Q&A: Delaware North on ambitions for Betly to become sports betting’s “third choice”

You could legitimately argue that US online sports betting has become a predictable affair. Legacy DFS brands FanDuel and DraftKings continue to have a stranglehold on the market, while the US has become a graveyard for tier-two and tier-three operators ground down by the heat of competition and costs associated with state-by-state regulation.

Yet one name still standing strong is homegrown challenger Betly. The digital brand of Delaware North, the privately owned hospitality and entertainment giant, Betly is available in Ohio, Arkansas, Tennessee, and West Virginia (sports betting and online casino).  

Delaware North has been busy carefully assembling an impressive roster of leadership talent to run its online operation. Recent hires include director of sports Alan Berg and director of marketing and user acquisition Sallye Hershman, who join the likes of director of interactive casino Davide Colosimo, CRM director Jordan Palamar, director of VIP Giovanni Jimenez Sabater, and general manager Bob Akeret.

Heading up the division is chief interactive officer Lee Terfloth, a guy who has been there, done that, bought the T-shirt where gambling is concerned, and is clearly relishing his challenge with Betly.   

EGR North America (EGR NA): You joined Delaware North in November 2024 following roles at Prime Sports, Hard Rock Digital, and Resorts Digital, to name a few. What attracted you to the job?

Lee Terfloth (LT): In 2018, Delaware North decided to get into the space by launching sports betting at the Southland Casino in Arkansas, and then online sports betting as well. So, they’re live in four states today, with one igaming state, West Virginia, but they were looking for a senior person to come in and help lead for the future. It was struggling to find its footing in Betly and grow beyond being a bottom-tier operator.

One of the first things I did was bring in a new management team, and I’m proud of the team we’ve hired. Some of them are people I’ve worked with before, who were willing to take another shot and get the band back together. The next step is looking to expand beyond our four states — sports betting is cute, but we all know igaming is where the real money is.

EGR NA: How different is Betly to your previous company, Prime Sports, a bookmaker that followed the Pinnacle model? 

LT: I think the world is starting to realize you can’t just be a casual bookmaker anymore. You just don’t have the business, and I think that’s where Betly was at. Now, it’s not necessarily a sharp book, but a book willing to take action. That’s why we brought in Alan [Berg], who’s just phenomenal. He was previously running the trading at WynnBet. I don’t think we’ll ever be competing for the top spots, but we’re certainly having a decent crack at things.  

EGR NA: Late last year, Playtech was selected as Betly’s new platform provider, supplanting Gamewise, a joint venture between Delaware North and Belgium’s GAMING1. What did that mean for the business and your customers? 

LT: We actually began the migration in my third or fourth week. So, we migrated Ohio in November and completed all the migrations in April. Today, we are still cleaning things up from the migration as it takes a while, but Playtech is committed to adding new features and functionality to benefit our customers.

We’ll see a big number of [content] additions coming to our casino, while our acquisition and CRM teams are starting to take advantage of the Playtech platform suite. Revenues are now back to where they were pre-migration. Anybody who’s ever done these migrations knows that’s really hard, so now the sky’s the limit while we try and find key differentiators that will allow us to stand out.

EGR NA: Which online states are performing best for Delaware North?

LT: Ohio is a challenging market, and I think every operator would say how challenging it has been. Arkansas is probably our most important state — we’re part of the triopoly there [along with BetSaracen and Oaklawn Sports]. It’s a great state with a lot of room to grow. If you look at average handle per adult in the state, it doesn’t have the disposable income of New York, but it underperforms.

BetSaracen is the current market leader, but I think there’s a lot of growth potential. We’re just getting started. So, my number-one target would be to go and make a name for ourselves in Arkansas. And then West Virginia is our only icasino state. That’s really important to us because icasino is a lot easier to make money in the short term. We’re also looking to expand into other states.   

EGR NA: Many small operators have come and gone over the years. Why do you think they failed and do these exits present an opportunity for Delaware North?

LT: In Europe everyone had the same approach, which was to acquire [customers] and keep offering them the same product and the same games. There’s a big enough population in a lot of European countries, where you can sustain this and have 20 or 30 operators all beating the same drum. But when you start looking at state-by-state gaming, it’s a lot harder, with a lot more challenging regulatory requirements and [smaller] populations.

So, you have to be different. If it’s the same games, same lines, same promotions, all you’re doing is racing to the bottom against two companies [FanDuel and DraftKings] that are willing to spend the gross domestic product of small nations to win. We’re building the foundational pieces today that allow us to be different and stand out, so in two years’ time I’d like to be a third choice.

EGR NA: When PASPA fell in 2018, did you ever imagine US online sports betting would become what’s essentially a duopoly controlled by two DFS operators?

