Some operators and major US sports leagues apparently are working together to get a law passed to legalize sports betting in Washington, D.C.
At least three sports betting operators — MGM, DraftKings and FanDuel — are actively working with the NBA, Major League Baseball and the PGA Tour to pass a bill all of the parties involved could live with.
The sports betting alliance at a glance
The alliance was first reported by The Washington City Paper and included a one-pager circulating around the DC Council, which recently advanced a piece of sports betting legislation. Monumental Sports & Entertainment (the owner of the Washington Wizards and Capitals) and the Washington Nationals also were listed as supporters of that document.
DraftKings, for its part, confirmed with Legal Sports Report that it is aligned with the policies on that document, which can be viewed at The City Paper’s site.
That document included a list of “essential components” that all of the alliance members could live with. Among those components were items that most sports betting operators have dismissed as unnecessary, including a requirement by operators “to use official league data to settle bets.”
The league-operator alliance also supports a “small fee” equal to 0.25 percent of all money wagered on sports in DC. The fee is not termed either a “royalty” or an “integrity fee,” two monikers that fee has gone by in lobbying around the country in 2018. It now is being called a “license fee.”
The DC bill being considered originally had such a fee in it before it was stripped in a vote last week.
MGM CEO Jim Murren just a few days ago said that he was “offended” by the need for his company to pay any integrity fee.
A ‘massive benefit’
The alliance also argue this, from the lobbying document:
Giving sports organizations a direct financial interest in the new betting market will create a massive benefit to the District and the D.C. business, as it will form a strong partnership among local government, betting operators, and the sports leagues, as the leagues — with their unparalleled sports fan reach and exclusive access to content — will be incentivized to support the District’s sports betting market and drive its success.
This seems to be a new tack from the leagues, who have in the past said they deserve to be paid a fee for merely existing.
The sports leagues, of course, should already be incentivized to support a regulated market, as legal operators are attempting to compete with illegal and offshore sports betting operators. The leagues have been on record as saying moving customers from offshore books to legal ones is one of their policy goals when it comes to sports gambling.
Trying to stop a DC sports betting monopoly
Why did the leagues and some sports betting operators team up?
The two often opposed groups appear to believe it is necessary to stop what could be a monopoly for the DC Lottery in handling sports wagering.
The lottery, in legislation, as written, has two paths it could go down: an open marketplace for licensing sports betting operators, or a single vendor under the umbrella of the lottery.
In the latter scenario, the lottery, via its provider INTRALOT, would offer sports wagering through a single source throughout the District, both for land-based and mobile betting.
That company, sources tell LSR, has argued to DC and lottery officials that an exclusive contract would create more revenue than the open model.
The alliance argues that the DC Lottery “should not be the exclusive operator of mobile sports betting” arguing for a competitive market.
Gaming analysts like Eilers & Krejcik have agreed, advancing the idea that a more open sports betting market would create more revenue for DC (and in other states).
But exclusivity zones…
There is an interesting and new ask in the lobbying document, as the leagues and companies want “exclusivity zones for professional sports facilities” in DC:
“Create a 5-block zone around each of the sports facilities where no retail establishment, either through the lottery or a private operator, may operate a sports book without the express approval from the owner or lessee of the facility.”
That’s an interesting wrinkle as teams and leagues have gotten more aggressive in what they are seeking out of sports betting regulation.
Ramifications for elsewhere?
The alliance appears to be borne of a fear of the “monopoly” model being advanced in DC could be used in other states where lottery exists.
That, of course, would be a doomsday scenario for a number of sports betting operators who have designs on offering their products in other states. DraftKings Sportsbook and FanDuel Sportsbook are both providing mobile wagering in New Jersey, with deals in place to do so in other states as well.
If sports betting becomes the domain of lotteries in the US, that will significantly impact operators who would then be vying for a single contract. (We’ve already seen that in how sports betting has been implemented in Rhode Island and Delaware.) It would also limit the amount of money the leagues could see from any of its desired fees, and it’s possible/likely that lotteries would not support these at all.
In any event, the leagues and at least some sports betting operators apparently fear this could happen.
Who’s not in the alliance?
While the alliance is significant in that it combines sports leagues, teams and gaming operators, it’s certainly far from all-inclusive.
The NFL and NHL are not involved, from the side of the sports world. And MGM, DraftKings and FanDuel represent only a part of the sports betting industry, albeit a substantial one in the early days in the US. A variety of national and regional casino operators, as well as actual sports betting companies, are not signed onto this effort.
It also remains to be seen if this alliance is ported over to lobbying in other jurisdictions. But it’s certainly an amazing development that some gaming and league interests are aligned enough to work together publicly.