Nov 9, 2022; Washington, District of Columbia, USA; Washington Capitals left wing Alex Ovechkin (8) reacts during a stoppage in play against the Pittsburgh Penguins in the third period at Capital One Arena. Mandatory Credit: Geoff Burke-USA TODAY Sports
- Lawmakers and sports betting operators today discussed a bill to expand the Washington, D.C., sports betting market
- The Sports Wagering Amendment Act of 2024 would open up D.C.’s online sports betting market to more than just one lone operator
- Most sports betting operators supported the online sports betting aspect of the bill, but one had major concerns with an increase in retail sports betting taxes
Washington, D.C. lawmakers are taking hard look at an expansion to its sports betting market landscape.
The Business and Economic Development Committee today heard several hours of testimony on Council Member Kenyan McDuffie’s Sports Wagering Amendment Act of 2024, which would allow up to seven online sports betting operators in the district, an increase from the current monopoly FanDuel has in the market.
While most operators were in favor of the online sports betting component of the bill, one major gaming company had serious concerns over a portion of the bill that would increase the district’s retail sports betting tax rate from 10% to 20%.
Additional Operators Means More Business for All
McDuffie’s bill would expand Washington, D.C.’s sports betting market to potentially include up to seven online sports betting skins. A new classification of sports betting license, Type-C licenses, would allow sports franchises in the district to partner with one sports betting operator to conduct online sports betting.
Sports franchise that plays 90% of its home games in the district would be eligible for a Type-C license. This would leave the following franchises and stadiums eligible for one of the new types of sports betting licenses.
- Audi Field
- Capital One Arena
- DC United
- Nationals Park
- Washington Capitals
- Washington Nationals
- Washington Wizards
The new bill would tax Type-C license holders at a rate of 30% of gross gaming revenue. A Type-C license would cost $2 million to acquire for five years and a $1 million renewal fee after that. It also calls for an increase of the retail sports betting tax rate for Type-A license holders from 10% to 20% of gross gaming revenue.
Currently, online sports betting in the district is only allowed through a FanDuel partnership with the D.C. Lottery. FanDuel recently took over the exclusive sports betting role from GambetDC on Monday, April 15.
Under the current law, retail sports betting is allowed at designated professional sports arenas and stadiums in the district for Class-A license holders. Caesars Sportsbook hosts a retail sportsbook at Capital One Arena, FanDuel hosts a retail sportsbook in Audi Field, and BetMGM hosts a retail sportsbook in Nationals Park. BetMGM and Caesars Sportsbook can only offer online sports betting to customers who are within a two-block radius of their retail sportsbook.
Robert O’Connor, VP, Government & Industry Affairs for BetMGM, says the importance of adding a mobile component for Class-A license holders is crucial.
“It increases our ability to connect with our customers when they’re not in or around the ball park,” he noted.
Two representatives for operators not currently in the district, DraftKings and Fanatics Betting and Gaming, both said their companies are extremely interested in entering the D.C. sports betting market and have already started partnership discussions with sports franchises.
If the bill is approved, DraftKings expects a very quick launch in the district, Matt Scalf, Government Affairs Manager for DraftKings, said at the meeting.
It’s no secret, said Brandt Iden, VP of Government Affairs for Fanatics Betting and Gaming, that district residents regularly cross over into Maryland and Virginia to use their favorite sports betting apps.
Fanatics, he said, will be interested in entering the market through online sports betting and retail sports betting if eventually available.
New Taxes and Concerns from Local Business
One operator currently in the market shared concerns with the bill’s proposed retail sports betting tax increase. Dan Shapiro, Chief Development Officer at Caesars Digital, said the increase of the retail sports betting tax rate would be extraordinarily detrimental to the Caesars retail sportsbook at Capital One Arena.
Since opening in May 2021, Shapiro noted the Caesars retail sportsbook at Capital One Arena has paid over $5 million in taxes to the district. The proposed increase of the retail rate to 20% would hamper the company’s ability to invest in the retail space and would cause it to 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% so we can continue to invest in the District,” he said.
Additionally, the new bill will do so much to prioritize online sports betting in the district, it will have the opposite effect on local businesses that currently house sports betting kiosks, Barbara B. Lang, a former President and CEO of the Washington D.C. Chamber of Commerce, told the committee.
COVID-19 severely impacted local businesses, she said, and the sports betting kiosks were a boon for suffering business. Businesses that host kiosks are eligible to keep 5% of the revenue brought in from the machines.
“The kiosks provide an essential draw to attracting and retaining customers,” she said.
FanDuel Now Live in D.C.
The Office of Lottery and Gaming (OLG) announced in March it had reached a deal with FanDuel to be Washington, D.C.,’s lone sports betting operator, taking over for the troubled and much-maligned GambetDC.
The operator launched on Monday, April 15.
Frank Suarez, Executive Director of Office of Lottery and Gaming, said during FanDuel’s first two weeks of operation it generated $14.7 million in online sports betting handle and $2.8 million in gross gaming revenue. The Lottery receives 40% of the gross gaming revenue totals from FanDuel.
“FanDuel is far exceeding handle rates that Gambet had,” he said.
However, if the district opens up its market to additional operators, it would put the lottery in a strange position, Suarez noted. The lottery currently requires a 40% share of gross gaming revenue from FanDuel, he said, and if the amended sports betting bill were to carry a 30% tax it would hamper the lottery’s ability to find a partner.
