A Senate bill under consideration would prohibit the renewal of an exclusive contract with Rhode Island’s sole mobile sports betting operator.
The More the Merrier
IGT, a London-based gaming company, has been Rhode Island’s exclusive mobile sports betting operator since the industry launched in 2018. Initially contracted to a five-year term, the agreement was renewed for another three years. But with the expiration of the pact looming in 2026, the state could be seeking a more competitive mobile sports betting landscape.
Senate Bill 748 would negate the monopoly IGT currently enjoys and would allow at least five sports betting platforms to operate in the Ocean State. However, IGT is currently the state’s lottery provider and would continue in that capacity irrespective of the outcome of this bill.
Market Challenges
In what could be mere coincidence to the timing of the legislation, IGT’s gaming operations were recently purchased by Apollo Global Management for $4 billion. It should also be noted that IGT has a significant workforce in Rhode Island and would likely be one of the sports betting platforms invited to participate if the market opens up to multiple operators.
But one obstacle the nation’s smallest state may face is wooing major market players, a la DraftKings, FanDuel, and Caesars, to participate. Rhode Island’s 1.1 million people rank 44th of 50 states, and considering it has the highest tax rate in the nation of 51% on sportsbooks’ revenues, it may not be an attractive market to enter.
Legislative Hurdles
Of course, the legislature could certainly consider lowering the tax rate to interest the national mobile sportsbooks, which could ultimately benefit the state’s bottom line by bringing in more customers, leading to a higher overall handle, and increased revenues.
Thus, the tax rate could be lower than it is currently, but the dollar figure would be higher due to increased competition and advertising. Should this Senate bill pass and IGT were to lose its exclusivity in the market, it could ironically give IGT leverage for more hospitable financial terms should no other platforms join the market at the prevailing tax rate.
The bill is currently in the Senate Labor and Gaming Commission, but that body has more than 30 bills in queue, which means this measure may not be prioritized for this legislative session.
Should that occur, the legislature would have to tackle this issue next year when IGT’s exclusive mobile sports betting pact expires.
IGT Remains Bally’s iGaming Partner
Regardless of what transpires with IGT’s status as the state’s exclusive mobile betting platform, it will have no bearing on its relationship with Rhode Island’s only iGaming operator, Bally’s. The Providence-based gaming company operates two land-based casinos in Rhode Island and was granted online casino gambling exclusivity in March of last year.
Online slots are taxed at 61% while a 15% tax is levied on table games’ revenues. IGT is an official vendor of Bally’s in the state’s digital casino market. Speaking of which, Rhode Island is only one of seven states to offer online casino gambling, with New Jersey, Connecticut, Michigan, Delaware, Pennsylvania, and West Virginia as the other six in the US iGaming market.
