Change is in the air in the District of Columbia.
The Washington, D.C. council voted this week to approve legislation that could create a more competitive market for online sports betting in the nation’s capital.
Soon after, it was announced the top regulator of D.C.’s current sports betting scheme is departing in the wake of that council vote, which could be viewed as a show of unhappiness with how wagering has rolled out in the district thus far.
The Connecticut Lottery Corp. announced Thursday that its board of directors had voted to appoint Frank Suarez as the new president and chief executive officer of the state-owned company, effective Aug. 1.
Suarez is leaving his post as the executive director of the D.C. Office of Lottery and Gaming (OLG) to take the new job, and he is doing so after defending the district’s sports betting status quo to lawmakers who want to invite some fresh faces into the district.
“I am honored and excited to join the Connecticut Lottery Corporation and to work with the talented team here to drive continued growth and success,” Suarez said in a press release. “Our focus will be on maximizing revenue for the state while maintaining the highest standards of integrity and responsible gaming.”
Before announcing his departure, Suarez had warned that overall sports wagering revenue for D.C. would drop with the model and tax rates envisioned by legislation for more competition in nearly district-wide mobile wagering.
Citing estimates from D.C.’s Office of Revenue Analysis, Suarez wrote in written testimony that FanDuel alone was projected to provide around $42.2 million more in revenue over four years compared to a previous estimate using the GambetDC platform FanDuel is replacing.
“The amount of additional handle and increased license fees generated by Class A and Class C operators will not be enough to make up for the reduction from 40% share of GGR [the FanDuel provides] to the lower 20% and 30% tax rates,” Suarez said. “The cannibalization of the 40% share of GGR will be too significant to make up the difference. In addition, without minimum guarantees, the District now has its sports wagering revenue at risk because it will be dependent on each operators ability to be profitable, which has proven to be inconsistent in the past as some Class A operators have had months without any tax provided because they had zero to negative GGR for that month.”
Yet those concerns were not enough to stop a majority of the D.C. council from supporting legislation that now contains the competitive market and tax rates Suarez warned about during a meeting this week.
One D.C. budget bill now proposes that so-called "Class A" operators, such as Caesars, would go from paying 10% of their monthly gross gaming revenue from retail and mobile wagering within two blocks of their brick-and-mortar book to 20% for retail and almost district-wide mobile wagering.
Class A operators would also see their licensing fees bumped to $1 million initially and then $500,000 for renewals after five years, double the current cost.
No time to wait
Meanwhile, new "Class C" operators, partnered with the district’s professional sports teams, would be charged 30% of their revenue from mobile wagering, in addition to a $2-million application fee and a $1-million renewal fee for the five-year licenses.
“Any delays are effectively going to continue the sole source monopoly and be to the detriment of existing Class As who have a retail operation at Gallery Place and at [the Washington Nationals stadium],” warned councilmember Kenyan McDuffie this week. McDuffie is the sponsor of the standalone D.C. sports betting bill that is now part of budget-related legislation.
A committee of the whole voted to shoot down an amendment that would facilitate the removal of the competitive sports betting provisions from budget legislation. The budget bill containing the expanded market measure could receive its final council reading as early as next week.
The budget and its sports betting-related provisions will still need approval from D.C. Mayor Muriel Bowser and are then subject to review by the U.S. Congress.
