Sports Betting Legalized In Washington, D.C., But There’s Bad News
Some great news came Tuesday for residents (and transients) of our nation’s capital, as the D.C. Council passed a bill legalizing sports betting in Washington D.C., making it the seventh U.S. jurisdiction to do so in 2018 alone.
The bad news is that the resulting mobile/online sportsbook to go to market — singular — may be somewhere between mediocre and downright terrible.
That’s because the Sports Wagering Lottery Amendment Act of 2018 puts the DC Lottery in charge of sports betting, and the DC Lottery has contracted with the Greek company Intralot, which manages lottery and iGaming operations in a dozen U.S. states.
The issues created here:
(1) The DC Lottery will have a virtual sportsbook monopoly, meaning your legal betting options consists of the forthcoming DC Lottery app and… that’s it (with a caveat we’ll discuss later);
(2) Worse than having just one option instead of a robust marketplace with commercial sportsbooks such as FanDuel Sportsbook, Intralot has made some laughable promises to the DC Lottery about the amount of money it will generate in this single-app environment. Part of their recipe for generating a landfill of gold is by paying out about 75 to 80 percent of wagers, versus the roughly 95 percent that a typical sportsbook pays back to bettors (on -110 prices).
How is this even possible? Separate from sorcery and a concentration in D.C. of the worst or drunkest sports bettors in the country, the DC Lottery sportsbook might offer only parlay or teaser wagering, from which a sportsbook typically has a much higher hold percentage.
If the DC Lottery sportsbooks do include traditional single-game wagering, in order to fulfill the promise of keeping 80 percent, the vig on both sides might be -120 or worse. In other words, you’re going to lose over the short and long-term. We’re speculating at this point, but there’s going to be something bettors won’t like about this sportsbook in order to make the fuzzy math add up.
Keep in mind that the D.C. mayor still has to sign the bill and also unique to D.C., the U.S. Congress will have 30 days to review the legislation and potentially void it, although such an occurrence is very rare. This legislation is just about a done deal.
It’s not a complete monopoly, however
Ironically, D.C. residents and visitors will have additional sportsbook options at… the professional sports arenas and stadiums! (Yes, we’re living in bizarro world. Back in May the pro leagues were arguing in the U.S. Supreme Court, also in D.C., that sports betting was an existential threat to their games.)
The law will allow these venues to offer (a) on-premises sportsbooks open potentially 24-7 and (b) would allow the gaming/sports betting partners of these franchises to offer access to their sportsbook apps while patrons are on premises. All apps will be required to use geolocating technology, the same kind of thing Google and other apps use to track your location. So this goes for:
- Nationals Park (Washington Nationals)
- Capital One Arena (the NHL’s Capitals and the NBA’s Wizards)
- Audi Field (home to the MLS’ D.C. United)
- St. Elizabeths East Entertainment and Sports Arena (home of the WNBA’s Mystics and the Capital City Go-Go of the NBA G-League).
So for example if Capital One Arena partners with FanDuel, you’d be able to use the FanDuel Sportsbook app while you’re at the arena — in the stands or in the on-premises sportsbook. But whether you could place your wagers there an access the app later to view the status of your wagers at home later, we don’t yet know.
Thanks to “emergency” legislation, the DC Lottery can commence the making of regulations immediately with the goal of having operations up and running Quarter 1 of 2019.
Anything else to know here?
The one potential saving grace here is that the law would allow the DC Lottery to reverse course in the event that the Intralot-made app is a catastrophe, or, if they come to their senses and want to allow a competitive market. The law applies a 10 percent tax on commercial operators’ gross revenue, which for now means whichever partners the franchises elect to use.
The bill also allows “Class B” licenses, meaning bars, restaurants and some other establishments may apply for a sports betting certificate and offer an app or perhaps kiosks avaiable on premises, as long as they’re located outside a two-block radius from the arenas, so-called “exclusivity zones.”
This bill and the ramifications we’ve discussed will likely embolden lotteries in other states to seek to seize control of the market. Delaware and Rhode Island, populations about one million like D.C., currently use the model. In both states William Hill runs the show for sports betting risk-management and oversight. Sub-optimal having but one (legal) option, but at least it’s an experienced bookmaker.
Opposition to this bill also created unexpected bedfellows and joint policy position: the pro leagues, along with DraftKings and FanDuel, suggested legislation including a “royalty” or “small fee” on operators, benefiting the leagues, merely for existing.
The DFS-turned-sportsbook giants are for the time being shut out of the market, and the leagues now have just one potential buyer of their “official” league data, instead of potentially five or 10.
Finally, what can you do?
Well, not a ton. Write your local D.C. Councilmember. And if you find that the app stinks, which we expect, just don’t use it. Continue wagering as you were. Money, or a lack thereof, talks.