DC Council votes to open up sports betting market

DC council votes to open up sports betting market
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At a D.C. Council meeting on Wednesday, members voted to retain an amendment in the budget that would allow the district to open its online sports betting market up to multiple operators.

Zachary Parker’s amendment to scratch fellow council member Kenyan McDuffie’s sports betting language from the budget was defeated by a 9-4 vote. The budget will have another reading next week but that is largely a formality.

It means that FanDuel’s brief but profitable monopoly on D.C. online sports betting looks to be ending.

FanDuel is currently the only online sportsbook operational in D.C. through a partnership with the D.C. Lottery. The Flutter-owned brand subcontracts that right from the Lottery’s contracted operator, Intralot.

Other sportsbooks want the market opened up. BetMGM, CaesarsDraftKings, and Fanatics Sportsbook had all spoken in support of McDuffie’s proposed Sports Wagering Amendment Act, which would allow the D.C. online wagering market to open up starting July 15.

Some lawmakers argue sportsbooks needed standalone bill

A version of act will remain part of the budget after Wednesday’s meeting, despite Parker arguing that the measure should be a standalone bill and not part of the budget. That was supported by members including Brianne K. Nadeau, who suggested it was unfair that council either had to support a “controversial and complicated” sports betting piece or vote against the entire budget.

Council Chairman Phil Mendelson rebutted that, since this is a revenue issue, the budget is a valid home for the bill.

The likes of Matthew Frumin and Charles Allen argued in favor of opening up the market, stressing that open and fair competition is key, “not for us as tax collectors [but] for protection and advancing the interests of consumers.” Frumin also stressed that the current monopoly system endangers D.C. to losing sports bettors’ business to nearby states that have an open market and better consumer choice.

McDuffie noted that Intralot has applied for a two-year extension to its contract with the lottery, which is due to expire this year. He noted this would mean prospective competitors would be “locked out” unless the bill passes.

“Any delays are effectively going to continue the sole-source monopoly and be to the detriment of existing class A [operators] who have a retail operation.”

BetMGM operates a retail sportsbook at Nationals Park and Caesars has a physical presence at Capital One Arena, home of the Capitals and the Wizards. While FanDuel has a legal monopoly on D.C. online betting, those two rivals hold the right to offer geofenced mobile betting within a two-block radius of their respective retail locations.

FanDuel exceeded expectations in first month

FanDuel has only been offering online and mobile wagers in D.C. for less than two months after taking over the license from GambetDC, Intralot’s former subcontractor, although it already had market access via a retail sportsbook partnership with the D.C. United soccer team at Audi Field stadium.

GambetDC had long been criticized by bettors for providing a substandard wagering experience. The Lottery said last month that the switch to U.S. market leader FanDuel had “exceeded expectations” thanks to $30 million in betting handle in the first 30 days. The District’s Office of Lottery and Gaming (OLG)’s 40% cut of GGR netted $1.9 million from FanDuel’s $5 million revenue reported from April 15 to May 14. Handle, operator GGR, and OLG revenue were all up more than 670% year-over-year for that period.

A letter written to Mendelson from FanDuel President Christian Genetski lays out that FanDuel’s subcontract stipulates that it provides a $5 million upfront guarantee for the remainder of the current term of the OLG contract, and $10 million guaranteed for each subsequent fiscal year as part of any extension.

Genetski’s letter added that if D.C. invites competitors into its market, it would terminate its subcontract with Intralot and apply for a license under the new regime. That would mean FanDuel would pay D.C. 20% tax on its revenue rather than 40%. Genetski argues that FanDuel is on track to raise nearly $23 million for D.C. in its first year, whereas an open market under the proposed new regime would generate just $8.4 million in FY 2025 and $32.2 million over the subsequent four years.

“Therefore, while FanDuel will be operating in the District under either regime, the Sports Wagering Bill would lead the District to a significant decline of revenue from sports wagering in comparison to the OLG contract extension,” wrote Genetski.

Nevertheless, Parker’s efforts to remove the sports betting issue from the budget were voted down 9-4.

The next stop for the budget is D.C. Mayor Muriel Bowser’s desk. After that, the budget will need Congressional approval before it passes into law.