D.C. Seeks Answers On Underperforming Sports-Betting Business

July 8, 2022
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Council members in Washington, D.C. will hold a hearing next week on the district’s struggling sports-betting program after significant underperformance compared with initial expectations.

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Council members in Washington, D.C. will hold a hearing next week on the district’s struggling sports-betting program after significant underperformance compared with initial expectations.

The D.C. Council’s Committee on Business and Economic Development has scheduled a “public oversight roundtable” on the district’s sports-betting program for Wednesday (July 13).

The 2018 law that permitted sports betting in D.C. effectively gave exclusivity for district-wide mobile wagering to the D.C. Lottery, and the council later approved a contract with Intralot to provide sports wagering in addition to its primary lottery system.

Private operators are allowed to partner with stadiums and arenas in the district to offer on-site wagering and mobile betting within two blocks of the facility, while other retail and hospitality businesses in the district are allowed to obtain licensure to offer in-person betting as well.

The lottery-centric plan was pushed heavily by the district’s then chief financial officer Jeffrey Dewitt, who initially projected that the lottery program would result in $92m in transfers to the district through the end of fiscal year 2022, with a quick launch being a key selling point of the lottery plan compared with a delayed rollout that would result from an extensive private licensing process.

Instead, according to projections the lottery submitted earlier this year, the transfer from the GambetDC program to the district through the end of fiscal year 2022 is expected to be about $1.8m.

In addition, although most U.S. jurisdictions that offer mobile wagering see about 90 percent of betting handle come through mobile, in Washington D.C. privately operated retail sports betting outperforms the lottery's mobile offering, with one retail location, the Caesars Sportsbook at Capital One Arena, seeing more handle and revenue than the online lottery product in total.

On Friday (July 8), Audi Field, home to D.C. United of Major League Soccer (MLS), will become the third sports stadium in the district to offer retail wagering when FanDuel opens its first sportsbook at an MLS stadium.

Fans can also wager at a BetMGM sportsbook at Nationals Stadium, which opened earlier this year.

The only other jurisdiction that offers mobile wagering where retail outperforms is Nevada, which boasts almost 200 retail locations.

Last year, the D.C. Auditor released a report titled “D.C. Sports Gambling Fails to Meet Expectations” that suggested several changes, including potentially licensing additional privately operated sportsbooks, as well as increasing payouts to bettors, the latter of which the lottery did earlier this year, increasing its payout cap from 80 percent to 90 percent.

“The committee is holding this oversight hearing to determine whether those changes have been implemented and learn what other changes could be made to enhance performance of the District's sports wagering program, grow revenue, and compete with sports wagering programs in neighboring Maryland and Virginia,” the notice reads.

Although Virginia has now had a competitive mobile market for more than a year and a half, Maryland continues to slowly inch its way towards its own mobile betting program, with regulators continuing to discuss potential regulations and an application process despite pressure from the state’s governor to move faster.

Regulators in neighboring Maryland also warned stakeholders this week about a fraud attempt targeting sports wagering applicants.

Jim Nielsen, deputy director and COO of Maryland Lottery and Gaming, said in an email to stakeholders on Tuesday (July 5) that a sports wagering applicant had received emails and phone calls from an individual falsely claiming to be a state employee involved in sports wagering licensing.

The emails, Nielsen said, “attempted to convince the applicant that she was ‘an insider’ who could assist the applicant in obtaining a license,” with one of the messages, which were from a Gmail address, asking for a $20,000 payment for the assistance.

“Please be assured that any State of Maryland employee who attempts to contact you regarding sports wagering will do so from an email address ending in Maryland.gov or from a 'State of Maryland' phone number,” Nielsen said.

“They will never ask you to send money directly to them, and they will not ‘guarantee’ you a license in exchange for money,” Nielsen said.

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