Washington, D.C. Legalizes Sports Betting, Gives Lottery Virtual MonopolyBy Jill R. Dorson | Published: December 18, 2018 at 4:28 pm
Washington D.C. has become the seventh and last jurisdiction to legalize sports betting in 2018. The D.C. Council voted, 10-2, on Tuesday to legalize sports betting in our nation’s capital, right under the nose of PASPA architect Orrin Hatch and others who believe that sports betting should be illegal, or, at the least, governed by the federal government.
The Council also passed emergency legislation late Tuesday, making the Sports Wagering Lottery Amendment Act of 2018 effective immediately, allowing the D.C. Lottery, the designated governing body, to begin work on regulations immediately. The new law allows for a unique single-app model that will give the D.C. Lottery a monopoly on mobile sports betting in the District of Columbia. This model generated conversation in previous readings and hearings about the new law, but on Tuesday, no questions were asked.
D.C.’s new law was met with mixed reviews from sports betting organizations across the country, who lauded the Council for legalizing sports betting, but say that the single-app mobile model is a major cause for concern.
Kudos And Caution The Reaction To New D.C. Sports Betting Law
Said Sara Slane, the American Gaming Association’s senior vice president of public affairs, via e-mail:
“While the vote today is progress, we remain deeply concerned about giving the lottery a virtual monopoly in the mobile market. Predictably, this will result in less investment and innovation, to the detriment of consumers and the ability of a nascent legal marketplace to compete with the accessibility and convenience offered by many established illegal wagering operations.”
The single-app model would allow the D.C. Lottery to be the only mobile app available within the borders of the city with some exceptions. While four professional sports venues under will be permitted to have sportsbooks on site, and to have their own mobile partners, those partners’ sites will be blocked once outside the sports facility.
So, for example, if the Washington Nationals partner with MGM (playMGM), fans will be able to use the app within the confines of Nationals Park, but once out and about in D.C., that app will be blocked and only the D.C. Lottery app will be available. The other venues permitted to offer brick-and-mortar sportsbooks include Capital One Arena (home to the NHL’s Capitals and the NBA’s Wizards), Audi Field (home to the MLS’ D.C. United) and St. Elizabeths East Entertainment and Sports Arena (home of the WNBA’s Mystics and the Capital City Go-Go of the NBA G-League).
The idea of a monopoly seems to obviously go against the idea of a free-market economy and would seem to, by definition, limit the amount of revenue the city will generate from sports betting.
Single-App Model Cause For Concern
In previous meetings, Evans has argued that his bill includes the ability to “pivot” away from the single-app model if it is not generating enough revenue for the city. He also said he followed the lottery’s recommendation when he included the single-app idea in his bill. There has clearly been concern on the Council, and among operators.
In fact, the NBA, PGA Tour, Major League Baseball, Monumental Sports & Entertainment, the Washington Nationals, MGM, DraftKings and FanDuel created a coalition lobbying for 10 mobile licenses in the District, as well as a royalty or “small fee” as they put it. The flyer the group circulated earlier this year argued that “a competitive market will allow operators to partner with the District’s small businesses and spend major marketing dollars at local businesses, creating jobs and contributing more money into the local economy.”
That argument should have been very attractive to D.C. lawmakers, who amended their bill to ensure that local women and minority owned businesses won’t be denied the opportunity to join the sports betting fray.
Three amendments to the bill were offered Tuesday, and all three passed unanimously. None will affect the essence of the bill — sponsor Jack Evans proposed an amendment that will authorize the D.C. Lottery, as sports betting’s governing body, to review what data sources sportsbooks are using to settle bets. He offered this amendment, he said, due to the concern among professional sports leagues representatives that “bad data” could be used, and by extension, sully the product. this will be addressed during the crafting of regulations. Evans second amendment requires sports betting operators to work with local unions.
A third amendment was proposed by Council Member Kenyan McDuffie. This gist is there will be some requirement that operators must work with women and/or minority owned businesses. This amendment also passed unanimously.
The new law allows for four types of sports betting licenses, one each of the operator, supplier, management services provider and an occupational license. The cost of a license for an operator, according to the text of the law, is $50,000 for a five-year term, with a renewal fee of $50,000. Costs for the other three types of applicants varies. The tax rate will be set at 10 percent of gross sports betting revenue.
Next, the bill must be signed by the mayor and then sent to Congress for approval. There is a period of 30 days before the law becomes effective. Per the D.C. Council website, “During this period of congressional review, the Congress may enact into law a joint resolution disapproving the Council’s Act. If, during the review period, the President of the United States approves the joint resolution, the Council’s Act is prevented from becoming law.” This is a rare occurrence.
D.C. Met Goal Of Beating Virginia, Maryland To The Punch
Of the two council members that opposed the bill, only David Grosso offered his thoughts on why while stating that he is wholly in favor of what the bill revenue will fund — early childhood education and crime prevention. Council Member Brianne Nadeau also voted against the bill.
“I plan to vote against this legislation again today because I am philosophically against legalizing sports betting in the District,” Grosso said. “I think the funding projections are (incorrect), but it will take a year or two to discover that they are way off and we will have lost crucial time to fund these important initiatives, which should be supported by a steady income stream, not on the backs of poor people.”
Objections and funky models aside, the Council has been focused on legalizing sports betting ahead of its neighbors, and with Tuesday’s vote, did just that. Virginia Delegate Mark Sickles has already filed a sports betting bill ahead of the 2019 session, and Senator Chapman Petersen is promising a second bill. Maryland will likely lag behind Virginia and the District, as it appears a constitutional amendment to allow sports betting would have to go to a vote of the people. The next chance for that is the 2020 election.
“Both Virginia and Maryland have indicated an interest in bringing up this topic when their sessions convene,” Evans said. “So it is important for us to get this up and running.”