An in-depth audit

The Office of the District of Columbia Auditor (ODCA) carried out an audit into the DC Lottery’s sports betting offering and has concluded that the performance of the GambetDC app, managed by Intralot, has been well below expectations.

This report, released on Thursday, outlines how tax revenue from May 2020 to March 2021 was about $1.8m. Of this revenue total, $1.4m came from GambetDC’s sole private competitor during this time period – William Hill. The previous DC Lottery estimate was that sports betting tax revenue for the period would be $6.2m.

GambetDC could increase the betting handle if it lowers the revenue margin by offering better odds

The reason for the audit was to figure out how much revenue the district is generating when compared to other states. The report found that GambetDC had a greater revenue margin percentage than other states, keeping 17% of all sports bets. For comparison, Montana was in second place with a margin of 12%. The ODCA recommends that GambetDC could increase the betting handle if it lowers the revenue margin by offering better odds.

The report showed that Intralot’s 42.5% share of gaming revenue compares favorably to the 49% in states like Rhode Island and New Hampshire which have similar deals in place with contractors. However, the Office of Lottery and Gaming (OLG) did cover $1.58m of Intralot’s operating costs.

Numerous delays caused issues

The report noted that the COVID-19 pandemic did have a negative impact on sports betting performance in the district because of less commuter traffic and the cancellation of significant sporting events. The most recent sports betting figures for Washington, D.C. are for the month of July. William Hill had a total handle of $10m, accounting for about 78.2% of July’s total betting handle. GambetDC had handle of $2.15m, while BetMGM accepted $643,498 in bets.

Among the suggestions in the report to get more revenue into the state’s coffers from sports betting are the ODCA’s suggestions to increase the tax rate on gaming revenue and allow more private licensed sportsbooks. It also proposes reviewing the OLG’s covering of Intralot’s operating costs and improving the user experience on the Intralot-powered app.

Future outlook

The report outlined the belief that there is potential to generate revenue for sports betting that would be similar to other states. It concluded: “….the future success of GambetDC will be tied not just to the strength of the District’s recovery from the pandemic but also to the steps the OLG takes to increase sports wagering revenue.”

OLG executive director Frank Suarez responded to the audit, stating that the OLG management generally accepts the views outlined in the report, with just a few exceptions. He does believe that significant progress has been made since sports betting went live in the district. He said: “We are excited about the future and developing a robust and lucrative sports betting business that supports the economic vitality of the District.”

A turbulent few years

The DC Lottery’s awarding of the sports betting contract to Intralot was controversial. There was no competitive bidding process and it gave Intralot a lot of control over the district’s sports betting market. Sportsbook operators are able to partner with professional sports teams in the district, but their mobile sportsbooks can only operate within a two-block radius of the teams’ stadiums. GambetDC then is the sole sportsbook available to bettors in Washington, DC outside of these areas.

numerous court challenges over the awarding of the contract to Intralot

There were numerous court challenges over the awarding of the contract to Intralot, which caused delays to the rollout of GambetDC. There were also delays to the launch of retail sports betting through GambetDC. This side of the offering only got up and running in July and the report believes that this delay also has had a big impact on performance levels. William Hill has had retail sports betting operations available for some time and has been generating greater revenue than GambetDC across the board.