After three hours of debate May 5 the Delaware House of Representatives voted down a bill that would have brought sports betting to the state’s three casinos.

Gov. Jack Markell was counting on an estimated $55 million in new revenue gained from sports betting and an increase in the state’s share of gambling revenues to help plug the state’s $780 million projected budget shortfall.

The substitute bill for House Bill 100 failed to meet the constitutional three-fifths majority required for passage by just two votes.

Throughout the debate House Republicans echoed gaming industry arguments that held the bill would devastate the state’s racinos and likely force Harrington Raceway and Casino to close within the year.

“The danger of passing this legislation as it’s written right now could very soon kill the goose that laid the golden egg,” said House Minority Leader Richard C. Cathcart, R-Middletown.

They also questioned the constitutionality of the bill and argued that legal challenges could delay the implementation of sports betting and hold back revenue.

Opponents spent the evening hammering staff from the governor’s office on the consequences that could result if the bill passed.

The governor’s legal counsel Mike Barlow defended the constitutionality of the proposal and said there’s no need to worry about lawsuits from the National Football League or the NCAA, both of which have indicated they would pursue legal action if sports betting were approved in Delaware.

Barlow said those groups and others like them would be on shaky ground in such a lawsuit, considering their toleration of sports betting in Las Vegas.

However, the governor has not received guidance from the state supreme court on what forms of sports betting would be legal. Markell requested advice on the bill from the court in March, but Chief Justice Myron T. Steele last week said the court would not offer its opinion on a bill that had not passed the legislature.

Cathcart and Rep. Thomas H. Kovach, R-Brandywine Hundred South, also grilled Deputy Finance Secretary Tom Cook over the numbers used to estimate the potential revenue that would result from sports betting.

Cook defended the administration’s revenue projections and argued they represent a more conservative number than has been put forward in several studies of the issue.

The Republicans also criticized the administration’s negotiations with the racinos, especially Harrington Raceway and Casino.

After the bill cleared the House Gaming and Parimutuels Committee early last month, racino executives and administration representatives were supposed to meet during the legislature’s spring recess and hash out a compromise, namely over the proposed eight-point increase in the state’s share of gaming revenues and a $4.5 million sports lottery licensing fee.

When no such compromise was reached, the executives claimed the administration refused to meet in the middle.

Harrington CEO Patti Key testified during the debate that the governor and his staff refused to examine a packet of financial information that showed her company would fall more than $3 million in the red if the bill were passed.

Even if Harrington made $1 million a year on sports betting, it would still cost the track $5 million to equip the facility and another $1 million in licensing fees, Key said.

Later, the governor and his senior advisers said Key brought no such packet to the meeting.

Finance Secretary Gary M. Pfeiffer said Key submitted some financial information, but the figures were not complete.

In an interview with reporters after the vote, Tom McGonigle, the governor’s chief of staff said it was the racinos who refused to accept compromises offered by the administration.

McGonigle said the governor offered to reduce the proposed increased split by two percentage points for any revenues earned by the racinos up to fiscal year 2009 levels. Any revenue earned above those levels would be subject to the eight-point increased split.

In addition, McGonigle said the administration promised the racinos table games by July 1, 2010.

He also said the administration put forward another plan to raise the split by four points beginning in July and defer an additional four-point increase until the fall, which would give the racinos a chance to begin generating money from sports betting.

Both offers were rejected, McGonigle said.

Markell also maintained that, according to the estimates his administration is working with, sports betting will earn the racinos more money in profits than it will cost them in fees, with plenty left over to outfit their facilities for the new game.     

In the wake of the bill’s defeat, the governor said state workers concerned about a proposed 8% pay cut should look to their legislators, who will have to come up with another way to raise the money that sports betting could have.

“This fight’s not over,” he said. “But state employees can now determine for themselves who took their side.”

Twenty-three legislators voted for the bill, 15 voted against it and three abstained. The bill needed 25 votes to carry the three-fifths majority necessary to pass a bill dealing with state fees.

House Majority Leader Peter C. Schwartzkopf, D-Rehoboth, said he knew the vote was going to be close.

“You might lose a vote during a debate, you might pick up a vote during a debate, and apparently we lost a couple,” he said. “We knew we were floating right around that 25, but we can’t do it by ourselves in a three-fifths vote.”

Schwartzkopf added that he will attempt to organize a recall of the vote. Under House rules, a recall must be initiated by a member of the prevailing side, in this case someone who voted no.

Rep. Gregory F. Lavelle, R-Sharpley, said he thought the bill was doomed to fail and may have been initiated as a way for the Democratic leadership to see who really is on their side.

“I don’t think many if any changed votes during the debate, I think it was a losing proposition going in, unfortunately so because I voted for it,” he said. “I think this was a question where perhaps the governor and the speaker thought there had to be some clarity on where people stood, and one way to force that clarity is to have a vote.”

For Scwartzkopf, the bill’s failure indicates a tough march to the June 30 budget deadline.

“This was the easiest vote they’re going to have, it was the easiest vote we as legislators are going to have in this budget process,” he said. “The bottom line is the people of this state lost today.”