District of Columbia Committee on Business and Economic Development
Public Oversight Hearing
Chairperson McDuffie and Councilmembers,
My name is Michelle Minton, and I am a senior policy analyst with the Reason Foundation, a nonpartisan public policy think tank. I am grateful for the opportunity to provide public comment on the state of the District’s sports betting market and offer a suggestion on how the Council could make the market more competitive, attractive, and profitable for the city and its residents.
When the City Council overwhelmingly voted to legalize sports betting in 2018, it did so for many good reasons. The first, was the DC’s Council’s recognition that outlawing sports betting, like other prohibitions, was ineffective at preventing illegal sports wagering within the city, counterproductive, and costly. Legalizing, regulating, and taxing the activity was intended to give residents and visitors legal and safe options for sports betting, guard against problem gambling, and generate much-needed tax revenue for the city.
Back in 2018, the Council was told to expect around $90 million in tax revenue during the first four years of legal sports betting in the city. Nearly three years in, however, the city has collected less than $4.5 million in taxes total, most of which has come from the live betting kiosks at Capitol One Arena.
The explanation for this poor performance is not complicated: DC’s sports betting market is simply and fundamentally unattractive to bettors. This rejection of DC’s legal sports betting market can be seen clearest in the handle collected by our licensed bookies, which, since its launch almost three years ago, has amounted to a grand total of less than $130 million in wagers.
That is less than the handle accepted by Maryland’s seven mobile sportsbooks in January 2023 alone, which accepted a combined $440 million in bets and generated nearly $2 million in tax revenue for the state.
Online and mobile gambling are increasingly critical components of the gambling industry, comprising 20 percent of total gaming revenue in 2022. But, the online sector is even more critical for any sort of gambling market in DC since the city has no casinos and limited options for in-person betting. The performance of DC’s sports betting market was always going to depend on the performance of its mobile sports betting sector. Unfortunately, in 2019 the DC Council at the time chose to authorize just one company, Intralot, to operate a single betting app, GamBetDC, for mobile sports betting throughout the city.
The decision to bypass the normal competitive bidding process and offer a no-bid five-year monopoly contract on mobile sports betting to a single entity might have initially seemed the quickest way to roll out legal sports betting in DC and seize the critical first-mover advantage ahead of its neighboring states like Maryland, Virginia, and West Virginia. Yet, neither that first-mover advantage nor the promised deluge of tax revenue came to fruition. In fact, during its first year of operation, GamBetDC actually cost DC $4 million.
There are many reasons why bettors dislike GamBetDC, including its troubled rollout, glitchy geolocation, service outages, and general user-unfriendliness. On top of that, however, it is also more expensive, offering worse odds and payouts than virtually any other private sportsbook, legal or otherwise. If GamBetDC were truly the only game in town, it might have generated more interest. But, it never was and never will be gamblers’ only option since they can always return to the unlicensed bookies and offshore websites they bet at before sports betting was legalized.
Today, however, DC gamblers need not skirt the law or go far for better options; they can merely travel to the Virginia border to access one of that state’s 14 mobile sportsbooks from their phones. This problem will only worsen as the legal sports betting markets continue to open throughout the region and as lawmakers in other states adjust regulations to make those markets more competitive. Luckily, the solution to the problem is nearly as simple as the cause: The Council should end the monopoly on mobile sports betting in DC. As proposed by former Councilmember Elissa Silverman, who introduced legislation last year, the city should create pathways for private companies to apply for mobile sports betting licenses.
Opening the market to competition would make those license holders more responsive to consumer needs, spur innovation, and reduce prices. Competition would help create a legal market that might appeal to bettors in and outside of DC and finally begin to generate the economic benefits the Council was originally promised, which other states are already reaping.
Senior Policy Analyst, Reason Foundation