A rendering of the proposed XL Center sportsbook lounge included in a 2022 presentation by SCI Architects.

Operators of the XL Center testified Thursday that a long-delayed construction of a sportsbook at the facility had been further complicated by the looming departure of Rush Street Interactive from a partnership with the CT Lottery. 

Officials from the Capital Region Development Authority, a quasi public agency that operates properties including the XL Center and Rentschler Field, appeared before the legislature’s Appropriations Committee to explain a $2.25 million item in the governor’s budget proposal meant to offset operating losses at those venues.

Those losses and the need for continued state support led to questions from lawmakers about a planned sports betting facility at the XL Center, which was delayed last year when supply chain disruptions made construction materials hard to acquire.

On Thursday, Anthony Lazzaro, the CRDA’s general counsel, said the project became more complicated in the last several weeks.

“We were thrown a curveball when Rush Street pulled out,” Lazzaro said. “We were very close to a [memorandum of understanding] with Lottery on operating at the XL Center, which would start as soon as we finish construction … The curveball being, the company that was going to be managing that on behalf of Lottery has pulled out.”

Rush Street Interactive was one of three online betting companies to partner with entities in Connecticut in 2021 when the state legalized sports betting and online gambling after reaching an agreement with the federally recognized Mashantucket Pequot and Mohegan tribes.

Rush Street partnered with the Connecticut Lottery Corporation in a 10-year agreement to operate online betting through its platform PlaySugarHouse.com as well as retail sports betting operations. Hartford’s XL Center was expected to be one of those retail sportsbooks. 

Late last month, Rush Street and the Lottery Corporation issued a joint press release announcing a decision to “wind down” their agreement. The company plans to continue operating the lottery’s betting operations both in-person and online until a suitable replacement is chosen. 

The release included a long statement from Rush Street Interactive CEO Richard Schwartz who said RSI would continue to support all player wagers until an eventual changeover later this year. 

“Consistent with our long-term strategic goals, after much deliberation and discussions with the CLC, we believe it is in the best interest of RSI and our stockholders to wind down this partnership,” Schwartz said. 

Gregory Smith, president of the Lottery Corporation, briefly thanked RFI for “working closely with CLC to establish the foundation for CLC’s sports betting operation, both online and in retail.”

On Monday, the Lottery Corporation posted a solicitation for proposals from companies seeking to replace RSI. The document estimates that the XL Center’s sportsbook will be completed by this fall. 

Lazzaro told lawmakers that the Capital Region Development Authority hoped the facility would be ready to take bets on Sept. 1. He said that standing up the betting facility at the arena had required major renovations in order to create a space for the sportsbook. 

Sen. Cathy Osten, a Sprague Democrat who co-chairs the Appropriations Committee, questioned why the coming sports betting facility had not mitigated some of the CRDA’s expected losses in the next two years. 

Lazzaro said revenues were made harder to predict due to Rush Street’s departure.

“At this point it’s just so hard to speculate that number, especially since now there’s a new company coming in and we don’t even know what that business deal is going to look like,” Lazzaro said. “For us to try to project two years — even a year from now — would be very difficult. We’ve been trying to be very conservative.”

Osten said they weren’t alone.

“We’re going to try to be very conservative with the money we spend on CRDA and ask you to push Connecticut Lottery to make sure that this happens because it’s been two years,” she said. “We approved that bill two years ago.”

“I know that the people in Hartford would appreciate having that sportsbook environment opened up. I recognize it’s not all on CRDA but I recognize also that it is something that we would like to see happen,” she said. “We don’t want to keep putting money that we could put in other programs into an environment that we think should be, at a minimum, at a break-even point.”