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D.C. Sports Gambling Fails to Meet Expectations

September 18, 2021 | Sports Betting

Kathleen Patterson, District of Columbia Auditor (www.dcauditor.org)

Audit Team

Gregory Woods, Auditor-in-Charge

Toya Harris, Audit Supervisor

A report by the Office of the District of Columbia Auditor

Executive Summary

Why ODCA Did This Audit

ODCA is mandated by D.C. Code § 36– 621.11(f)(3), to prepare a study evaluating the performance of sports wagering to determine the level of District revenue generated by mobile and online gaming compared to similar jurisdictions.

What ODCA Found

  • The Office of Lottery and Gaming (OLG) operates GambetDC and regulates the private sportsbook William Hill, located at the Capital One Arena. Delays in establishing GambetDC retail locations adversely affected the platform’s performance. The William Hill sportsbook retail location earned more sports wagering revenue than GambetDC, which only offered betting through the GambetDC mobile app during our review.
  • In comparison with four states that operate sports wagering, the District allocates 42.5% of gross gaming revenue (GGR) to Intralot. This amount is more favorable to the District than the 49% share of GGR allocated to contractors in support of the respective sports betting platforms in New Hampshire and Rhode Island. Montana also partners with Intralot and distributes only 40% of its GGR.
  • The District also pays “other direct operating costs” such as marketing and advertising incurred by the contractor (Intralot) from the District’s share of GGR. After paying Intralot their 42.5% share of GGR which totaled more than $2.34 million, OLG paid an additional $1.58 million in other direct operating costs incurred by Intralot from May 2020 to March 2021.
  • Despite having the smallest total handle (amount wagered) during the review period, GambetDC has the highest GGR margin percentage compared to other states. Although a higher GGR margin would mean that GambetDC retains a larger percentage of wagers, lower GGR margins may incentivize more bets, resulting in more revenue.
  • Looking at states that also serve as regulators of sports wagering, the District and Colorado have enacted a 10% tax on privately sponsored sportsbooks GGR. Illinois has a tax rate of 15% of GGR.
  • The reduced commuter population due to COVID-19 adversely affected GambetDC’s performance during our review as major sporting events were cancelled or postponed.

Steps D.C. Could Consider to Enhance Revenue

  • Building out a GambetDC retail network to increase revenue as authorized by the legislation.
  • OLG granting operator licenses to additional privately sponsored sportsbooks to enhance revenue as also authorized by legislation.
  • Increasing the 10% tax rate on GGR to enhance total revenue.
  • Negotiating terms to eliminate OLG’s obligation to cover Intralot’s other operating expenses.
  • Increasing payouts to further incentivize betters to place bets with GambetDC and potentially increase overall revenue.
  • Improving the GambetDC app’s user experience and resolving technical issues experienced by users to attract additional betters.

Click Here to download the complete Audit Report

SOURCE: A report by the Office of the District of Columbia Auditor.

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