Rhode Island regulators are actively considering ending the state's online sports betting market monopoly, currently operated exclusively by International Game Technology (IGT) through the state lottery's Sportsbook RI application. The state's Department of Revenue Lottery Division has issued a request for information to assess the feasibility of opening the market to more operators, receiving expressions of interest from eight major operators by August 22, including well-known companies such as DraftKings, FanDuel, and BetMGM. IGT's exclusive contract is valid until November 2026, and last year the state collected $14 million in tax revenue from IGT by imposing a 51% actual tax rate. The state Senate has previously passed a bill to end the monopoly, but the House of Representatives did not consider it, and legislators plan to propose a similar bill in 2024.
Regulatory Dynamics and Market Assessment
The Rhode Island Department of Revenue Lottery Division is assessing whether to end the state's online sports betting monopoly. Currently, International Game Technology (IGT) holds an exclusive contract and operates online sports betting services through the state lottery's Sportsbook RI application.
Earlier this year, the lottery department issued a request for information aimed at understanding the interest of other operators in entering the market, in preparation for possible policy adjustments.
Operator Responses and Market Interest
By the submission deadline of August 22, the lottery department had received expressions of interest from eight sports betting operators. These companies include Bally's, BetMGM, DraftKings, Fanatics, FanDuel, BetRivers, Kambi, and OpenBet.
The responses indicate that major operators are keenly interested in entering the Rhode Island market, providing a market basis for ending the monopoly.
Current Monopoly Structure and Contract Duration
IGT currently holds the exclusive rights to operate online sports betting in Rhode Island, with the contract valid until November 2026. This exclusive operating model makes IGT the only legal online sports betting provider in the state.
This monopoly structure exists in several states across the US but has increasingly been questioned in recent years regarding competition and consumer choice.
Fiscal Contribution and Tax Revenue
In the last fiscal year, Rhode Island collected $14 million in tax revenue by imposing a 51% actual tax rate on IGT's sports betting revenue. This relatively high tax rate provides significant fiscal income for the state government.
Tax contributions are an important consideration in assessing the pros and cons of the monopoly model and are central to policy discussions.
Legislative Efforts and Policy Process
State Senator Frank Ciccone proposed a bill this year to end IGT's monopoly, which passed the Senate with a vote of 30 in favor and 3 against. However, the House of Representatives did not consider the bill before the end of the June session.
Legislators plan to propose a similar bill in 2024, continuing to push the market opening process, indicating political support for reform.
Market Issues and Consumer Experience
The monopoly operating model often receives negative reviews from bettors. On September 7, the first weekend of the NFL season, IGT servers experienced a 75-minute downtime, preventing Rhode Island betting customers from using the service.
Such technical issues exacerbate concerns about the quality and reliability of services under the monopoly model, supporting the necessity of introducing competition.
Research Recommendations and Professional Assessments
Earlier this year, the Rhode Island Lottery Department released a research report by Spectrum Gaming Group. The study recommends adding at least three and up to five new sports betting operators in the state.
Professional assessments provide a basis for policy-making, indicating that introducing limited competition may be more beneficial for industry development than complete monopoly or complete market opening.
Local Operators and Market Characteristics
Bally's, headquartered in Providence, operates two casinos in the state and has offline sports betting facilities. Rhode Island became the seventh state in the US to legalize online casinos in 2023, and Bally's also launched the Bally Bet platform in 2024.
The presence of local operators provides an additional dimension to market opening, potentially affecting the final policy decision and market structure.
National Background and State Comparisons
Several states in the US have sports betting monopolies. Florida is exclusively operated by the Seminole Tribe's Hard Rock Sportsbook, while Oregon and New Hampshire have chosen DraftKings as the sole provider.
BetRivers is the only sports betting provider in Delaware, and state legislators are also considering expanding the market. Montana has signed an exclusive agreement with Intralot.
Future Outlook and Possible Timelines
If the market is opened, the transition process may take time. IGT's existing contract is valid until November 2026, providing a natural time window for policy adjustments.
Any market opening may be implemented in a phased manner to ensure a smooth transition and minimize disruption to existing services and revenue.
Economic Considerations and Balancing Interests
Policy-makers need to balance the concerns of multiple stakeholders, including maximizing fiscal revenue, consumer choice, market stability, and responsible gambling requirements.
Research shows that moderate competition may increase overall market revenue and taxes while improving consumer experience, but requires a carefully designed regulatory framework.
