Fast-Tracked DC Sports Betting Market Not Fast Enough For New NFL Season

Posted on: August 9, 2019, 06:05h. 

Last updated on: August 10, 2019, 11:44h.

Philip Conneller @casinoorgphilc Read More
Expertise: Gaming Business, Regulation, Tribal Gaming.

DC sports betting will not be ready for the start of the new National Football League season, District officials have said. This despite the controversial decision by the DC Council to forego customary procurement procedures on mobile betting for a speed-to-market approach that aimed to capitalize on the forthcoming football season.

DC Sports betting
DC Sports betting will miss the boat on the new NFL season, having become bogged down in red tape, with a delay of several weeks expected at least. (Image: Matt Rourke/AP)

The awarding of the no-bid, $215-million contract to DC’s existing lottery operator, Intralot, has been mired in controversy because the company’s local partners have links to DC politicians.

Meanwhile, Councilmember Jack Evans, who spearheaded the legislative push for sports betting liberalization, is currently under investigation by the FBI for reasons that are under seal.

The Intralot contract was narrowly approved by the DC Council last month despite the reservations of some council members that it smacked of cronyism.

But revenues from the impending NFL season ultimately proved too tempting for the majority, who argued that a competitive bidding process could delay market launch by three years, potentially costing the District millions in taxes.

Delay ‘Several Weeks’

Executive director of DC Lottery Beth Bresnahan told The Washington Post Thursday that officials are still working on the regulatory framework, which will include rules on advertising standards and licensing requirements.

Bresnahan said the holdup is because of around 100 pages of comments on draft regulations, submitted by prospective sports betting operators, which need to be addressed by regulators.

While the council has gifted the mobile betting monopoly to Intralot, the new law also allows for land-based betting at arenas, bars, restaurants, and convenience store kiosks, which will be more of an open market.

Bresnahan said it was difficult to forecast the length of the delay, but it would be several weeks minimum, and the DC Lottery won’t be accepting land-based applications until at least September.

High-Hold Model

Once the market is finally up and running, DC Council expects it to generate $17.1 million in tax dollars next year. That seems high for a jurisdiction with a population of just over 633,000, although there is nothing that currently exists in the US that can be compared with the model DC is proposing.

As a jurisdiction with no casinos or racetracks, the accessibility of sports betting at multiple land-based facilities is a positive, and these operators will be taxed at an industry-friendly ten percent.

But mobile is the real money-generator for sports betting, although less-so with the version DC has chosen to adopt.

Intralot has promised it will generate higher revenues than the District would have received had it embraced an open market. To this end, it has proposed a high-hold sports betting model that will return around 70 to 80 percent of handle to the customer, far less than the roughly 95 percent that is customary in Las Vegas and elsewhere.

That approach could be problematic and may cause the new operator to struggle to compete with the black markets.