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Delaware Chooses RSI as iGaming Vendor: 888 Given the Boot

Map of Delaware

On Thursday, Aug. 18, 2023, Rush Street Interactive (RSI) announced that it had been chosen to become the Delaware State Lottery's vendor for online gaming products. RSI thus replaces 888, which was the old vendor. The licensed Delaware internet gaming industry consists of three operators, which are partnered with the state's three brick-and-mortar casinos and offer casino and poker products over the internet.

The Delaware Lottery has chosen Rush Street Interactive as its partner for regulated online gaming

About Rush Street Interactive

Logo of RSI

Founded in Chicago in 2012, RSI (NYSE: RSI) is a leading provider of regulated real money online gaming throughout the United States as well as several foreign jurisdictions, like Ontario, Colombia, and Mexico. It's responsible for the successful PlaySugarHouse and BetRivers brands, which are active in several states, notably Pennsylvania.

Rush Street's gaming portfolio includes sports betting, and it in fact operates a few physical sportsbooks in addition to its online bookmaking endeavors. On the casino side, it offers a range of popular slots and table games.

For the second quarter of 2023, RSI reported $165.1 million in revenue, 15% higher than the same period last year. Net loss was $16.7 million whereas Q2 2022's figure was $28.3 million. The company found that it was generating average revenue per monthly active user of $359 in the United States and Canada, 11% higher than last year's second quarter.

About the Delaware Lottery and Online Gambling

Logo of Delaware Lottery

The Delaware Lottery was created in 1974 and at first restricted itself to traditional lottery products, like drawings for prizes and scratch cards. It has, however, over the years acquired oversight responsibilities for other kinds of gambling, like terrestrial casinos, sports betting, and online gaming.

Delaware's licensed online gaming services are available to people 21 years old and above who are located within Delaware's borders. This includes residents of the state as well as visitors as long as they are physically inside Delaware whenever any gaming occurs.

How Do Delaware-Licensed Internet Gaming Sites Work?

Under the provisions of the Delaware Gaming Competitiveness Act 2012, the state's lottery is empowered to establish online gaming sites, which it has done in collaboration with the three DE casinos: Dover Downs (now Bally's Dover), Harrington Raceway, and Delaware Park. These sites launched in November 2013 and are powered by software provided by official vendor 888. They offer casino games and virtual poker tables.

Bally's Dover hosts online poker games as well as casino fare for real moneyWebsite of Bally's Dover Online, One of Three Licensed Internet Gaming Sites in Delaware

All three of the sites pool their poker players together into a single player pool. With the creation of the Multi-State Internet Gaming Agreement in February 2014, this poker traffic was further boosted by allowing Delawareans to access games hosted by 888's All-American Poker Network in Nevada under the brand. The addition of New Jersey to the MSIGA in 2017 enhanced the poker traffic accessible to Delaware's citizens by a considerable degree.

Because these three operations are all managed by the Delaware Lottery and all utilize 888's software, there is very little difference between them. They all have the same casino titles and act as gateways to the same poker games. Only a few of the promotions differ between the sites.

Contracts and Timeline

Under Delaware law, the Lottery can select an online gaming vendor for a five-year contract and then extend the contract yearly up to five times at its discretion. This is just what happened with 888, which was initially selected to power the sites in 2013, and when its contract was up in 2018, received the maximum five extensions, carrying the arrangement forward through 2023.

After the initial five-year period and all extensions are complete, the Delaware Lottery is required by law to open up applications to other competitors. It did this in January when an RFP was issued for “Internet Wagering System and Services Solution.”

There were two organizations that responded to the RFP: current vendor 888 and Rush Street Interactive. However, 888 withdraw its application in May for reasons that were not revealed, leaving RSI as the sole contender and eventual choice of the Delaware Lottery.

The Delaware Lottery has stated:

It is the Lottery’s intent to begin Production Operation no later than November 1st, 2023. All proposed components of the Solution must be delivered, installed, implemented, acceptance tested and ready to be operational by the agreed-upon schedule.

Given that it's already mid-August, a Nov. 1 launch date for the new platform seems extremely ambitious. It appears to us that the only way all phases of the deployment could be completed by then is if RSI merely clones one of its existing state-regulated sites, changing any items that need to be Delaware-specific. There's almost certainly not enough time for the company to craft a unique solution for the state from scratch.

Future of Delaware Poker Questionable

Green Question Mark

Given the tight timeframes that Rush Street will have to work within, it's doubtful that it will be able to implement an online poker solution in time especially given that RSI has no poker product ready at the moment. That's correct – the vendor that Delaware has selected to provide its online poker sites has no poker software client to use right now.

On RSI's “Products” web page, we find the following text:

Coming Soon: Poker

Currently in development, RSI's proprietary poker platform will provide players with a fair and fun experience through a modern, streamlined user interface. Our thoughtfully crafted policies and features allow our players to feel safe, protected, and to just play. Moreover, our Dynamic Avatar feature will bring a human element to online poker.

Phil Galfond to the Rescue?

Despite its lack of a poker app, RSI has been making moves to stake a claim in the world of online poker. In March 2022, it acquired Phil Galfond's brainchild Run It Once Poker. Run It Once had shut down a couple of months earlier with founder Galfond hinting at possible entry into U.S. regulated markets.

