For the second time this year, Washington D.C.’s independent auditor has released a report criticizing the District’s betting program. The July analysis stated Intralot, the private contractor hired to manage the betting system, was not meeting subcontracting requirements with local small businesses. Now in its recently released report, Auditor Kathy Patterson’s department found the District’s sports betting program is performing poorly and urgent changes must be made immediately to boost revenue, which has fallen far behind projections.
The auditors said unfavorable odds for bettors, problems with GambetDC, the District’s mobile betting app and issues with the regulatory structure have caused numerous problems. They wrote, “Overall, the future success of GambetDC will be tied not just to the strength of the District’s recovery from the pandemic but also to the steps the Office of Lottery and Gaming takes to increase sports wagering revenue.”
In response to the audit report, lottery officials said they already started to address some of those issues. For example, they said the District’s new retail program that places GamBet kiosks in bars and restaurants is expected to generate new revenue. Opening sportsbooks at the District’s sporting venues, such as Nationals Park and Audi Field, also should help.
Office of Lottery and Gaming Executive Director Frank Suarez said, “Despite the initial negative impact of the Covid-19 pandemic on professional sporting events and the number of commuters and tourists that visit the District, significant progress has been made since launching sports wagering in the District. We are excited about the future and developing a robust and lucrative sports betting business that supports the economic vitality of the District.”
The auditors found the District took in $30.6 million in wagers between the launch of GamBet on May 28, 2020 and the end of March 2021, and paid out $26.2 million winnings, resulting in $4.27 million in gross revenue for the District. However, it kept only about $444,400 compared to District officials’ original claims the District would earn $17 million in annual revenue.
The reason for the difference is the District gave $3.93 million to Intralot; under its contract with the company, the District is required to give it 42.5 percent of gross revenue plus an additional $1.58 million to offset its operating costs. Those costs include “bonuses and promotions for bettors, streaming fees and marketing activities,” the report noted. Similar operations in Montana and New Hampshire, for example, do not include those kinds of provisions for those states’ contractors.
The report recommended giving wagerers better odds, which it said could result in more payouts to players, but “it may further incentivize bettors to use GamBetDC if they think they can win more money.” The auditors also noted “resolving technical issues experienced by users” betting on GamBet’s mobile app also could help raise revenue.
In response, Suarez wrote that District officials and Intralot “continuously review payouts and will make adjustments as required in order to be competitive in the marketplace and to maximize revenue to the District.” However, he would not commit to other odds adjustments. A lottery spokeswoman said the agency still is considering whether to increase the payout rate.
Suarez added Intralot and the District have made a variety of improvements to GamBet’s experience, including a “revamp” of the user interface and the upcoming addition of betting inducements like teasers and prop bet. He noted restrictions prohibiting bettors from placing wagers in federally controlled areas still frustrate users. The District cannot change those provisions on its own. Suarez stated, “The perception is that the GambetDC platform doesn’t work when it is working exactly as required by District and federal laws by not allowing wagers to take place within significant areas within the District.”
He added the District is reviewing whether it could pay Intralot a larger percentage of gaming revenue instead of a flat fee for operating costs. But Suarez pointed out the District has collected $2.1 million in licensing fees from private operators but reviewing those operators’ applications and other regulatory steps have cost $3.7 million. He noted, “Licensing fees are set by statute. The Office of Lottery and Gaming will continue to monitor costs and, if warranted, will provide recommendations to council for their consideration of any necessary modifications.”
