DC Council and Lottery at odds over how to fix sports betting

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During a contentious meeting last week the D.C. City Council and the Office of Lottery and Gaming (OLG) butted heads and were at odds regarding the future of sports betting in the district.

D.C. Council Committee on Business and Economic Development (CBED) Chair Kenyan McDuffie summed up the DC sports betting situation well in his opening remarks.

“I’ve heard from many residents about their unease with the district’s woeful performance on sports betting. And I absolutely share those same sentiments, from issues around usability, customer service, and seriously declining revenue. We know the current model simply is not working,” he began.

“Frankly, I’m frustrated. This roundtable feels like, to steal a line from Yogi Berra, deja vu all over again.”

D.C. Lottery did not expect such a negative reaction to -120 pricing

OLG Executive Director Frank Suarez spoke at length at the meeting and agreed that the district’s partnership with provider Intralot has not met expectations. He also acknowledged that, while the decision came before his tenure, the lottery miscalculated the ability to successfully offer bad pricing and -120 lines to bettors.

“My understanding is that they believed they were going to have casual betters primarily that didn’t worry so much of what about what the payout was. That’s why they launched with an 80% payout. That didn’t happen,” he admitted.

He also suggested though that the projections the GambetDC sportsbook is being held to were out of whack. Crafted in 2018, Suarez said that the industry was simply too new to understand exactly what the expectations should be. However, as analyst and investor Chris Grove pointed out on Twitter, even in 2018 the district was warned about the perils of a lottery-run model.

Nonetheless, Suarez trumpeted the improvements to GambetDC’s revenues over the past two years as well as how a new version of the app rolled out in November had brought the app store review ratings up to an average of 3.6 out of 5 (by comparison, most other operators average above 4.5).

Intralot wants to bring major brand in as a subcontractor

He explained the next step would be to continue the lottery’s contractual relationship with Intralot but to bring in a subcontractor in the form of a commercial operator. Suarez did not name exactly which name brand the group had been speaking in but did speak highly of its performance.

Yet, when McDuffie asked what kind of vetting went into this process, Suarez was light on details and generally just expressed hope this was the best path forward. McDuffie thought otherwise.

“To borrow a phrase from the Co-Chair of the Mayor’s Task Force…Hope is not a plan. Hope is not a strategy. And I don’t have any real confidence in what you hope for at this point.”

Lottery’s contract with Intralot up in July

McDuffie rightfully questioned the need to keep Intralot in the fold given the initial contract between the vendor and the lottery is up in July. Suarez pointed out that, if there are concerns with Intralot, the proposed arrangement would continue to pay the contractor but in reality, “there’s not much for Intralot to be doing.”

Suarez said if the lottery were to open up the contract to new proposals, that is a process that could take a year. He preferred the subcontractor option because he claims it can be implemented in time for March Madness.

Suarez and others testifying from within the district argued that it is vitally important to keep the opportunity for small businesses to partake in the retail sports betting side of things, hence why the lottery is reticent to fully open the online marketplace.

“We have 64 across the district. Those are small businesses that are able to have a way to be part of sports wagering, which is very unique to DC.”

The CBED also heard from national brands about the economic benefits of opening up the market. Caesars though argued that the current set-up, which allows for the brand to have a retail sportsbook at Capital One Arena and limited online betting options in the area around the venue, was preferable for them.

There were no firm decisions as a result of the meeting but the takeaway is clear: everyone agrees what has been done isn’t working and some change is coming in the near future.