FanDuel makes last-minute attempt at Rhode Island market expansion

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The Backstory

A late push against a tightly held market

FanDuel’s bid to pry open Rhode Island’s online sports betting market is the latest challenge to a gambling structure that has long favored a limited number of state partners over broader private-sector competition. The company is backing House Bill 8186, introduced in February by Rep. Matthew Dawson, which would expand the number of online sports betting operators to four to six and cut the sports wagering tax rate to 12% from 51%.

The timing is notable. Rhode Island has allowed online sports betting since 2019, but its market has remained among the most restricted in the U.S. Sportsbook Rhode Island has been the only live sportsbook, while Bally’s recently gained approval to become the second. That leaves national brands such as FanDuel and DraftKings outside a market surrounded by states where their apps are familiar to many bettors. FanDuel’s outreach to Rhode Islanders who wager through its platform in neighboring states is designed to turn that regional imbalance into political pressure on Gov. Dan McKee and lawmakers.

The proposal faces steep odds. The House Finance Committee recommended the bill for further study in April, a move that often slows legislation rather than advances it. Still, the measure reflects a broader dispute over whether Rhode Island is maximizing tax revenue through exclusivity or leaving money on the table by limiting consumer choice.

Senate vote exposed pressure on the old model

FanDuel’s campaign follows a separate legislative push that already showed significant appetite in the Senate for reopening the state’s gambling contracts. In May, the Senate voted 30-2 for legislation that would allow Rhode Island to seek bids from outside operators after the current contract expires next year, according to a prior report on how a Rhode Island bill could open the market to new sportsbooks.

That measure, Senate Bill 748, did not by itself authorize a fully open market. Instead, it would create a procurement pathway that could let DraftKings, FanDuel and other operators compete for the right to provide sports betting in the state. Its House companion, however, had not advanced out of committee, leaving the broader reform effort incomplete.

DraftKings supported the Senate proposal, arguing that letting Rhode Islanders use their preferred apps would increase revenue. IGT, the incumbent technology provider, opposed the premise that broader competition would necessarily help the state. Joe Bertolone, a senior vice president at IGT, told lawmakers the current model outperforms many regional peers despite competition across state lines.

That disagreement defines the current debate. Supporters of expansion say Rhode Island’s limited app environment suppresses participation and sends bettors to Massachusetts, Connecticut or offshore sites. Incumbents counter that a concentrated model paired with a high state share produces dependable budget revenue without the need to subsidize commercial operators through lower taxes.

Tax rate is the central trade-off

Rhode Island’s 51% sports betting tax rate is the highest among states that have legalized sports wagering, according to a May 2025 study by Spectrum Gaming Group cited in the current debate. For lawmakers, that rate is both a strength and a barrier. It gives the state a large share of each dollar won by operators, but it may discourage additional companies from entering unless the rate is reduced.

Dawson’s bill would cut the rate to 12%, a level closer to competitive-market states but far below Rhode Island’s current take. The fiscal question is whether more operators, larger marketing budgets and more active customer acquisition would offset the lower percentage collected on each dollar of operator revenue. That calculation is difficult because Rhode Island’s market is small, but the state sits in a dense regional betting corridor where app availability can shape consumer habits.

The state generated $31 million in sports betting revenue between July and March, giving lawmakers a measurable baseline. Expansion supporters argue that figure could rise if bettors had more brand choice and better products. Critics say the state would assume a major tax cut while gambling companies capture the upside, particularly if new operators mainly shift existing bettors from one app to another.

The contrast with larger states is complicated. Competitive markets often produce higher handles because operators advertise aggressively and cross-sell customers. But their lower tax rates can mean the public share is thinner. Rhode Island’s decision is therefore not simply whether to add apps, but whether to move away from a model designed to maximize state share in favor of one meant to maximize market size.

Igaming gains gave reformers new evidence

The sports betting fight has unfolded as Rhode Island’s newer online casino market has begun producing meaningful revenue. The state became the seventh U.S. jurisdiction to legalize online casinos, with its first and only licensed platform launching in March 2024. Early returns have given both sides material to use.

In November, online casino revenue slipped to more than $2.7 million despite higher wagering, according to Rhode Island Lottery figures covered in a report on Rhode Island online gaming revenue near $3 million. The decline showed how payout volatility can affect monthly net gaming revenue even when betting activity rises. It also underscored the state’s reliance on a single-platform structure that limits direct comparisons with more competitive casino markets.

December delivered a stronger signal. Rhode Island reported more than $3.6 million in online gaming net revenue, surpassing the previous record set in October and bringing the year’s total to $18 million, according to a report on the state’s record December igaming revenue. Slots accounted for $2.5 million of December’s total, while online table games generated $1.1 million.

Momentum continued into February, when combined net igaming revenue reached $3.7 million, the highest total of the fiscal year at that point. As detailed in coverage of Rhode Island’s best month of fiscal-year igaming revenue, online platforms reported $25.4 million in net gaming revenue and $688.5 million in wagers for full-year 2025 figures then available. Slots remained the primary driver, with more than $18.6 million in net revenue.

Consumer protections are moving alongside expansion

As lawmakers weigh more operators, they are also revisiting enforcement and age-related rules for online gambling. A separate measure, House Bill 5643, sought to criminalize bettors younger than 21 who use online gambling platforms. The proposal advanced through the House Judiciary Committee before being defeated April 22 on a 7-5 vote, then was scheduled for reconsideration after state police sought another hearing.

The dispute, covered in a report on a defeated Rhode Island online gaming bill up for reconsideration, highlighted a tension that accompanies digital betting expansion. Rhode Island allows adults older than 18 to gamble at certain retail locations, creating confusion about why online gambling carries a higher age threshold. Opponents of criminal penalties argued that 18- to 20-year-olds should not face records for conduct they may reasonably assume is lawful, and suggested civil penalties and education instead.

That debate matters for FanDuel’s push because a larger app marketplace would likely bring more advertising, more account sign-ups and more scrutiny of age verification, responsible gambling tools and enforcement. Lawmakers who support competition may still demand stronger guardrails before authorizing additional operators. For opponents, concerns about youth access and problem gambling provide another reason to preserve a narrower system.

Budget stakes are driving the next phase

Rhode Island’s gambling policy has long been shaped by fiscal needs. Gambling remains one of the state budget’s major revenue sources, and lawmakers are reluctant to alter any model that reliably sends money to public accounts. That makes the debate less ideological than practical: Which structure produces more durable revenue with acceptable regulatory risk?

FanDuel and other potential entrants are betting that dissatisfaction with limited choice, combined with visible growth in online casino revenue, will make the case for competition more persuasive. The incumbent side is betting that Rhode Island’s small size and high tax yield will keep lawmakers cautious.

The outcome will likely turn on whether the House is willing to move beyond study and procurement concepts toward a direct market-opening bill. The Senate has shown willingness to revisit exclusivity. The House has been more restrained. Until that changes, Rhode Island will remain a test case for whether a high-tax, limited-operator model can withstand pressure from national betting brands that dominate just beyond its borders.