DC Council Vote Keeps Sports-Betting Plan Intact

June 13, 2024
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The DC Council rejected an effort on Thursday to separate sports-betting language from a pending budget bill, increasing the likelihood of an overhaul to the district’s regulatory model.
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The DC Council rejected an effort on Wednesday (June 12) to separate sports-betting language from a pending budget bill, increasing the likelihood of an overhaul to the district’s regulatory model.

At a meeting of the full council, members voted 9-4 against a proposed amendment that would remove language to create a competitive mobile sports-betting market from the “Fiscal Year 2025 Budget Support Act of 2024”.

Opponents of the language pushed that the concept was being rushed through in the budget rather than considered as standalone legislation, and that the district’s chief financial officer projected that continuing with FanDuel as the sole district-wide mobile operator with DC keeping a 40 percent share would be more profitable than the proposed multi-operator model with a 20 to 30 percent tax rate.

Councilmember Kenyan McDuffie, who introduced the sports-betting legislation, and others pushed back on the idea that the plan was being rushed, arguing that the issue had been analyzed in multiple oversight committees in recent years.

He also added that the move was being done to protect professional sports teams, who testified that the status quo risked the closure of retail sportsbooks at their stadiums and arenas.

“Our professional sports teams came to us and my team and the committee over the course of our oversight and asked that the timeline be sped up,” McDuffie said.

“I don't want to risk businesses closing or losing jobs ... and that's a real threat that we're facing with delays.”

“Part of what people are saying is, if FanDuel can have a monopoly for a long enough time, then it makes competition that much more difficult to get started,” added councilmember Matthew Frumin. 

“And the fall also coincides with the football season, which is one of the big times when these kinds of apps are used, and so either we do it as fast as this, or we delay, in which case, we're a market actor in another kind of way, in giving FanDuel a major advantage.”

Flutter-owned FanDuel began operating mobile sports betting in the district in April after subcontracting with the DC Lottery’s vendor Intralot to replace the ill-fated GambetDC app with its own platform. 

The budget proposal would grant existing licensed professional sports facilities the right to offer district-wide mobile betting, and create new licenses for operators to obtain that would permit them to partner with a district professional sports franchise to offer mobile sports wagering.

The subcontract with FanDuel has not yet been made public, and McDuffie said Wednesday that the DC Lottery has yet to make it available even to council members. 

However, FanDuel president Christian Genetski wrote in a letter last week to DC Council chairman Phil Mendelson that the contract guarantees at least $5m to the District of Columbia government by July 15, and then guarantees $10m in each fiscal year of a potential extension to the district’s lottery contract with Intralot.

The lottery contract is set to expire on July 15, and the DC Office of Lottery and Gaming (OLG) has asked the council to approve a two-year extension with Intralot while it prepares a request for proposals to bid on the next contract. 

In addition, under the subcontract, FanDuel absorbs marketing and other operational costs previously absorbed by the DC Lottery and provides retail kiosks in businesses throughout the district.

If the new plan were to be approved, Genetski said, the company would exercise its right to terminate the subcontract and would transition its operations to its partnership with Audi Field, which would allow the company to pay a license fee and a 20 percent tax rate with no minimum guarantee, as well as no longer supporting the kiosk program.

“Any district-wide sportsbook operations by OLG would no longer have participation from FanDuel,” Genetski wrote in the letter, which was obtained by the Washington City Paper. 

“In total, the sports wagering [plan] contemplated … would allow multiple operators to offer citywide mobile sports wagering at either half or three-quarters of the revenue share currently provided by FanDuel under the OLG contract without (i) minimum revenue guarantees or (ii) an obligation to furnish and service retailers with kiosk machines.”

Still, the majority of the council backed the sports wagering language within the budget plan, calling for a competitive market five years after first enacting legislation that granted the existing monopoly to the DC Lottery.

“This is my third or fourth time around with the issue of the lottery, lottery contract, sports betting, the sports betting arrangement, and what I have seen each time is that parties on each side emphasize, I'd even say, overemphasize, how their position is far more profitable to the district, and that the other side of the argument is far less profitable,” said Mendelson during a press conference earlier this week.

Mendelson was a strong supporter of the initial plan to grant the sports wagering monopoly to Intralot in 2019 without a competitive bidding process, but has changed his tune in supporting the pivot to a competitive market.

“As a general matter, an open market competition is better than a monopoly, and that's a reason to support this,” said Mendelson.

Others such as councilmember Charles Allen, who were opposed to the existing sole-source plan in the first place, were supportive of a more open market.

“I think that where we stand now is that we've got an operator, FanDuel, who's come in and been able to immediately show success, and that's good news,” Allen said. “But I do think that it would be better for this to be an open and fair competition, and so I think that's really important.”

One of the biggest concerns regarding the bill came from small businesses with sports wagering kiosks and McDuffie said he expects to have an amendment that will be presented at a future meeting to address those concerns.

Mendelson said he expects the full bill to be considered at a June 18 meeting if completed, and if the bill is not yet ready for a vote, it would be considered the following week at a June 25 meeting.

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