Legislation Could End FanDuel’s New Sports Betting Monopoly In DC

Written By Mike Breen on May 11, 2024 - Last Updated on May 14, 2024
A stock picture of lawmakers drawing up legislation

A Washington D.C. council member has proposed an amendment allowing more online sportsbooks to operate in the nation’s capital.

Councilmember Kenyan R. McDuffie’s Sports Wagering Amendment Act of 2024 (Bill 25-0753) would enable retail sportsbooks operating at Washington’s sports venues to offer online sports betting throughout the district.

His amendment would also establish a new mobile-only license for online operators.

FanDuel Became Sole Online Sportsbook in DC on April 15

Recently, FanDuel became the sole online sportsbook in DC. It replaced the unpopular Gambet, which the DC Office of Lottery and Gaming (OLG) had operated as the only districtwide online sports betting option. Maryland sports betting, in contrast, has nearly a dozen online sportsbook operators.

In the three weeks since FanDuel became the only online sportsbook in DC on April 15, officials have converted sports betting kiosks at district bars and restaurants from Gambet to FanDuel.

Should the amendment be approved, Maryland residents who visit or work in the district would benefit from several more online sportsbooks.

Sportsbook Operators Testify in Favor of Amendment

On May 6, the DC Committee on Business and Economic Development (of which McDuffie is the chair) held a public hearing to allow testimony for and against the amendment.

The hearing included testimony from DraftKings, Fanatics, Caesars, Caesars and Penn Entertainment (which operates ESPN Bet) supporting the measure.

DraftKings, Fanatics, and ESPN Bet, among other operators, would be able to enter the DC online sports betting market if the amendment passes. It would allow Caesars Sportsbook and BetMGM to expand their reach in the district.

Caesars operates a retail sportsbook at Capital One Arena, home of the Washington Capitals and Washington Wizards. Its online sportsbook is available only around the arena. BetMGM’s online sportsbook is available only in and near the Washington Nationals’ baseball stadium, where the company operates a retail sportsbook.

In written testimony to the committee, Penn’s Jason Tosches noted that ESPN Bet has taken millions of dollars in bets from DC residents since launching late last year in neighboring Maryland and Virginia.

“Consumers in the district are currently at a disadvantage by not being able to compare and select from the offerings found in a competitive market. Instead, the status quo has pushed consumers to seek online sportsbook alternatives outside of the district.”

Washington Sports Teams Also Favor Opening Up Market

In a joint statement to the committee, Washington’s professional sports teams – Nationals, Wizards, Mystics, Capitals, and DC United – also expressed support for McDuffie’s amendment.

The statement said the teams and their sports betting partners have been disappointed with results so far in the district, “both in terms of customer experience and revenues.”

“A competitive environment will align the district’s gaming operator landscape to its neighboring jurisdictions, creating a more fluid betting experience for customers and growing gross gaming revenues.”

Lottery Opposes Elements of Amendment

Frank Suarez, executive director of the OLG, submitted testimony opposing elements of the amendment, including the proposed tax rate that he said would decrease FanDuel’s tax revenue.

In the OLG’s deal with FanDuel, the sportsbook agreed to give the district 40% of its gross gaming revenue, with a minimum $5 million guaranteed in its first full year, then at least $10 million guaranteed annually after that. In his written testimony, Suarez said that tax revenue increased significantly in the first two weeks since the transition to FanDuel from the Gambet platform.

The Office of Revenue Analysis (ORA) estimated FanDuel would generate $42.2 million more in tax revenue annually than Gambet. If the amendment was in place, FanDuel would generate only $26.8 million in tax revenue a year, the ORA estimated.

McDuffie’s amendment would tax gross revenue from current retail sportsbooks offering online sports betting at 20%. Meanwhile, it taxes new mobile-only licensees at 30%. Suarez believes those rates are too low.

“The overall sports wagering revenue for the district will decline if the tax rates remain as proposed in the (amendment).”

DC Council Has Several Options

The Business and Economic Development Committee hasn’t taken a vote on McDuffie’s amendment. It’s unclear what the next steps will be.

The OLG’s contract with Intralot (which subcontracts with FanDuel to provide mobile sports betting districtwide) is set to expire in July. It had requested the DC City Council consider a two-year extension of the contract.

Council could instead allow Intralot/FanDuel’s contract to expire and then approve McDuffie’s amendment. It could also potentially restructure DC’s entire sports betting framework into a more competitive system. It could also cut the OLG out of the sports betting picture entirely.

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