Analysis: Past-Due DC Sports Betting Audit Likely To Show GambetDC Failures

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DC sports betting

The rollout of DC sports betting has been less than perfect since Intralot’s contract was steamrolled through DC Council more than two years ago.

It is only fitting, then, that a deep dive into the market’s performance is delayed because the office in charge of the audit did not know it had to do it.

The Office of the District Columbia Auditor missed a requirement that called for a fresh look at the market two years after the sports betting law went into effect:

“Twenty-four months after the effective date of this title, the Office of the District of Columbia Auditor shall prepare a study evaluating the performance of the sports wagering instituted by this title to determine the level of District revenue generated by mobile and online gaming compared to other similarly situated jurisdictions and submit the completed study to the Mayor and Council.”

The audit on sports betting in DC was due May 3. Now it might not be seen until the end of June, according to DC Auditor Kathy Patterson.

No mobile monopoly required for DC sports betting

Perhaps the most frustrating part of sports betting in DC is there is no legal requirement to give Intralot a District-wide mobile monopoly:

“The Office may offer a mobile or on-line sports wagering product, either by taxing mobile and on-line licensed retailers at a rate of 20%, without limit to the number of licenses issued, or through contract with a limited number of partners operating an Office of Lottery and Gaming mobile and web-based sports wagering operation, whichever can be shown to return the most revenue to the District.”

That means depending on what the audit shows, there could be a refresh upcoming for the DC market. The first year of GambetDC has not exactly gone to plan with missed and lowered forecasts.

Not many additional details about audit

Other than the hopeful end date of June, Patterson did not have much else to share about the process.

“We’ve selected the other jurisdictions to review and are in the process of interviewing as well as getting all the relevant data from the lottery,” she told LSR.

DC Councilmember Kenyan McDuffie, chair of the Committee on Business and Economic Development that held March’s sports betting hearing, has not responded to requests for comment.

GambetDC has woefully underperformed

Patterson did not mention what other jurisdictions would be compared to DC, but it might not really matter. The most telling story is how GambetDC has compared to its only in-District competitor, William Hill.

William Hill, which launched with a temporary sportsbook at Capital One Arena in July and added mobile in January, is the clear sportsbook of preference in the District. That’s even with the mobile app only available within a two-block radius of the arena.

Total DC handle since launch through April is $137.6 million, of which $102.9 million came from William Hill. Sports betting revenue is $21.6 million, $15.4 million of which is from William Hill. That means the sportsbook limited to in-person betting and a geofenced app had 74.8% of handle and 71.3% of revenue.

Total benefit to Washington DC so far is a bit unclear. William Hill has paid $1.5 million in taxes, whereas GambetDC works under a revenue-share model. The DC Lottery said about 50% of gross gaming revenue is profit for the Lottery. It did not work out that way in fiscal 2020.

Of GambetDC’s $956,062 in revenue from launch through Sept. 30, only $352,000 was transferred to the lottery.

DC likely would have benefitted from open model

While it is impossible to say for certain, it seems DC sports betting would have been much better off with an open mobile model. That might be true even if William Hill was the only operator.

William Hill’s paid taxes would have doubled to $3.1 million. That is not including the additional action it would have taken without GambetDC in the market.

Even if GambetDC got 50% of the revenue from launch through April, it would only be $3.1 million.

William Hill likely would not have been the only sportsbook, though. Operators like BetMGM and FanDuel Sportsbook have DC sports betting partnerships even with limited operations. BetMGM’s approval is pending a completed application. FanDuel has not yet started the process.

The Lottery’s platform also could have been more successful with better odds. The Lottery told LSR GambetDC is not designed to pay out like a “casino-style sportsbook” or “attract high-stakes bettors.”

DC sports betting continues to get new competition

It is only going to become harder to get betting dollars from commuters from here on out.

Sports betting in Maryland was formally legalized when Gov. Larry Hogan signed the bill into law Tuesday. That means DC is surrounded by legal sports betting states after VA sports betting launched in January.

There are already 10 Virginia online sportsbooks licensed, with up to five more on the way. Maryland, meanwhile, could have 60 mobile operators.

That means both states will likely feature sportsbooks with sign-up bonuses and promos not available in DC because there is hardly any competition.

In other words, DC needs to find a way to its sports betting market worth staying in the District for.