Rhode Island Senate Advances Bill to Expand Online Sports Betting to Six Operators With Tiered Tax and Revenue Guarantees
The Rhode Island Senate approved legislation late Thursday night that would significantly expand the state’s online sports betting market. Sen. Frank A. Ciccone (D-7) sponsored SB 3118A, which passed by a 29-6 margin. The bill sets a licensing framework for a minimum of four and a maximum of six online operators and now heads to the Rhode Island House of Representatives.
This move comes after a similar expansion effort failed in 2025. It also introduces novel tax cliff mechanics and revenue guarantees that could reshape operator incentives in a small but tightly controlled market.
No Floor Debate on a Major Market Shift
Despite the bill’s potential to more than triple the number of licensed online operators, the Rhode Island Senate passed SB 3118A without any discussion on the floor. The legislation directs the Rhode Island Lottery to begin accepting applications for new operators no later than Jan. 1, 2027.
Currently only two operators hold online sports betting licenses in the state. The IGT-led Sportsbook RI remains the sole live online platform, operating on behalf of the Rhode Island Lottery. Bally’s will launch Bally Bet later this year.
The request for proposals will prioritize applicants demonstrating technical capability to ensure platform integrity and responsible gaming, a strong regulatory compliance history, a strong history of sports betting operation in other states, and commitment to maximizing state revenue and minimizing harm. The Rhode Island Lottery will continue to oversee all sports betting and iGaming regulations.
This lack of debate raises questions about how thoroughly lawmakers weighed the competitive and operational implications before advancing the measure.
Tiered Tax Structure Creates a Revenue Cliff
Licensed operators currently pay a 51% tax rate on all online sports betting revenues. Under the new legislation, operators would continue paying the 51% rate until the state receives the amount of revenue generated by sports betting and online sports betting in fiscal year 2025. Once that mark is met, the tax rate drops to 12% for the rest of the year.
If revenues fall short of the fiscal year 2025 total, each sports betting operator will make an equal additional payment to the state to close the deficit for that year. For each licensed operator, the bill increases its revenue share from 32% to 40.5% in a fiscal year until the state receives the amount of revenue generated by fiscal year 2025. Once that mark is reached, operators receive 79.5% of revenues for the rest of the year.
These mechanics create an unusual set of incentives. Operators have a collective interest in hitting the fiscal year 2025 revenue threshold quickly to unlock the lower tax rate and higher retained share. Yet the equal-deficit payment provision means underperformance imposes uniform penalties regardless of individual market share.
From my perspective after decades observing gaming regulation, such structures can align short-term behavior with state revenue goals while introducing volatility once the cliff is cleared. Operators may accelerate promotional spending early in the fiscal year to push handle through the threshold, then recalibrate for margin protection later.
Host Facility Revenue Adjustments and Bally’s Exposure
The bill reduces host facility revenue share from 17% to 8.5% for the fiscal year. Host facilities, which are the land-based casinos in the state both owned by Bally’s, shall receive no less than $4.5 million in sports betting revenues for the year.
This guaranteed floor provides Bally’s with a defined baseline even as its percentage share declines. However, the reduction could pressure overall economics if the expanded operator field fragments retail-driven traffic that currently flows through Bally’s properties.
The provision reflects a deliberate rebalancing. The state appears willing to protect a minimum return to its host facilities while directing more of the upside toward operators once baseline revenue targets are satisfied.
Lessons From the Failed 2025 Expansion Attempt
The Rhode Island Senate last year approved a bill from Ciccone to expand the state’s online sports betting from one operator to a potential maximum of five. The Senate passed SB 748 in June 2025 by a 30-3 vote.
Lawmakers then approved an amendment setting the total number of online sports betting operators at no more than five but no less than three. That amendment also disallowed the state to renew its sports betting contract with IGT after Jan. 31, 2026. The original bill had set the renewal deadline at July 1, 2026.
The 2025 measure never received a committee hearing in the House and died when the legislative session ended on Saturday, June 21. The current bill avoids the earlier contract-renewal language, which may improve its prospects in the House.
A section on risk deserves attention here. The absence of floor debate and the reliance on revenue guarantees introduce uncertainty. If the fiscal year 2025 benchmark proves overly ambitious, the equal additional payment requirement could strain smaller operators. Conversely, if the market expands faster than projected, the state might collect less than anticipated once the 12% rate applies.
Bally’s dual role as both host facility and soon-to-be second online operator adds another layer. Its guaranteed $4.5 million minimum mitigates some downside, yet the reduced share could still affect property-level profitability if online cannibalization accelerates.
The Bottom Line
Rhode Island’s latest expansion bill signals a pragmatic attempt to broaden the online sports betting market while safeguarding baseline state revenues through innovative tax cliff and guarantee mechanics. By setting a clear fiscal year 2025 threshold before rates drop and shares adjust, lawmakers have created incentives that could drive aggressive early-year performance from new entrants. Whether the House advances the measure remains to be seen, but the contrast with last year’s failed effort suggests growing recognition that limited competition has constrained both consumer choice and state upside. Operators and suppliers evaluating Rhode Island should model scenarios around that revenue cliff closely. The structure may prove an inflection point for how smaller jurisdictions balance expansion with fiscal certainty.
