Two major players in the sports betting world, BetMGM and Caesars Sportsbook, were all set to broaden their horizons in Washington, DC, beginning Monday, 15 July. However, the anticipated expansion hit a snag as Mayor Muriel Bowser has yet to sign the crucial budget bill. This delay forced BetMGM to call off its planned celebration at Nationals Park, leaving many sports betting aficionados in limbo.
For now, FanDuel remains the sole option for sports betting enthusiasts in the capital, thanks to its partnership with the DC Lottery. As of Monday night, this collaboration ensured that FanDuel was the only active digital sports betting platform in the region.
The Road to FY 2025 Budget Approval
The DC Council provided its final nod to the FY 2025 budget on 25 June, setting the stage for it to take effect on 15 July. This approval follows a broader context in which the DC Council had taken significant steps back in January 2019. The council had greenlit a single-provider digital market for sports wagering without venturing into a competitive bid process, subsequently expanding the contract of lottery vendor Intralot to include sports betting.
Challenges with GamBetDC
Intralot's GamBetDC platform, which was set up as part of this expansion, soon encountered myriad issues. The platform faced criticism for its limited betting markets and persistent technical glitches. Adding to these woes was the fact that GamBetDC fell dramatically short of its revenue projections, compelling the lottery to rethink its strategy.
The turning point came with a new contract with FanDuel, which saw an impressive spike in activity. The handle surged by a staggering 450% in the first month of FanDuel's online sports betting operations, compared to the same timeframe under GamBetDC. Furthermore, FanDuel recorded a substantial $4.9 million in revenue in May 2023, a stark contrast to GamBetDC’s $711,282 during the same period. These figures underscored the inefficacy of the GamBetDC platform and justified its eventual shutdown.
Revenue Implications and Tax Landscape
Importantly, the city garners benefits by claiming 40% of the revenue from lottery-backed wagering partners. With Intralot's contract expiring on 15 July, the introduction of new regulations and licensing categories changed the game. The latest law introduces Type C licenses, valid for five years, priced at $2 million with an annual renewal fee of $1 million. Licensees will be subject to a 30% tax rate.
Another significant development is that operators can now partner with franchises in addition to venues. This opened new doors for FanDuel, which has leveraged its market access through its association with Audi Field, benefiting from a relatively lower 20% tax rate due to this partnership.
Class A License Holders
BetMGM and Caesars Sportsbook, on the other hand, hold Class A licenses. These licenses permit them to operate digital platforms within a specific two-block exclusion zone around their respective venues—Nationals Park and Capital One Arena. Caesars Sportsbook partnered with Capital One Arena and launched its sportsbook in July 2020, while BetMGM kicked off its operations at Nationals Park in June 2021. FanDuel joined the physical sports betting fray by establishing its retail presence at Audi Field in July 2022.
Awaiting the Mayor's Approval
The expanding sports betting landscape in Washington, DC, teeters on the precipice of further evolution, awaiting crucial approval from Mayor Muriel Bowser. Her sign-off on the budget bill will officially mark a new chapter in the city's sports wagering scenario, potentially welcoming BetMGM and Caesars Sportsbook into the fold and offering competition to FanDuel.
As of now, enthusiasts and operators alike are in a holding pattern, eager for the anticipated changes that could redefine sports betting in the nation’s capital.