Expansion and Challenges in Washington, DC's Sports Betting Market
Washington, DC's sports betting landscape is undergoing significant changes as key players BetMGM and Caesars Sportsbook prepare to expand their footprint. Originally scheduled to roll out starting Monday, July 15, the expansions were thrown into disarray due to a delay in the approval of a crucial budget bill by Mayor Muriel Bowser. Notably, BetMGM had to cancel its planned celebration at Nationals Park, highlighting the broader impact of the budgetary hold-up on the sector.
Despite these setbacks, FanDuel continues to make waves as the sole operational sports betting platform in DC as of Monday night. This market dominance is attributed to a partnership with the DC Lottery, solidifying FanDuel's position in a competitive environment. The DC Council had given the final nod to the FY 2025 budget on June 25, anticipating it to come into effect on July 15. However, Mayor Bowser's pending signature on the budget bill has left key stakeholders like BetMGM and Caesars Sportsbook in a state of limbo.
Historical Context and Market Dynamics
The roots of DC's sports betting framework can be traced back to January 2019, when the DC Council approved a single-provider digital market without entering a competitive bidding process. The contract was handed to Intralot, the existing lottery vendor. Intralot's platform, GamBetDC, was soon criticized for its limited betting options and technical glitches, failing to meet revenue expectations.
The arrival of FanDuel marked a turning point. Following a new contract, the DC Lottery decided to shut down GamBetDC. The shift produced immediate results, with FanDuel's online sports betting operation seeing a staggering 450% increase in handle during its first month compared to GamBetDC. FanDuel generated an impressive $4.9 million in revenue in May 2023, whereas GamBetDC lagged far behind with $711,282 for the same period.
Revenue and Legal Framework
The city benefits significantly from sports betting, collecting 40% of the revenue from lottery-supported betting partners. Intralot's contract, which expired on July 15, opens opportunities for other operators under a newly introduced licensing framework. The new law establishes Type C licenses, valid for five years, costing $2 million upfront, and carrying an annual renewal fee of $1 million. Licensees will be taxed at a rate of 30%.
This new framework allows operators to collaborate with sports franchises, not just specific venues. FanDuel's access to the market comes through its partnership with Audi Field, allowing it to benefit from a preferential 20% tax rate due to its alignment with the venue.
Class A Licenses and Venue Partnerships
BetMGM and Caesars Sportsbook, holding Class A licenses, offer digital platforms within a two-block exclusion zone around their respective venues: Nationals Park and Capital One Arena. Caesars, which partnered with Capital One Arena, has been operational since July 2020, while BetMGM launched its operations at Nationals Park in June 2021. FanDuel further entrenched its presence by initiating a retail operation at Audi Field in July 2022.
As the timeline for Mayor Bowser's approval of the budget bill hangs in the balance, the future actions of BetMGM and Caesars Sportsbook remain uncertain. The broader sports betting community in Washington, DC, awaits the resolution, hoping for an expanded, competitive market that could provide more options and potentially higher revenues for the city.