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The Rhode Island Lottery plans to conduct a wide-ranging study of the state's sports-betting market to determine if allowing multiple operators would increase tax revenues.
In 2018, the state legislature granted the Rhode Island Lottery full operational and regulatory authority over sports betting, which can be offered through Bally Corp.’s Twin River casinos in Lincoln and Tiverton.
Online sports wagering was made legal within the state in 2019 via a single platform, Sportsbook Rhode Island, operated through a partnership between the lottery, International Game Technology (IGT) and Bally’s.
“The Rhode Island Lottery is interested in obtaining an economic analysis of the potential costs and benefits to the (state) from having more than one sports wagering platform licensed to operate in the state, given the potential incremental costs to implement such a model,” Rhode Island Lottery director Mark Furcolo told Vixio GamblingCompliance on Tuesday (October 15).
Furcolo said that the lottery’s response will depend on the recommendations or concerns raised in the study.
Responses to a request for proposals (RFP) from consultants seeking to conduct the study are due by November 7, with an anticipated award date of no later than November 25.
The lottery initially released the RFP on October 2 and is looking for an entity to conduct the “Sports Wagering Study” to assess the current operating model and revenue-sharing structure, in order to determine if it is economically viable for additional sports-betting operators to enter the state.
Currently, 51 percent of revenue from online and retail sports betting is distributed to the state, with 32 percent to IGT and 17 percent to Bally’s.
Lottery executives are also open to considering changes to how the revenue is shared if opening the market to more operators generates additional tax dollars for Rhode Island.
For the first two months of fiscal year 2025, the Rhode Island Lottery reported $53.21m in sports-betting handle with $4.58m in book revenue. For fiscal year 2024, wagering handle in Rhode Island topped $458m with $38.58m in book revenue.
Book revenue is before any commissions, operating or allowable expenses. One of those deductible expenses is free play provided by the retail sportsbook or online provider, as long as they can demonstrate that the operator has not been reimbursed in cash allowing the free play to be deducted from the total revenue amount.
After deductions, $19.2m was transferred to the General Fund from sports betting in fiscal 2024.
Rhode Island is one of several states along with Montana, Delaware and New Hampshire, where the state lottery operates and regulates both traditional lottery games and sports betting.
In Delaware, retail sports betting has been legal at the state's three land-based casinos since 2018. Late last year, however, Rush Street Interactive (RSI) launched its BetRivers sportsbook after executing a contract to serve as the exclusive mobile sports betting and online casino partner of the Delaware Lottery.
Earlier this year, House Bill 365, which emerged from the bipartisan Internet Sports Lottery Legislative Working Group would have expanded sports betting in Delaware by allowing its three land-based casinos to partner with multiple online sportsbooks.
The bill that would have taxed sports betting at 18 percent of adjusted gross revenues, but it died in the House Appropriations Committee in June. Currently, the state gets 50 percent of the gross gaming revenue.
The new study in Rhode Island also comes after a similar revisiting of mobile sports betting in Washington D.C, where the DC Council decided earlier this year to open up its market to multiple private operators after several years of disappointing performance by the DC Lottery's GambetDC offering.
Despite an effort by the Lottery and its vendor Intralot to save the sole-operator model by subcontracting the sports betting operation to FanDuel, the Council was unmoved and language was included in the district's budget package that opened the sports wagering market to multiple mobile operators.
Rhode Island Lottery’s Mixed Results
The Rhode Island Lottery’s $426.4m in revenue deposited in the state’s General Fund for fiscal year 2024 was a slight drop of $8.3m compared to fiscal year 2023, according to a 77-page report published earlier this month by Rhode Island Auditor General David Bergantino.
Overall, video lottery machines remain the lottery's largest revenue source, earning $314.9m, or 72.2 percent of total revenue, but that number was 1.8 percent less than the previous fiscal year. Online draw games like Powerball and Mega Millions posted a 2.4 percent rise, with gross profits of $52.1m.
Gross profit on instant ticket games totaled $22.4m in fiscal 2024, a decrease of 7.7 percent over fiscal 2023. After commissions paid to the casino facilities and host towns, and related operating expenses, the state’s share of net revenue from table games amounted to $20.3m, a decrease of 4.1 percent over fiscal 2023.
Sportsbook gross profit totaled $19.2m, after commissions, payouts and marketing expenses, a decrease of $6.3m or 24.8 percent over the previous fiscal year, while iGaming commenced in March 2024 and produced a gross profit of $3.6m, after commissions, payouts and marketing expenses.
Bergantino attributed the mixed results to increased competition from neighboring states, including Massachusetts and Connecticut. Massachusetts launched online sports betting in March 2023 with six operators, while in Connecticut, internet gaming and sports betting also have impacted Rhode Island’s gaming market.
