A woman fills out her D.C. Lottery Powerball slip. Credit: Darrow Montgomery/File

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Last week, Maryland cut the ribbon on legal sports betting. Beating Maryland and Virginia to the punch, as those who have followed the path to legalized sports betting in the region from the beginning may well be aware, was one of the main reasons D.C. rushed its own legalization bill through emergency legislation, which led to a sole source contract with Intralot, the Greek company with which the D.C. Lottery already partners. With Virginia’s system up and running for roughly a year, it’s become clear that GambetDC, the city-run, mobile app, has failed to capture the local market. Coupled with the results of a long-delayed audit, the gulf between a successful state-run sports betting operation and the current state of affairs is even clearer.

From geolocation issues and poor odds, to a user unfriendly interface, GambetDC squandered its opportunity to capture the market. But despite its problems, there was still one good reason for D.C. residents to want GambetDC to thrive in the marketplace.

On March 10, at a performance oversight hearing, Ridgely Bennett, chief counsel for the Office of Lottery and Gaming, provided testimony (starting at the 10:58 mark of this video) that, “Currently, about 50 percent of gross gaming revenue (GGR) generated through GambetDC, or approximately $2.2 million, is net returned to the District.”

In contrast, private operators, like the Caesars Sportsbook at Capital One Arena, are taxed only 10 percent of their GGR. In theory, that means that GambetDC would bring in close to five times the tax revenue for the equivalent amount wagered through a private book.

The law that legalized sports betting in the District mandated an audit after two years, which was originally due May 3, but was delayed until September. The numbers from that audit reflected many of the aforementioned issues with GambetDC, but an even larger one in regards to the revenue that the city’s own sports betting platforms actually returned to District tax coffers.

According to the audit, which took place over an 11-month period from May 1, 2020 to March 31, 2021, GambetDC took in $5.52 million in gross gaming revenue. An OLG spokesperson confirmed this number to City Paper. Per the city’s contract, 42.5 percent of that amount went to Intralot. An additional $1.15 million was then paid out in promotional bonuses and bonus plays to bettors. Of the remaining $2.024 million, another $1.588 million also went to Intralot to cover marketing expenses, and credit card and transaction fees. That left just $444,398 in actual tax revenue for the city.

Much of the focus of the coverage of the audit was, understandably, on that low raw tax revenue number, and the just $1.8 million drawn between all operators. That’s a far cry from the more than $25 million per year in tax money projected when the bill was first proposed. But the real glaring number here is in the percentage of GambetDC revenue that made its way to city coffers.

That $444,398 represents just 8.05 percent of gross gaming revenue from the GambetDC platform. That’s not just a far cry from the “about 50 percent” from March’s hearing; it’s an even lower percentage than the private operators are required by law to provide.

These results call into question why the city’s agreement with Intralot is constructed this way. Why, to start, is the city responsible for covering the additional $1.588 million in operating expenses—nearly 29 percent of gross gaming revenue from the audit period—for Intralot? Why are bonus payouts not deducted until after Intralot has already taken its cut from GGR? Even just paying those bonuses out first, then giving Intralot 42.5 percent of the remaining revenue, would have more than doubled the amount of money returned to D.C. tax coffers, adding more than another $488,000.

Fortunately, the District is not stuck in this contract. There are mechanisms through which the Office of the CFO can modify it, which has been done three times already. The CFO can also terminate the contract entirely, if it is deemed to be “in the District’s interest.” While OLG responded to the audit by suggesting they would examine the prospect of creating friendlier betting lines to attract more traffic, if those changes have been made, they don’t seem to be reflected in any current odds on the app.

For bets like over/unders, bettors are often offered a -118 line, meaning they have to bet $118 to win $100. In many other betting forums, these lines are usually -110, or even -105. That may not seem like a huge difference, but consider what it means. At -110, a player would have to win 52.4 percent of the time (11 of every 21 bets) to break even. At -118, a player would need to win 54.1 percent of the time. For someone tossing down a casual $5 or $10 bet here and there, this difference might not matter. But for the serious bettors—the ones putting the real money down—that can easily be the difference in not just using another platform, but going to the illegal, offshore sites that legal sports betting is hoping to pull from.

The logic is easy enough to understand. The worse the odds are for bettors, the less money gets paid out in winnings, therefore the higher percentage the house keeps. But GambetDC’s poor overall performance during the audit period came despite having the highest percentage kept of any of the states surveyed, at 17 percent. Compare that to anywhere from 12 percent on the high end in Montana down to just 6 percent in Colorado.

It also means those left using the GambetDC platform, whether due to lack of information or lack of access to better odds on other platforms, are at the mercy of a more predatory system.

One former user of the Gambet DC app, who asked to remain anonymous, lives in an area designated as a zone in which the app should work. But he often had to walk several blocks further away from Capital One Arena to have functionality. He also shared that some of his coworkers, who work in Georgetown, will now drive across the river to Virginia to place bets—the exact opposite flow of traffic that D.C. sports betting originally promised.

GambetDC’s myriad issues help explain why Caesars Sportsbook at Capital One Arena has vastly outperformed it. In just eight months—starting in August 2020, when it became fully operational—it generated $13.856 million in GGR, with $1.386 million of that going back to the city in taxes. The handle, or total amount wagered, was nearly $95 million, almost all in person—less than 7 percent of that total came through their mobile app.

If the D.C. sports wagering contract is altered, it could potentially open the door for private operators to have city-wide access with their mobile apps. Queries to the Mayor’s office as well as Councilmembers Phil Mendelson and Kenyan McDuffie about the possibility of altering the contract were not answered as of Thursday afternoon. As for the operators, such a change would be an obvious boon.

“We can’t comment on any discussions we’ve had on this subject with city officials,” Caesars Sportsbook senior vice president of operations David Grolman tells City Paper. “If expansion were to happen, we obviously would embrace the opportunity to offer more passionate sports fans access to our mobile sportsbook offering.”

Until that happens, and unless GambetDC can provide both a more appealing product for users and a better share of their profits back to the city, D.C. sports betting revenues look to continue to fall well short of their projections.