Why Should Delaware Care?
Gambling and lottery games are increasingly moving online, and regulators are following them there to keep pace. But that movement has begun to cut out one of the stakeholders in Delaware’s gambling economy: the retailers that sell the scratch-offs and lottery tickets. A new bill looks to bring them back into the equation.
A new bill could require online lottery players to first buy a prepaid card in a physical store.
Introduced by Rep. Bill Bush (D-Dover), House Bill 335 intends to protect small businesses’ sales role as the Delaware Lottery moves increasingly online.
If approved, Delaware would be the only state with such a prepaid card requirement, state Lottery Director Helene Keeley said.
Earlier this year, Delaware launched digital scratch-off games through iLottery, which allowed players to directly transfer funds from their bank accounts. The lottery plans to expand the online service later this year to offer multi-state lottery drawings, like Powerball and Mega Millions, through Scientific Games, the state’s longtime contract partner.
Bush argues House Bill 335 aims to uphold Delaware’s 2012 law that first authorized internet gambling and required prepaid cards to play internet games. Under iLottery’s current system, however, those prepaid cards are no longer required.
So-called “igaming services,” like sports betting and online casino games, would not be impacted by the new bill, Bush added.
He called out the lottery for not upholding the protective provision in the bill passed over a decade ago.
But Keeley said the original text did not mandate prepaid cards, but rather considered multiple funding options. House Bill 335 removes the option of an “other mechanism” through which players can fund online play.
Bush said the iLottery launch arguably shouldn’t have happened in the first place.
“The burden created by this requirement could be so substantial that it would ultimately threaten the viability of the online lottery program itself,” Keeley said in a statement to Spotlight Delaware.
A projected loss for the state
Bush said he doesn’t know whether iLottery sales impact small stores, but the bill provides protection regardless.
During a June 6 House Appropriations Committee hearing, Keeley presented letters from the Virginia and Pennsylvania lotteries stating that iLottery games there had not harmed local retailers in their states. Pennsylvania launched its iLottery program in 2018 while Virginia launched in 2020.
Currently, the Delaware Lottery offers an affiliate program for retailers to make commissions from linked iLottery players. Along with Pennsylvania and Virginia, it is one of the three states that does so, Keeley said.
According to data shared by the Delaware Lottery, cumulative retail sales since iLottery’s launch have increased from $151 million in 2025 to $158 million in the last eight months.
A Scientific Games company spokesperson said that since iLottery launched in 2025, retailer sales of all lottery products have increased “approximately 5% year-over-year.”
James Leonard, senior director at Scientific Games who helped launch Delaware’s iLottery, said at House Appropriations that the program launched with the expectation that it would generate “more than $4 million annually in additional lottery revenues for the state.”
If HB 335 were to be implemented, annual iLottery revenue could lose of up to $4 million by the third year, according to a fiscal analysis of the bill.
Up to 30% of total revenue from lottery ticket sales go to Delaware’s General Fund, which finances the state’s day-to-day operations. The lottery’s contribution only accounts for roughly about 3-4% of the fund’s total revenue.
Bush recognized this loss, but said the need to protect small businesses is foremost.
Keeley said the Lottery has “engaged extensively” with retailers, implementing “what is widely regarded as one of the most generous retailer incentive programs in the nation.”
After talking with retailers, she said the lottery ultimately decided to release e-Instant games first before online draw.
Meanwhile, Mike O’Halloran, executive director of the Mid-Atlantic Petroleum Distributors’ Association, said the iLottery launch took a lot of stores by surprise.
The association has been partners with the lottery for over 50 years, and collected over $1 billion in revenue in the last five years, according to O’Halloran.
“For whatever reason, the lottery department never promulgated any regulations to create the program,” he said, “And certainly didn’t promulgate the regulations with regards to critical retail protection that was in that 2012 law.”
Small businesses weigh-in
Bush is mainly concerned for the small stores in rural areas, “places that don’t get your everyday traffic,” he said. Out of the Lottery’s 610 retail partners in the state, 407 are small businesses, according to Keeley.
Some aren’t worried about losing sales to iLottery.
Mark Wortman manages The General Store, a deli and convenience store in Lewes. Wortman said when he told his customers about the new iLottery system, they weren’t interested.
Most of his clientele who buy lottery tickets are older and don’t bother with the online offerings.
“A lot of the older folks love the one-on-one transactions,” Wortman added.
In downtown Rehoboth, a couple blocks from the boardwalk, RB Convenience owner Shane Mellin said that when iLottery launched its digital platform it was “a little unsettling.” But he’s since discovered that the majority of his customers just aren’t interested in the digital options.
Like Wortman, Mellin also said that most of his lottery customers are older and enjoy the trip to the store.
“They like the ritual of coming in, getting a paper ticket, checking in,” he said.
Out in western Kent County in the unincorporated community of Sandtown, Anne Bischoff, the manager of the Country Cupboard, a convenience store and gas station, said that they don’t get a lot of lottery ticket sales.
The store is one of about six lottery retailers in Kent County west of Route 15.
Both Wortman, Mellin, and Bischoff said that they have not seen a decrease in scratch-off sales since iLottery released their digital version this year.
A compromise?
While the Lottery and Scientific Games argue that iLottery will help attract new players and subsequently generate more state revenue, supporters of the bill worry about the future of retail sales.
“iLottery was not designed to replace retail lottery sales, it was designed to reach new players and engage consumers who increasingly expect digital options,” Leonard said in the committee hearing.
While some retailers said that the majority of their lottery customers are older, O’Halloran is worried about iLottery moving the next generation of players online.
“Once those newer players are introduced to iLottery and start online, they’re going to stay online, which means that every successive generation of players are just going to grow up playing iLottery,” he said.
If this happens, he predicts iLottery will eventually succeed in-store sales.
Bush felt that if the Lottery was going to move forward with its online expansion, it should’ve come to the legislature first.
He said that there will be talks with the Lottery and retailers this week to “see if there is a solution somewhere in the middle.”
Three distribution association groups, including MAPDA, sent a letter to Gov. Matt Meyer last September, asking to halt the program and to discuss other options. O’Halloran said they’ve received no response.
