Council Member Kenyan McDuffie has sponsored the Sports Wagering Amendment Act of 2024 which would allow more than one exclusive provider to service the DC mobile sports betting market.
Seeking Competition
Mobile sports betting in Washington DC has been a disaster since the powers that be decided to reinvent the wheel and create their own sports betting platform, GambetDC, through its lottery provider, Intralot. But not everyone agreed, including Council Member Kenyan McDuffie, who believed the District should have followed the successful blueprint employed by virtually every other domestic sports betting market.
Since mobile sports betting in the U.S. became legal back in 2018, states and jurisdictions passing the law to permit wagering on sports routinely welcome several national online sportsbooks into the fold after a vetting process. Those vetted sportsbooks then partner with local professional sports franchises or venues and pay a hefty licensing fee as well as a designated tax on adjusted gross revenues. From there, the tax coffers begin to swell and that is the blueprint for success in the mobile sports betting market.
New Course of Action
But the Council has seen the error of its ways and has tried to correct it to a certain degree by recently scrapping GambetDC and bringing in FanDuel to run its mobile sports betting app that is tied to the DC lottery, still controlled by Intralot. Currently, retail sites are being run by major sportsbooks like Caesars operating out of the Capital One Arena, BetMGM booking out of Nationals Park, and FanDuel taking wagers at Audi Field. Those sites are allowed to take mobile bets but only within a two-block radius of their respective sports venues.
But McDuffie has sponsored the Sports Wagering Amendment Act of 2024 which would create a new “Type C” license that would be taxed at 30% of adjusted gross gaming revenue (AGR) in addition to a license fee of $2 million for five years and a $1 million renewal charge following that.
However, an immediate conflict of interest comes into play as FanDuel is paying 40% of its AGR to the lottery and would be at a competitive disadvantage unless its rate was also changed to 30% like the new entries into the market. The retail sportsbooks will also frown as their tax would be doubled from 10% to 20% under McDuffie’s bill. However, their mobile app would be permitted to operate throughout the District, which would likely be an agreeable tradeoff.
Major Players Support McDuffie’s Bill
It is not surprising that the major players would support the bill as the District has one sole operator, FanDuel, that can operate its mobile sports betting app uninhibited by any geographic limitations within DC. Nevertheless, some of that support comes with a dose of apprehension.
Caesars retail sportsbook at Capital One Arena has paid over $5 million in taxes to the District since it opened in 2021. Doubling its tax rate could hamper investments into the property and its ability to be competitive, so says Dan Shapiro, Chief Development Officer at Caesars Digital.
“We will support mobile sports betting, but it’s the retail aspect we have serious concerns about. The tax rate should be left at 10% so we can continue to invest in the District,” he said.
Robert O’Connor, VP, of Government & Industry Affairs for BetMGM, said allowing mobile betting is critical. “It increases our ability to connect with our customers when they’re not in or around the ballpark,” he stated.
Losing Revenue
Fanatics Betting & Gaming’s Brandt Iden testified that his data reveals that 10% of their Virginia customers have attempted log-ins within DC’s borders while a whopping 65% of Fanatics’ Maryland customers have also tried. Iden also warned against illegal sites that are capturing those customers who cannot bet with anyone other than FanDuel through the DC Lottery.
“Consumers are either traveling to the surrounding states to wager or, worse yet, placing wagers in the illegal offshore market, where there are no responsible gaming protocols to protect customers,” Iden stated.
