A meeting of the Washington D.C. Council’s Business and Economic Committee Wednesday became highly contentious as the group debated the future of sports betting in the District.
Council member Elissa Silverman spoke about her bill that would give District-wide mobile access to operators like BetMGM, Caesars Sportsbook, and FanDuel. Currently, those three operators have retail sportsbooks in the District, but BetMGM and Caesars have severely restricted mobile sports betting access and FanDuel doesn’t have any mobile access.
Only GambetDC, a lottery-run sports betting app developed through third-party provider Intralot, is allowed to operate in the majority of D.C. But the app has received subpar reviews over the years for its poor odds, clunky interface, and failing tech.
“Gambet can’t be fixed,” Silverman said. “The District will correct the course on sports gambling and actually generate revenue only if the council acquires it through legislation.”
It’s worth noting that Silverman won’t be able to usher her bill through the council in the immediate future, as she didn’t win reelection in November.
Lottery pushes back
Frank Suarez, the executive director of the D.C. Office of Lottery and Gaming, pushed back hard against Silverman’s ideas throughout Wednesday’s meeting. The two went back and forth on multiple occasions, at times getting heated about the topic.
Suarez praised recent GambetDC interface enhancements that have boosted the platform’s average rating on the App Store. He added that opening up the D.C. mobile sports betting market to competition would be a mistake, at least from a tax revenue generation perspective.
Furthermore, Suarez admitted that GambetDC has cost the District $1 million across the last three fiscal years, an alarmingly poor statistic. He argued that it’s still the best option, though, because it created a transfer (revenue minus costs) to D.C. of $2.7 million in fiscal year 2022. He expects that level of positive revenue creation to continue in future years.
Saturday marks the two-year anniversary of GambetDC’s launch. I took a look at a few major events in the DC sports betting platform’s short history. https://t.co/PdHAdiFiu5
— Bennett Conlin (@BennettConlin) May 26, 2022
“The reason that Gambet is going to do better, and the model is going to do better, is because you have to look at the numbers,” Suarez said.
The D.C. Lottery plugged some of the financial numbers referenced by Suarez (and the new interface) in a recent press release, seemingly a response to Silverman’s proposed bill.
“In addition to a new app experience, GambetDC unveiled a host of other product enhancements which should further drive growth,” the press release said. “This includes increasing the GambetDC average payout to 90%. Rapid expansion of the GambetDC retail footprint to 58 licensed retailers and upgrades to the retail self-service betting experience have also been key to growth.”
GambetDC saw a total handle — from retail kiosks and online bets — of $58.3 million in fiscal year 2022. By comparison, Caesars Sportsbook’s retail location at Capital One Arena in Washington D.C. (and the two-block radius around it where legal mobile wagers can be placed) generated a handle of $111.9 million in fiscal year 2022.
Still, GambetDC’s handle resulted in $10.2 million in gross gaming revenue and $1 million in tax revenue for D.C, as the District has a 10% tax on gross gaming revenue.
“Even when compared to privately operated District sportsbooks, GambetDC’s growth and financial contribution to the District are unmatched,” the lottery’s press release said.
Customer experience not considered?
Suarez didn’t seem to argue that GambetDC is actually a better option for customers than BetMGM, Caesars, or FanDuel. Rather, he’s arguing that those sportsbooks can’t match the revenue creation of GambetDC, as all revenue generated by the app goes to the District’s general fund.
“With only little more than one-third (36%) of the total handle achieved by privately operated sportsbooks in the District, GambetDC provided almost double the transfer amount to the city ($1.4 million vs. $2.7 million),” the lottery’s recent press release said.
Suarez was a bit hasty to dismiss the possibility of private operators matching GambetDC’s tax revenue generation, as Silverman calls for a 15% tax on gross gaming revenue in her bill and sports bettors prefer mobile wagering to in-person betting. States with both mobile and retail sports betting often see 80% to 90% of wagers placed online.
