Audit Of DC Lottery’s Sports Betting Platform Offers Lessons For MD Regulators

Posted on September 15, 2021 - Last Updated on September 30, 2021

A scene from the 1993 Ron Maxwell film “Gettysburg” has Tom Berenger uttering a line about a commonality between losing sides of the American Civil War and American Revolution. In the movie, Berenger says that both would “rather lose the war than admit to the mistake.”

In review of a Washington, DC sports betting audit, the quote seems to ring true in this context as well. The conclusions of the auditing body were no surprise to anyone in the nation’s capital. For regulators in Maryland, it’s a precautionary tale of what not to do.

Details of the Washington, DC sports betting audit

Last week, as the 2021 NFL season got underway, the Office of the District of Columbia Auditor presented its findings to both the public and the Office of Lottery and Gaming. In short, legal sports betting in DC looks good for the Lottery’s partners. It has fallen short of meeting its primary objective, though.

That objective is creating tax revenue for DC off sports betting. The audit found from launch through March of this year, the District collected just $444,000 in that metric. Meanwhile, the Lottery’s operational partner for GambetDC, Intralot, received nearly $4 million in disbursements during the same period.

The ODCA report pointed out how DC sports betting’s figures pale in comparison to other markets’ performances. It levied the same conclusion in comparison to Caesars/William Hill‘s returns in the District.

It didn’t cast the blame for that situation on the collective landscape of legal betting in DC. Rather, it focused criticism on what the Lottery controls. That’s not only GambetDC but the regulatory framework in the District.

OLC seems unmoved by poor performance

In the audit, the ODCA made several recommendations for possibly improving the return to DC. Most of them centered on making the product more appealing to bettors, like:

  • Reducing vig to make odds more competitive
  • Renegotiating contract terms with Intralot to provide for more frequent and lucrative promotions
  • Granting licenses to more private operators

The OLC’s response to each recommendation is in the audit as well. Largely, the responses do not acknowledge the issues that the recommendations point toward. They also by and large assert that the OLC is already taking the recommended action. For instance, in response to the recommendation about reducing vig, the OLC replied:

“OLG and its vendor continuously review payouts and will make adjustments as required in order to be competitive in the marketplace and to maximize revenue to the District.”

Regardless of the OLC’s assertions, the proof is in the pudding in terms of the numbers. With only twice the population, the state of New Hampshire collected 10 times the amount of revenue as compared to GambetDC in its partnership with DraftKings Sportsbook.

In that comparison, it’s also worth noting that NH has no major professional sports teams within its borders like DC does. DC sets up for sports betting with franchises like DC United plus the Washington Capitals, Mystics, Nationals, Spirit, and Wizards all playing home events therein.

For regulators in Maryland, it’s a storyline to follow. The Old Line State could potentially benefit from struggles in DC in several ways.

What MD regulators and sportsbooks should take away from these proceedings

In navigating a new industry, there’s no shame in adjusting to the market’s patterns. In fact, that’s exactly what competitive sportsbooks do on a daily basis. They move lines based on how the public is betting so that ideally, they win regardless of how sporting events play out.

Such agility is crucial for sportsbooks to compete. Regulatory landscapes have to afford operators as much freedom to tailor their products to consumer interest while still prioritizing fairness and integrity.

Additionally, while bettors value both price and convenience, they will choose the former over the latter if forced to do so. DC bettors chose William Hill over GambetDC for its superior odds even when their only option for doing so was visiting the ticket window at the Entertainment & Sports Arena.

Finally, the most essential quality for regulators undertaking the burden of administering MD sports betting is humility. In the “war” to capture tax revenue from sports betting and introduce consumer protections by taking the activity off the illegal market, it’s preferential to admit mistakes.

Photo by Dreamstime / Igor Zakharevich
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Derek Helling

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