All bets are off: Behind the West Virginia betting blackout

When two retail sportsbooks in West Virginia suddenly stopped taking bets and their state-wide mobile app went offline, it was presumed gremlins in the system had temporarily paralyzed operations.

But with the betting blackout in early March dragging on for days at Delaware North’s Wheeling Island and Mardi Gras casinos, and with the BetLucky app still down, confusion reigned as aggrieved bettors struggled to get answers.

That was over two months ago, and since then sports betting has failed to return to the Mountain State’s only betting app and at the two affected properties. It later transpired, though, that Delaware North, a regional casino operator and a global hospitality giant, terminated its contract with technology supplier Miomni Gaming at the end of March. Furthermore, Buffalo,

New York-based Delaware North is now suing Miomni, alleging that the company and its CEO, Mike Venner, “fraudulently misrepresented its ownership of a key part of the BetLucky sports wagering platform.”

Delaware North says the interruption was attributed to Miomni’s contract dispute with third-party technology provider Entergaming Software Solutions Limited, a Cyprus-headquartered company known as Entergaming. The lawsuit alleges Miomni repeatedly claimed to own the IP rights to the platform, including the source code underlying the front-end interface and the back-end platform.

According to the lawsuit, Delaware North discovered through contact with Entergaming that Miomni never owned the source code for part of the “back-end” of the platform – it was only licensed from Entergaming.

The lawsuit also accuses Miomni and Venner of falsely claiming to own all rights to the platform and that they had intentionally concealed this from Delaware North, as well as the fact Entergaming had written to Miomni on February 25 announcing the termination of the agreement and back-end services.

Delaware North claims Venner had said the platform interruption on March 6 was part of an Entergaming scheme to extort Miomni and that Entergaming had illegally hacked the platform.

However, the lawsuit says: “Entergaming’s disabling of the Platform was not the result of any ‘criminal’ behavior or ‘hacking,’ and Miomni knew that all along.” On March 29, Delaware North notified West Virginia Lottery Commission, the state’s regulator, that it had terminated its contract with Miomni.

West Virginia is in the midst of a mobile betting blackout as a lawsuit breaks out against an operator and its service provider

An embarrassing start

While Delaware North moved to honor outstanding bets, the privately owned company and its casinos have been left with egg on their faces. “An epic disaster” is how one industry source described the debacle to EGR NA.

Furthermore, the episode will have eroded trust in a nascent market that only went live last August after sports wagering was legalized the previous March, two months before PASPA’s repeal. Delaware North announced its joint venture with Miomni last October, and on December 27, sports betting launched at Wheeling Island, Mardi Gras and via the BetLucky app.

The original plan was for BetLucky to also serve as the sportsbook’s technology platform for Delaware North’s casinos, where sports betting is legal. Besides West Virginia, Delaware North has gaming properties in New York, Illinois, Arizona, Arkansas and Ohio.

However, the platform went down in West Virginia on February 5 for a few hours, before the major outage on March 6. It’s now highly unlikely BetLucky will return, leaving West Virginians with only retail sports betting at three properties: Hollywood Casino, Mountaineer Casino and the private Greenbrier resort.

If anything, it is a salutary reminder of the need to thoroughly investigate potential partners as the industry rushes to roll out sports betting in regulated states. “

In this instance, you have to question why Delaware North didn’t discover, as the lawsuit alleges, Entergaming owned part of the “back-end” before entering into the JV. After all, you wouldn’t expect Delaware North – a 104-year-old business with operations in almost 40 states, a workforce of 55,000 and annual revenue of around $3bn – to wind up in this predicament.

On the other hand, Miomni is an established outfit that has been providing sports betting technology in Nevada since 2012 and currently has more than 50 casinos in the state as customers. It also powers mobile betting apps for a number of properties.

Melissa Blau, director of iGaming Capital, doubts whether anything could have been done differently to avoid the situation that materialized: “Delaware North is a great company that is very professionally managed.

“They would have done the required due diligence. [Miomni CEO] Mike Venner is a good guy, [he’s] honest and working to try to expand his business. I could easily see how these companies came together. The immediate issue I have is that I am not sure what the lesson would be at this point.”

One possible knock-on effect of the public fallout is that operators will veer towards the larger and more established sportsbook vendors when settling on a partner. Chris Grove, managing director of sports and emerging verticals at Eilers & Krejcik Gaming, says: “I suspect you’ll see suppliers get a bit more of a premium for their track records going forward, especially for proven performance in regulated US markets.

I could also see retail operators rethinking plans to bring technology in-house through acquisition or joint ventures.” A blow to revenue Unsurprisingly, the abrupt closure of the two brick-and-mortar sportsbooks and BetLucky, which came ahead of March Madness, had an impact on the market.

In the four weeks prior to BetLucky’s disappearance, the app generated a combined average weekly gross revenue of around $83,000 for Wheeling House and Mardi Gras, comfortably outstripping retail’s contribution.

Total lifetime gross revenue from mobile was roughly $630,000. Yet with the loss of mobile and two retail sportsbooks, total handle across the state plummeted from 2019’s peak of $4.8m in January to a low of $2.3m before plateauing at around $2.6m for the last three weeks of April.

A rural state like West Virginia needs mobile betting for the market to maximize its potential. And this could be about to happen with William Hill US, DraftKings and FanDuel recently being awarded one-year online licenses.

William Hill already operates the betting facilities at the Hollywood and Mountaineer casinos, while FanDuel is behind the Greenbrier’s sportsbook. Blau says: “Additional competition is always good for the market. DraftKings, FanDuel and William Hill have done a great job getting the New Jersey market off to a great start.

“Innovative features and competitive bonuses, which have all contributed to a vibrant market, will soon be available in West Virginia. It is unfortunate for Delaware North, as a local casino owner brand that had a clear first mover advantage under BetLucky and was helping fight off the brand dominance that both DraftKings and FanDuel have exercised in New Jersey.”

While the arrival of apps from this caliber of operator should kick-start the market, it’s questionable how many brands a state of 1.8 million people (roughly 0.55% of the entire US population) can realistically sustain. New Jersey (population nine million) is already reaching saturation point with 13 online sportsbooks.

As for Delaware North, which put up $5m in cash for a 51% stake in BetLucky, the company has stated publicly it could take months or longer to identify and implement a solution.

Not only will the company be even more out of pocket remedying the situation, but it could find itself feeding on scraps in West Virginia when it re-enters the market. When it comes to sports betting more generally in the Mountain State, Grove says the industry will move on and this sorry chapter will eventually be largely forgotten.

“The episode will ultimately end up being a footnote in West Virginia’s gambling history. That’s not to say it isn’t unfortunate – it is – but once we have a few years of multiple operators competing in the market, I suspect this dispute will transition from a material issue to trivia for industry insiders.”

NB: Delaware North declined to take part in this article, while Miomni Gaming failed to respond to requests for an interview.