Theoretically, introducing well-known mobile sportsbooks across the District could see those operators increase handle significantly, which in turn could lead to a notable increase in gross gaming and tax revenue. Commuters from Maryland and Virginia, as well as tourists from across the country, could also use an app like FanDuel with relative ease, as the major operator is available across many U.S. states.
DC folks, your nearest Maryland metro stops for likely getting better sports betting experience are Friendship Heights and Silver Spring (red), West Hyattsville (green/yellow), Cheverly (blue/orange), Capital Heights (blue/silver).
Virginia option remains Rosslyn (orange/blue). https://t.co/NoBXUNMXki
— David Fucillo (@davidfucillo) November 17, 2022
A new system could also benefit customer experience, a point that often seems lost on lottery officials. It’s hard to argue that GambetDC matches the average recreational bettor’s user experience when using FanDuel.
With a more enjoyable user experience, it’s logical to assume bettors would be more willing to wager frequently. While GambetDC’s app is improved, the platform’s reputation is abysmal, and it could be hard to win back lost customers who now have the option of traveling to Maryland and Virginia to use major mobile sportsbooks they like.
Silverman and Suarez spat
Toward the end of Wednesday’s meeting, the conversation between Silverman and Suarez became fiery.
Silverman said original proponents of GambetDC pointed to a need to quickly launch an app when the contract with Intralot was signed. The hope was to beat Maryland and Virginia to launch, creating loyalty among commuters.
“I will concede your point that our model can generate more money for less gross gambling revenue and users, but we’re not gonna get the gross gambling revenue and customers because our model can’t compete given that the situation has changed,” Silverman said. “We didn’t get a first-mover advantage. We never created a habit, and now the daytime population of our city is a lot different because of work-from-home culture.”
Silverman believes GambetDC’s reputation is so damaged that bettors will prefer traveling to other states to wager. She also seemed concerned about the long-term revenue potential of GambetDC.
“We’re not accepting that the situation has changed, and we’re not adapting to try to maximize our revenue given that the conditions and fact pattern has changed,” Silverman said.
Suarez, who took over as the lottery’s executive director in August 2021, strongly disagreed.
“What I want to make sure is clear is that the model you’re proposing will not raise revenue, and no matter how many different ways you look at it, it’s not a better model than what we currently have,” Suarez said.
He felt compelled to call out Silverman for what he considered a lack of data in her argument.
“I’m giving you facts, and I’m not hearing facts from your side that are coming that are saying that’s a better model,” Suarez said.
By the end of their interaction, Silverman said she was looking forward to seeing how D.C. competes with Maryland and Virginia in coming months. With a hint of sarcasm, Silverman said she hoped they could return to the conversation in a year.
“If you are right, give me a call, and I’ll tell you you’re right,” Silverman said.
“I will do that,” Suarez said.
Next steps
Silverman didn’t win reelection to the D.C. Council, putting the push for a change to the District’s model in serious jeopardy. One of the bill’s co-sponsors, Mary Cheh, was also an outspoken critic of GambetDC and won’t be returning to the council.
I am about to chair my final hearing as @councilofdc Labor Committee chair. I will be saying more on the D.C. Board of Elections, @Vote4DC, overturning & reserving the errant Office of Campaign Finance ruling that prejudiced voters against me and led to my defeat.
I am outraged. https://t.co/FVB932P2TQ
— Elissa Silverman (@tweetelissa) December 12, 2022
No additional action is expected on the bill in 2022, which means a D.C. council member would have to reintroduce the legislation in 2023 for it to amount to anything. If reintroduced, there won’t need to be another hearing on the bill, although the council could still hold one if it chooses.
Other council members could push the bill forward or introduce another to shake up the District’s sports betting model in 2023. Currently, however, the D.C. Council seems content to complain about GambetDC’s shortcomings every few months without doing anything tangible to improve the situation.
