of Delaware’s Online Gaming Revenue

Delaware’s online lottery is taking a disproportionate percentage of its revenue from table games when compared to traditional markets, especially its own.

Slots usually generate a majority of a casino’s gaming win. The Las Vegas Strip is an exception to this. Casinos on Las Vegas Blvd often have more tables compared to gaming establishments in other locations. These resorts are also taking most of the large baccarat and blackjack action in the U.S.

Below is a list of casino markets and the percentage of its gaming revenue derived from table games:

  • Las Vegas Strip: 58%
  • Nevada: 42%
  • Pennsylvania: 32%
  • Downtown Las Vegas: 30%
  • Atlantic City: 30%
  • Delaware: 13%

The Delaware Lottery’s online games beat all of these. Table games made up 75% of revenues derived from house games, but excluding poker. That number jumps to 80% if poker is considered a table game, which is the case in many states.

Why is Delaware’s Internet Lottery Winning So Much at Table Games?

Delaware offers a very limited number of games to its players. There are only 11 slot titles. This is a very small number for a casino platform. None of these are ones that live slot players recognize because they are exclusive to the Internet. This makes it difficult to draw players from live casinos that often prefer familiar games.

Video poker is also included in slot revenue. Delaware’s internet gaming only offers a single video poker game. That game – Jacks or Higher – is basically the popular Jacks or Better game found in casinos. It is among the least popular of all video poker games among serious players. That is because the variance is low compared to other titles.

Popular Video Poker Titles Not Available

Bonus Poker games have become extremely popular in casinos. These games have top-heavy payouts. Four aces in Bonus Poker pay more than three times the traditional quad return. Quad twos, threes and fours also have increased returns.

Double Bonus and Double Double Bonus return at least twice as much as Jacks or Higher on all quads. Quad Aces through fours have even higher payouts. Double Double Bonus gives an extra boost when special quads come with an ace, two, three, or four kicker.

Players love these bonus games because they can win what can be considered a jackpot on more hands than just a royal flush. In exchange for this variance, two pair pays the same as a pair of jacks or better. Other favorites, including Deuces Wild and Joker Poker, are also absent from Delaware sites.

Table Games Also a Problem

Blackjack and roulette are the only two table games spread at Delaware sites.  Proprietary games are not available on the platform, but neither are craps, and baccarat, which are essentially generic games.

Games Available in New Jersey and International Markets

New Jersey online casinos spread a variety of proprietary games, so the ability to offer them is out there with proper licensing agreements in place.  An IGT representative told USPoker in October 2013 that it would provide casino content to Delaware’s internet gaming platform. It has yet to do so and did not respond to our request for comment on whether that status has changed.

Delaware Lottery Needs Online Casino Game Expansion

Players become bored with the same game offerings. This is true in live casinos and on the Internet. There is a reason why Las Vegas casinos constantly rotate slot titles.

This is also the case with table games. Colorado expanded table games to include craps and roulette in 2009 and enjoyed a nice boost in gaming win. South Dakota hopes to do the same in a statewide referendum next month.

A variety of table games are already legal at Delaware casinos. Delaware gaming regulations permit baccarat, craps, Let it Ride, Pai Gow, and Sic Bo. It also allows the Director to authorize any other suitable game, and it has.

Just like in live casinos, refreshing the gaming content will draw in new players and help retain existing ones. Internet gaming has a huge advantage over live casinos in that it does not have to remove one game to add another. There is no concern about angering a guest by removing his favorite game.

Delaware Tax Situation Not Helping

The Delaware Lottery taxes the first $3.75 million in annual internet gaming win at 100%. At its current rate, actual internet gaming win will only get about two-thirds of the way there. That means that there is no revenue for the casinos and vendors, which leaves little incentive to improve.

The Delaware Lottery may be more successful if it loosens the tax burden on its partners. This could motivate Delaware casinos to advertise the games and allow for more investment in casino content.

The online gaming tax is not the only issue facing the Delaware Lottery. The state’s three video lottery casinos, which also operate the online sites, are complaining about the high tax burden affecting live operations.

Author’s Note

New Jersey is facing a similar problem.  I wrote about that at our sister site

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