Revenue from legalized sports betting in DC provides more bust than boom

Revenue from legalized sports betting in DC has not lived up to expectations, in part because players do not have many options when it comes to placing those bets, according to a Sept. 9 report from the Office of the District of Columbia Auditor.

Revenue from legalized sports betting in DC has not lived up to expectations, in part because players do not have many options when it comes to placing those bets, according to a Sept. 9 report from the Office of the District of Columbia Auditor (ODCA).

The ODCA found that sports betting in DC is largely limited to the city’s GambetDC mobile app. At the time of the review, the only physical place to place bets was the privately owned William Hill Sportsbook at Capital One Arena, though bettors can also place bets within two blocks of the arena through the William Hill mobile app.

After sports betting was legalized in May 2019, city officials predicted a tax cut of tens of thousands of millions of dollars.

But between May 2020 and March 2021, when ODCA conducted its audit, the GambetDC app generated just over $ 440,000 in sports revenue for the city. Meanwhile, the William Hill Sportsbook brought the city $ 1.38 million in tax revenue despite only being present in one place.

The most important take-away, according to the ODCA, is that the district should build more physical sports betting sites to increase revenue.

GambetDC is operated by the Office of Lottery and Gaming (OLG), which is both the regulator and the sole operator of sports betting in DC

In its regulatory role, OLG grants licenses to private sports betting operators. Until recently, William Hill was the only licensed operator in the city. The audit recommends that OLG grant additional licenses while expanding its own retail presence beyond the digital realm, which “would likely increase revenue and benefit the city.”

The ODCA also blamed the pandemic for the disappointing revenue, which not only canceled major sporting events but also deprived the city of commuters and tourists.

“This in turn reduced the number of potential better ones, as bets can only be placed via GambetDC within the district’s boundaries,” the report said.

In its response to the report, OLG also blamed the pandemic for its poor performance, but said it has implemented “significant improvements to the sports betting landscape”, many of which are in line with the report’s recommendations.

It includes creating a stronger retail presence, which OLG said was always the plan, but was put on the sidelines by pandemic-related health restrictions.

In July 2021, OLG launched self-service kiosks that allow sports bettors to play at small businesses such as Ben’s Next Door, Lou’s City Bar, Takoma Station Tavern and Dirty Water, with plans to expand the kiosks to other businesses.

OLG also said it provides additional licenses to privately run operators, including BetMGM, which now operates around Nationals Park. FanDuel also has a pending application to open a sportsbook at Audi Field.

However, OLG argues that it does not make economic sense to issue too many licenses because the cost of regulating private sportsbooks exceeds the licensing fees that the agency receives from these sportsbooks. The district collects 10% of the gross gaming revenue from private operators, even though the money goes directly to the city, not to OLG.

The agency said it has raised just over $ 2 million in license fees since 2020 – but has spent about $ 3.6 million on regulating the industry.

OLG said it uses the revenue from GambetDC to compensate for the shortfall, which is why the city’s payout is much smaller than what many had expected. During the audit period, GambetDC generated $ 5.5 million in “gross gaming revenue” (the money left over after payouts to winners), but only $ 440,000 of that eventually went to the city.

OLG has also come under fire for its event with Intralot, the company that won a no-bid contract in 2019 to be the sole provider of the city’s GambetDC app.

During the event, Intralot receives 42.5% of GambetDC’s gross gaming revenue. It’s actually less than what Intralot gets from other states it works with, including New Hampshire and Rhode Island, but the district also pays Intralot “other direct operating costs” such as marketing and advertising.

The audit suggests that OLG renegotiate these terms so that it does not have to pay these costs; OLG said it is reviewing the contract.

The agency has also been criticized for not aggressively encouraging betting to lure players and for various technical flaws with its app, which rates a dismal 1.6 out of 5 stars in Apple’s app store.

OLG said it is taking steps to improve its app and adding features like:

  • FaceID login;
  • Daily campaigns that encourage play;
  • The ability to find a GambetDC reseller location without leaving the app;
  • Inclusion in the Google Play Store;
  • Renewal of GambetDC’s user interface and user experience for easier and faster player navigation;
  • Improving betting opportunities, such as the introduction of teasers and richer bets;
  • Make the logo and images more reflective of a sportsbook.

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