LT: I used to joke that these guys [FanDuel and DraftKings] would soon be on ‘Series Q’ of their fundraising just to continue to spend on the marketing machine. If you look at their publicly traded reports, they’re still reinvesting oodles of money into marketing. I think we all expected the brick-and-mortar casinos [to lead on sports betting]. They were the ones that spent money lobbying and doing things right. But when it came to investing in technology, we still don’t see that from the brick and mortars.

MGM [Resorts International] still relies on a relationship with Entain [for BetMGM], and obviously tried, unsuccessfully, to acquire Entain. Caesars has finally started to invest in tech, although it’s not the full caboodle. They didn’t go out and buy a casino company — they bought bits and pieces. But we’re still in the first inning of regulated igaming in the US. As we’ve seen many times in Europe and in the US in the pre-UIGEA days, just because you’re first today doesn’t mean you’ll be first tomorrow.   

EGR NA: A recent trend has seen certain states increasing taxes and others exploring hikes. Ohio doubled its GGR rate from 10% to 20% in 2023, and Governor Mike DeWine had hoped to take it to 40% in his latest budget. How concerning is this? 

LT: [A tax rate of] 40% in a sports betting state that underperforms and has one of the highest licensing costs in the nation […] I don’t have any appetite for 40% in Ohio. I get that funds have become harder to come by from a state taxation perspective, so you have to make up the difference somehow. But when you look at the pie chart of gaming revenue, there’s only two levers you can control [if taxes go up] — marketing or reinvestment. You can’t stop marketing because you don’t want to die, so you take it away from player reinvestment, which makes retention harder.

And, inevitably, you end up taking that away from your smallest customer base, so you have to work harder to keep your VIPs. Tax increases don’t help anyone. In fact, all it does is decrease long-term revenue. I think it will probably affect New Jersey [after the state increased online sports betting and igaming to 19.75% in June]. New Jersey’s trajectory of growth has been a continuous hockey stick, but I think you’re going to see a slowdown. We saw online casino overtake brick-and-mortar revenue for a few months this year, but I think you’ll stop seeing that 20% year-over-year growth as a result.   

EGR NA: Is part of the problem some states set their tax rates relatively low in the first place?

LT: I don’t want to speak for regulators or say tax is too low, but one thing I’ve learned is they’re not necessarily getting the best education in this area. If you have a 40%, 50%, 55% tax on gaming revenue but allow for unlimited promotional deductions, what are you accomplishing? Nothing. I’d rather have a 20% tax with no promotional deductions. The AGA [American Gaming Association] has put up great guidelines on this. We should all follow them because they have smart people writing these things. It shouldn’t fall on deaf ears.

EGR NA: What’s your opinion on the One Big Beautiful Bill Act (OBBBA), which includes limiting bettors to deducting 90% of their losses in a tax year?

LT: My hope is the FAIR BET Act that’s been introduced [by Republican Dina Titus from Nevada’s first district] will be successful in returning the taxation of gambling winnings back to where it was. Poker players are the ones who will notice this the most, because they structure their lives around being plus EV [expected value] when it comes to taxes. This will devastate online casino customers, too, because you’ve got a $1,200 ‘taxable event’ every time you hit a slot machine. And for someone who bets $300 or $500 a spin, they’re getting taxable events all the time.

You could have millions of dollars in taxable events at the end of the year. If you can’t offset that 100%, you’re in bad shape. A number of customers I’ve seen over the years have millions of dollars in taxable events, but they’re down several hundred thousand dollars on the year. They offset that with their win-loss. But if you have a $7m win and you’ve lost $8m in total, so you are net negative $1m, now you’ve got to pay $700,000 in taxes. That is going to absolutely devastate the online VIP slot customer [segment].

EGR NA: How much of a threat are prediction markets to the regulated industry?

LT: I’ve been involved in regulated [US] gaming since day one [in New Jersey in 2013]. I’m part of a select group of people who dedicated their time to be in the regulated US [market]. We’ve built this great framework of regulated controls, KYC, and responsible gaming.

Everything that we’ve put in place over the last 12 years to protect customers is undone by prediction markets if they’re allowed to continue. So yes, it’s an absolutely fundamental threat to sports betting.

EGR NA: If prediction markets were able to offer parlays and same game parlays, would that be…

LT: The end? Why would you ever go to a single-state sportsbook offering?

EGR NA: When we last spoke in 2017, you said the gambling industry is like dog years, in that its action-filled nature means one year is like seven years in a regular job. Do you still think the same?

LT: It’s the hardest-working industry, though obviously the military gets a pass. Yes, online gaming is like dog years. This is my 22nd year in the industry and I definitely feel 150 years old.