The District of Columbia’s Business and Economic Development Committee listened to hours of testimony on the Sports Wagering Amendment Act of 2024 May 6.
The testimony comes at a time when the city seeks to broaden and enhance the sports betting milieu after a disastrous few years with GambetDC. FanDuel replaced GambetDC in April in partnership with DC Lottery associate Intralot.
During the hearing, committee members listened to representatives from BetMGM, Caesars Sportsbook, DraftKings, and Fanatics Betting & Gaming.
The proposed law would permit as many as seven pro sports teams to link with digital sportsbooks and establishes a Type C license. As it stands now, online sports betting is accepted only with FanDuel, which replaced GambetDC in April.
Signed in 2019, the Office of Lottery and Gaming (OLG) has one contract with Intralot for lottery and sports betting. At the time, council member Kenyan McDuffie’s did not support the setup. Lottery chief Frank Suarez said the lottery-Intralot deal cannot be split without new legislation.
If approved, the new law would raise the tax rate for retail sportsbooks from 10 to 20 percent and bring back funding for problem and responsible gaming programs. Type C license holders would carry a tax rate of 30 percent of gross gaming revenue, in addition to the $2 million license fee good for five years, followed by a $1 million renewal.
Under current directives, retail sports betting can be established at pro sports arenas and stadiums in the district for Class A license holders. Caesars Sportsbook hosts bettors at Capital One Arena, FanDuel at Audi Field, and BetMGM at Nationals Park. BetMGM and Caesars Sportsbook have online betting but only within a two-block radius of their retail sportsbooks.
FanDuel, which said it paid the city $5 million, for the right to offer digital wagering throughout the city, brought in $14.7 million in handle, with gross gaming revenue of $2.8 million in its first two weeks of operation.
The contract between the lottery and Intralot ends in mid-July and the lottery wants a two-year extension. An Request for Proposal to sign additional operators would be required and that may take up to a year, Suarez said. Intralot remains the betting system operator during this time.
Fanatics Betting & Gaming’s Brandt Iden said that with the current system, Fanatics”estimates a market penetration of 1 to 2 percent of eligible adults due to a lack of alternatives.”
“Consumers are either traveling to the surrounding states to wager or, worse yet, placing wagers in the illegal offshore market, where there are no responsible gaming protocols to protect customers,” he told Yogonet International.
Robert O’Connor, vice president of Government & Industry Affairs for BetMGM, said a mobile component for Class A license holders “increases our ability to connect with our customers when they’re not in or around the ballpark.”
DraftKings would launch in short order given the opportunity, said Matt Scalf, Government Affairs Manager for the company.
However, Dan Shapiro, chief development officer at Caesars Digital, said the increase in the retail tax rate would be very disadvantageous to the Caesars retail sportsbook. Since it debuted in May 2021, the sportsbook at Capital One Arena has paid over $5 million in taxes to the district. The proposed jump in rate would crimp the company’s ability to invest as it would operate at a loss.
“We will support mobile sports betting, but it’s the retail aspect we have serious concerns about. The tax rate should be left at 10 percent so we can continue to invest in the District,” he said.
Small, local businesses that house sports betting kiosks believe the proposed bill will hurt their bottom line, Barbara B. Lang, a former president, and CEO of the Washington D.C. Chamber of Commerce, told the committee.
The kiosks helped overcome the retail downturn resulting from Covid-19. “They provide an essential draw to attracting and retaining customers,” she said. “A competitive, mobile-dominated system would completely squeeze out retailers looking to generate revenue from in-person gaming.”
