Three years after it was legalized in Washington, D.C., sports betting has not met the financial projections of its proponents, resulting in a series of downward revisions to its expected contribution to the civic budget.
During a contentious meeting of the D.C. Council Committee on Business and Economic Development, it was disclosed that sports-betting taxes had yielded only $230,000 in revenue through the first three-quarters of fiscal year 2021. Six million dollars had been expected, followed by $18 million in fiscal year 2022. (By contrast, neighboring Virginia raked in $1 million in sports-wagering taxes in April alone.)
“Since Virginia launched online sports betting in January of this year, GamBet’s monthly handle has consistently declined. While there is a certain seasonality to sports betting that results in a post-NFL-season dip, this nosedive seems connected to the new and much more appealing options in Virginia,” observed PlayUSA analyst Jessica Welman, referring to the city-run GamBetDC sports-betting operation.
A variety of factors were blamed at the hearing, including COVID-19, a lack of commuters, the reportedly daunting nature of online registration, and the odds offered by GamBetDC.
“This fiscal year has been difficult for us, because of the COVID restrictions and we’re looking forward to next fiscal year being able to significantly increase 2021’s total so far, once we get retail-based sports wagering operational,” said District of Columbia Lottery General Counsel Ridgley Bennett. “Just like the rest of the entertainment industry in the District, we’re cautiously, cautiously optimistic.”
“I am admittedly less confident than you are,” committee Chairman Kenyan McDuffie told Bennett. “I’ve got to tell you, my confidence isn’t improving.”
Despite GamBetDC’s mobile application being available citywide, its handle is dwarfed by William Hill ($92 million this fiscal year), which is accessible only within a limited radius of Capital One Arena. In terms of revenue, William Hill held $8 million in April, compared to GamBetDC’s $2.7 million, despite its (critics say) less generous lines. In terms of sheer wagers, it was more balanced: 100,955 placed through William Hill versus 87,085 via GamBetDC. The odds on the latter will likely be challenged further, now that BetMGM went live with a mobile app at Nationals Park last Thursday.
“D.C. is certainly one of the most interesting U.S. betting markets, largely because it set itself up with several handicaps that prevent it from meeting market potential,” Welman told CDC Gaming. “While D.C. isn’t the only market to implement a de facto monopoly on online betting, it has definitely done the worst job delivering a quality product people want to use. For example, both New Hampshire and Rhode Island have similar setups, but they work with top-tier operators DraftKings and William Hill, respectively.”
As for the GameBetDC lines, “Unlike most sportsbooks that offer ten-cent lines, the GamBet lines consistently rake more vig than is industry standard. You can see a similar pattern in Oregon, which also opted for a homegrown product that has generated minimal return.”
As the above-cited numbers indicate, Welman said, “The William Hill retail sportsbook at Capital One Arena has consistently generated more business than the online betting app, because customers seem more willing to travel to the arena and bet on more affordable lines than to stay home, use an app that is harder to navigate, and pay more in fees.”
Bennett tried to make the case that walk-up betting was more popular, saying, “Many people prefer to pay with cash” and that providing bank-account and Social Security numbers was a disincentive for betting online.
This was met with skepticism by news station WTOP, which asserted, “That is thoroughly contradicted everywhere else in the country where sports betting is legal, including Las Vegas and New Jersey — where such verification requirements haven’t hindered anything.” Wagering surged in Illinois when Gov. J.B. Pritzker temporarily suspended the state’s in-person registration requirement.
In addition to competitive pressure from Virginia, the District of Columbia will shortly find itself in a clash with Maryland, where sports betting legislation was recently signed into law by Gov. Larry Hogan and where MGM National Harbor sits right on the D.C. border.
