Note: Following the publication of this story Delaware North, owner of the three suspended WV sportsbooks, announced it was severing ties with Miomni, its sports betting provider. The company has been without sports betting for 23 days and there is no end in sight. Delaware North informed the West Virginia Lottery of its intent. Legal Sports Report has the full story. This is a developing story and we will continue to update as the situation warrants.
The West Virginia sports betting situation has become a little more clear.
Legal Sports Report obtained a letter from Delaware North (DNGE) through a public request under the Freedom of Information Act on Tuesday.
DNGE operates the Wheeling Island Sportsbook and Mardi Gras Casino Sportsbook. It partnered with Miomni Gaming to bring sports betting to the two sportsbooks and offer mobile sports betting through the BetLucky app.
The bottom line is the company blames Miomni’s disagreement with a third-party supplier, Entergaming, as the cause of the shutdowns.
DNGE explains WV sports betting shutdown
The letter, dated March 19, from Delaware North President E. Brian Hansberry outlines the issues involved.
In the letter, Hansberry writes that he “believes that Miomni has and continues to infringe upon Entergaming’s intellectual property rights in relation to the use of proportions of the platform.”
Hansberry also notes that DNGE didn’t know of the agreement between the two companies when it contracted with Miomni.
Entergaming and Miomni are in dispute as to whether Miomni has the right to use certain intellectual property. It terminated its agreement with Entergaming in February.
Entergaming is a software development company based in Greece specializing in gaming, automation, security, and retail sales. The company has clients and customers around the world.
Miomni specializes in gaming technology with offices in:
- New York
Neither Entergaming or Miomni responded to PlayWV.com for comment.
According to the letter, the service cancellation left DNGE in the dark, and it was caught by surprise. The company also didn’t know the platform’s reliance on Entergaming intellectual property.
“Given the allegations of Miomni and Entergaming, the continued service interruption to the citizens of West Virginia, and our firm commitment to integrity and excellence, we are evaluating our options. We expect to be able to report on our next steps in the near future.
“This matter has already caused substantial disruption to our West Virginia patrons, as well as to employees of DNGE, who are West Virginia citizens. It has also harmed DNGE’s business and operations (including lost business due to the shutdown of the Platform, resulting in less tax revenue), and caused reputational loss.”
The closings of WV sportsbooks has left a measurable impact on the rest of the market. In fact, it has led to a deep cut in overall wagering. For the week ending March 16, handle was about $ 2.8 million in wagers.
That’s the lowest handle since November – a full month before Wheeling Island and Mardi Gras opened their sports betting windows.
Recent results are a frustration for Del. Shawn Fluharty (D), who helped lead the efforts in sports betting legalization.
“It’s certainly frustrating because I worked for years to get the ball moving on this and got out in front of it early, help promote it, built a coalition with individuals involved in the lottery and casinos, and really help kind of be the front man on sports betting to work so hard to see West Virginia get out in front of something.”
Fluharty notes that the Miomni and Entergaming dispute may not be resolved quickly, considering the long intellectual property battles between companies such as Apple and Samsung.
“When you start thinking of disputes with intellectual property issues, they can go on forever,” he says. “This could get ugly and ugly for a long time, which could make it ugly for West Virginia if we can’t get it resolved.
“If you’re Delaware North, honestly, the process should have been vetted better. So you’re telling me you enter into an agreement with Miomni, and then you don’t know who Miomni is working with. You don’t know that Entergaming and Miomni have a dispute. Are you absolutely unaware of it or did you not vet the process good enough?”
While Fluharty may question DNGE’s efforts in vetting its sports betting partners, he also realizes regulators play a role.
“We put the responsibility on regulators to make sure things like this don’t happen,” he says. “So if you’re the lottery, you need to know every single entity that’s involved before allowing things to go live.”
The West Virginia Lottery regulates all casinos and gambling. Fluharty still believes it can handle the additional gambling responsibilities.
“At this point I haven’t been given any indication that they’re incapable of doing that. I think they’re going to get things moving and do their homework with online gaming.”
Revenue losses for state
The sports betting shutdown has not only been a loss for online gaming but also the state. Fluharty says this plus the slow rollout of sports betting has cost the state significant tax revenue.
Referring to March Madness, Fluharty talks about missed revenue opportunities.
“That’s going to kill revenue stream generation for sports betting. And you know who will get the blame for that? The legislature. They’ll say, ‘You guys promised us the world and we didn’t get anything.’ That’s usually how it works, so it’s incredibly frustrating.”
Fluharty agrees Delaware North should consider its options when it comes to its sports betting partner. The dispute could drag out and cost the company bettors and market share.
“A dispute arises, and it’s almost like the parties involved at this point don’t know what’s going on and don’t know who to hold accountable,” he says. “If Miomni didn’t hold up their end of the bargain, maybe they can get another entity involved, and that contract should be voided. There are so many different issues that could arise from this.”
The situation may leave an opening in the market and DraftKings may receive regulatory approval soon.
“I think they probably have an incentive to [enter the market],” Fluharty says, “given the circumstances surrounding online betting in West Virginia currently.”