Starting the week with significant moves, two major players in the sports betting industry, BetMGM and Caesars Sportsbook, were poised to expand their services across Washington, DC, beginning Monday, 15 July. Yet, the celebration was marred by last-minute hurdles, primarily due to notable delays in the approval of the crucial budget bill.
Mayor Muriel Bowser has yet to sign off on the budget bill that holds the keys to this immense expansion. This delay led BetMGM to cancel its planned celebratory event at Nationals Park, tempering the excitement surrounding their anticipated rollout.
Exclusive Playing Field
As of Monday night, FanDuel, thanks to its strategic partnership with the DC Lottery, remains the sole sports betting platform available to enthusiasts in the district. This monopolistic position has lent FanDuel a significant advantage in the market.
The budget bill, having secured final approval from the DC Council on 25 June, was slated to go into effect on 15 July. However, the prolonged wait for the mayor's signature continues to keep the industry in a state of suspense.
Background and Behemoths
Reflecting on the history, in January 2019, the DC Council chose to opt for a single-provider digital market, bypassing the competitive bidding process. This decision enhanced the contract of lottery vendor Intralot to encompass sports wagering.
Intralot’s GamBetDC platform, however, faced substantial criticism for its restricted betting markets and recurring technical issues. Consequently, GamBetDC failed to meet its ambitious revenue expectations. This shortfall led to the lottery’s decisive move to discontinue GamBetDC in favor of a new contract with FanDuel.
The difference was immediately palpable. The handle surged by a staggering 450% in the first month of FanDuel's online sports betting operations, compared to the same period under GamBetDC. FanDuel went on to generate $4.9 million in revenue in May 2023, dwarfed only by GamBetDC’s revenues of $711,282 in the same month.
Washington, DC, benefits notably from these ventures, taking a 40% cut of the revenue generated from its lottery-backed wagering partners. Hence, the mayor's delayed endorsement holds broader economic implications.
Licensing and Partnerships
This new landscape introduces Type C licenses, valid for five years and costing $2 million upfront with an annual renewal fee of $1 million. Licensees are subject to a 30% tax rate, adding a layer of fiscal regulation to this evolving market.
One distinctive feature of the new law is that operators can now partner with sports franchises, not just venues. This change has allowed FanDuel to access the market through its partnership with Audi Field, paying a reduced 20% tax rate due to this strategic alliance.
BetMGM and Caesars Sportsbook have secured Class A licenses. These licenses permit the offering of digital platforms within a two-block exclusion zone around their respective venues—Nationals Park for BetMGM and Capital One Arena for Caesars Sportsbook.
Caesars opened its sportsbook at Capital One Arena in July 2020, while BetMGM launched its operations at Nationals Park in June 2021. FanDuel established its retail presence at Audi Field in July 2022, showcasing an aggressive expansion in the DC region.
Future Prospects
As the sports betting landscape in Washington, DC awaits final approval from Mayor Muriel Bowser on the budget bill, the trajectory of this burgeoning industry remains a focal point of interest. The mayor’s decision will play a pivotal role in shaping the market dynamics, influencing both incumbents and new entrants in the capital's sports betting arena.
The unfolding developments reflect the fast-paced and competitive nature of sports betting, with industry giants maneuvering for dominance. As stakeholders, enthusiasts, and economic planners keep a watchful eye on the mayor's signing, the anticipation builds for what promises to be a seminal moment in Washington, DC's sports betting saga.