Two major players in the sports betting arena, BetMGM and Caesars Sportsbook, are gearing up to strengthen their presence in Washington, DC. However, their expansion plans experienced a hiccup due to the delayed approval of a crucial budget bill. The budget, scheduled to take effect on July 15, remains unsigned by Mayor Muriel Bowser.
The delay in the budget approval has already had tangible consequences. BetMGM had to cancel its much-anticipated celebration at Nationals Park, disappointing many local sports betting enthusiasts. Despite this setback, FanDuel continues to be the sole platform available in DC for now, operating in tandem with the DC Lottery.
A Complicated Legislation Landscape
The budget's final approval came from the DC Council on June 25, paving the way for its planned implementation less than a month later. The situation harks back to prior legislative decisions in January 2019, when the DC Council opted for a single-provider digital market without a competitive bidding process. This resulted in the expansion of the lottery vendor Intralot's contract to encompass sports wagering, specifically through its GamBetDC platform.
Unfortunately, GamBetDC faced harsh criticism right from the start. Limited betting markets and recurring technical issues plagued the service, leading to its eventual downfall. GamBetDC’s inability to meet revenue expectations was a significant factor in the lottery’s decision to shut it down and partner with FanDuel instead. The numbers speak for themselves: FanDuel’s handle surged by 450% in the first month compared to GamBetDC's performance, generating $4.9 million in revenue in May 2023. In contrast, GamBetDC reported a meager $711,282 in revenue for the same period.
The Changing Dynamics of Sports Betting in DC
With Intralot's contract ending on July 15, a new law has been introduced, paving the way for Type C licenses. These licenses are valid for five years and come with significant costs—$2 million upfront plus a $1 million annual renewal fee. On top of this, licensees are subjected to a hefty 30% tax rate.
Interestingly, the new law allows operators to partner with franchises rather than being limited to venues alone. This shift has already been leveraged by FanDuel through its alignment with Audi Field. By marketing themselves as Audi Field’s partner, FanDuel benefits from a lower tax rate of 20%, distinguishing them from other operators who continue to pay higher rates.
The Competitive Landscape
BetMGM and Caesars Sportsbook currently hold Class A licenses, which permit them to offer digital platforms within a two-block exclusion zone around their respective venues—Nationals Park and Capital One Arena. While Caesars began its operation at Capital One Arena in July 2020, BetMGM joined the fray at Nationals Park in June 2021. FanDuel, not to be outdone, launched its retail presence at Audi Field in July 2022.
Despite these advances, the sports betting scenario in DC remains in a state of flux due to the pending approval of the budget bill by Mayor Bowser. This legislative bottleneck has tangible implications not just for the operators but also for the city's revenues. Notably, the city takes a 40% cut from lottery-backed wagering partners, a significant source of income that could be impacted by delays and operational disruptions.
As the situation stands, Washington, DC finds itself at a crossroads. The successful implementation of the new budget and the subsequent expansion of sports betting platforms could bring renewed vigor to the city's betting landscape. Until then, all eyes will be on Mayor Bowser to see when—and if—she signs the crucial budget bill, setting into motion a new era for sports betting in the nation's capital.