Indeed, the short blurb about poker on RSI's “Products” page is accompanied by an image that looks suspiciously like an old Run It Once Poker table with the addition of a BetRivers logo to the middle of the table. Moreover, the only specific feature referenced in that text, “Dynamic Avatar,” was also a notable feature of Run It Once.

BetRivers Poker will reportedly be based on Run It Once Poker's SoftwareThe Image of the Upcoming BetRivers Poker Table Bears a Remarkable Resemblance to Run It Once's Tables

All the evidence points to Run It Once being resurrected by Rush Street to power its internet poker platforms not just in Delaware but in other regulated jurisdictions too. Indeed, it's likely that we'll see the room arrive first in a more profitable state before being extended to Delaware. Even if the room begins Delaware operations exactly on the Nov. 1 target date, it will likely be segregated to Delaware's tiny population of 1 million at least until the technical details and regulatory hurdles of cross-state liquidity combination under the MSIGA are worked out.

Comments from execs at RSI hint at their new internet poker product being ready in late 2023 or early 2024.

Why Rush Street Interactive?

Blue Information Button

Given RSI's lack of poker experience, one might wonder why the Delaware Lottery chose it as a partner (apart, that is, from the fact that it was left as the only remaining applicant). The answer might lie in the mix of gaming possibilities that the Lottery is attempting to bring to fruition.

In its January RFP, the Delaware Lottery explained that it was seeking a wagering system that included “casino table games, Video Lottery games, poker, bingo, and keno with the option for the Lottery to add internet sports betting.” Of these categories, only casino table games, video lottery games, and poker have been implemented. There are no interactive bingo or keno games available, and internet sports betting isn't even (yet) a legal activity to host within Delaware's borders!

Clearly, the Lottery is looking toward the future and attempting to select a vendor that has what it takes to succeed not only today but in the coming years as well. Casino gaming already comprises the bulk of Delaware's online betting revenue, pulling in $13,189,067 in 2022 as compared to the modest $440,956 contributed by poker. If state leaders foresee sports betting, bingo, and other new revenue streams as being potentially more lucrative than the hitherto anemic poker vertical, then it makes sense that they would deprioritize poker and may be willing to put up with a temporary suspension of poker services.

Why Did 888 Withdraw?


Although there has not been any solid explanation forthcoming from 888 for its abandonment of the Delaware market, we can read between the lines and attempt to guess the reasons behind it.

As we've just mentioned above, the total size of the Delaware iGaming economy is a bit less than $14 million annually. Other regulated online gaming states have posted much bigger numbers, such as the $1.36 billion posted by Pennsylvania internet casinos and poker rooms in 2022 or the $1.66 billion recorded by New Jersey during the same period.

Now, those states do have a much larger population than Delaware does by an order of magnitude. However, this still doesn't explain the lackluster performance of Delaware-regulated internet gaming, which generates revenue figures a couple of orders of magnitude smaller than its compeers.

There's also the question of how this revenue is divided up. In Delaware, the first $3.75 million of revenue per year per operator goes directly to the state while the remainder is taxed at 57% of slot revenue and 20% of table game revenue (including poker). With less than $14 million per year, split up three ways, and the first $3.75 million for each of the three sites being effectively taxed at 100%, there's precious little left over for the vendor.

By contrast, Pennsylvania levies 16% on poker and casino table games and 54% on slots while New Jersey taxes online gambling at a rate of 15%. Thus, Delaware is not only a much smaller operating environment than neighboring states, but it also has higher effective tax rates.

It's likely that the higher-ups at 888 crunched the numbers and decided that a continued investment in Delaware was not in their best interests. 888 is a mature company with global interests, and it could have decided that its resources were better spent elsewhere. RSI, on the other hand, is a relatively younger enterprise that's still growing, and with its focus on the North American market, it probably feels that the chance to get its foot in the door in Delaware is too good an opportunity to pass up.

Key Stakeholders Give Their Opinions

Red Speech Bubble

Representatives from both the Delaware Lottery and Rush Street Interactive had positive things to say about the recent news. In a statement dated Aug. 17, RSI CEO Richard Schwartz explained:

We are honored to be selected by the Delaware State Lottery selection committee to provide online gaming operations in the First State. 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.

Richard Schwartz is the CEO and co-founder of RSIRush Street Interactive CEO Richard Schwartz

Delaware Lottery Director Helene Keeley said:

Rush Street Interactive has established itself as a leading innovator in the industry, and is a respected iGaming and sports betting company. 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.

More Delaware Online Poker Destinations Available


Of course, there are other ways to play poker on your computer in Delaware besides the uninspired sites run by the Lottery. There are offshore rooms that happily transact in Delaware and give you alternatives to the three identical state-licensed online poker rooms.

Perhaps the best among them is BetOnline, which boasts poker tables, casino gaming, and a sportsbook. You can join up at BOL today by clicking the button below:

If you would like to learn more about BOL before signing up, then head over to this lengthy BetOnline review page. For other Delaware-friendly online poker alternatives, check out this guide to Delaware online poker. Those in other parts of the county may wish to instead read this overview of online poker USA.