The Washington D.C. Council’s (long overdue) expansion of the city’s sports betting market is welcomed news to the District’s resident bettors and daily out-of-town commuters. It also represents a new reality for U.S. sports betting nationwide.
The expansion, passed as part of the city’s upcoming budget and expected to be formally approved in the coming weeks, will allow up to seven mobile operators. Neighboring Virginia started 2024 with 16 sportsbooks. On the north side of the Potomac River, Maryland has 12 operators and allows up to 60.
The D.C.’s government-imposed sportsbook licensing limits would have drawn outcries in recent years. Now there may not be enough operators willing - or financially able - to fill the seven spots.
Major shifts continue
D.C.’s ill-fated sports betting experiment was a major catalyst for larger sports betting market infrastructure.
One of the first jurisdictions to approve legal mobile sports betting, Washington, D.C. policymakers in 2019 engineered a de facto city-wide digital sports betting monopoly. Councilmembers damaged the market further with a no-bid contract to Intralot, the city’s lottery provider, to create a sportsbook.
The ensuing monstrosity, GambetDC, was (justifiably) ridiculed by industry stakeholders and sports bettors alike. The glitchy, aesthetically dull (and poorly named) sportsbook with non-competitive betting lines and limited promos routinely drew less monthly handle than the city’s in-person sportsbooks.
This failure helped reinvigorate pushes for wide-open, competitive markets in the ensuing wave of sports betting legalizers. By 2022, multiple states allowed licensing structures for up to several dozen sportsbooks.
By 2024, few states will need licenses in the double digits.
Market realities have killed off scores of sportsbooks that had high hopes – and millions of dollars in investments. WynnBet, TwinSpires, 888, PointsBet, and Tipico, all of which entered with bold projections to shake up the U.S. marketplace, have been effectively shuttered or acquired by competitors. A large group of less prominent sportsbooks (farewell, MaximBet) have also ceased operations.
DraftKings and FanDuel have essentially created a U.S. duopoly, grabbing between 66% and 75% (or more) of the total market share in most states in which they operate. Another 10-15% or so of share is split between the No. 3 (BetMGM) and No. 4 (Caesars). This leaves low single-digit shares apiece for the next wave, including ESPN BET, Fanatics, bet365, BetRivers, and Hard Rock.
Sixteen Virginia mobile sportsbooks accepted bets in Q1 2024. The nine books mentioned above accounted for more than 99% of the handle.
Virginia sports betting market share - Q1 2024:
— Ryan Butler (@ButlerBets) June 26, 2024
FanDuel 40.14%
DraftKings 27.15%
BetMGM 10.79%
Caesars 6.09%
ESPN Bet 4.95%
bet365 4.66%
BetRivers 2.20%
Hard Rock 1.85%
Fanatics 1.42%
Betway 0.26%
Bally Bet 0.10%
Betfred 0.10%
Superbook 0.10%
Unibet 0.08%
SI 0.07%
Betr 0.02%
New realities set in
Several of those sportsbooks in the bottom 1% have since departed Virginia – and every other state. Though rumors persist another company, perhaps outside the realm of traditional gaming, could seek to enter the space, the market is becoming increasingly entrenched; there is no longer a need for a wide-open competitive license structure because there are not enough sportsbooks left to apply.
In D.C., FanDuel has temporarily replaced Gambet as the district’s lone mobile sportsbook operator. Though it has threatened to leave the market should a D.C. sports betting expansion pass, it would presumably remain a top-grossing book in the city if remains.
The new regulations would require all operators to partner with one of the District’s pro sports teams or their respective host venues. FanDuel could remain due to its sportsbook at Audi Field. BetMGM and Caesars, which already operate retail sportsbooks at Nationals Park and Capital One Arena, respectively, are expected to be eligible for city-wide mobile licenses.
DraftKings and Fanatics have both publicly lauded the D.C. Council’s move and seem poised to strike market access partnerships. That leaves two spots – and the possibility they may not be filled.
BetRivers and ESPN BET already operate in both Maryland and Virginia and would seem like the next likeliest candidates. Bally Bet, live in Virginia and set to launch in Maryland, as well as Superbook (live in both) could also be theoretical candidates, but neither have been able to crack the 1% market-share threshold. Even BetRivers and ESPN BET, perennially top 10 nationally in market share, may hesitate to enter one of the nation’s least-populated jurisdictions and one that is set up to, again, be dominated by the existing market leaders.
This could make D.C. the perfect showcase for the technological advantages that have created such a top-heavy market.
FanDuel and DraftKings have dominated the market in no small part due to their expansive betting catalogs and technological capacities to stack these wide-ranging bets into lucrative parlays. These two have also been among the first operators to consolidate all state logins to a single app, instead of the state-by-state login/log-out requirements of many of their closest competitors.
In D.C., where several hundred thousand people cross over from both Virginia and Maryland daily, this ability to bet seamlessly will make an even more pronounced difference. Even offered a plethora of options, bettors are focused more on spending their money with books that give them the most to bet on – and easier ways to do so.
Bottom line
Washington, D.C.’s failed monopoly helped spark the industry-wide push for large, competitive markets. Five years later, its competitive, though still limited, setup is a microcosm of the industry’s present and future. Government sportsbook caps will become obsolete when the market has created such a high barrier to entry.
