An audit carried out by the Office of the District of Columbia Auditor (ODCA) has concluded that the DC Lottery’s sportsbook product GamBet has performed far below expectations for its launch.
As a result, the report called for the state to offer improved odds, license more private sportsbooks and reduce expense payments to sportsbook provider Intralot.
OCDA conducted the audit in order to determine the amount of revenue generated in the district compared to other states – Rhode Island, Montana, New Hampshire, Illinois and Colorado.
GambetDC was found to have a higher revenue margin percentage compared to other states, retaining 17% of all sports wagers, while in second-placed Montana, the margin was 12%. However, OCDA advised that improving betting odds and increasing payouts to players would beneficial. It said that by lowering the revenue margin, it could incentivise more wagers.
“GambetDC is an outlier in terms of GGR Margin compared to the other states,” it said.
OCDA also found that the 42.5% of gaming revenue which the District allocates to Intralot compares favourably with the 49% paid in other states like New Hampshire and Rhode Island where there are similar agreements with contractors.
However, OLG also covered a large share of Intralot’s operating costs, which amounted to ($1.58m).
Intralot extended its contract with DC Lottery back in 2019 to much controversy, as a lawsuit argued the deal violated the Home Rule Act that established the powers of Washington D.C. A temporary suspension was placed on the contract, however the Washington DC Superior Court later denied the issuing of an injunction.
The audit found that delays in establishing a retail presence for GambetDC – which launched in July – had severely affected the company’s performance, as it could only offer sports betting via its mobile app. William Hill’s retail sportsbook locations all generated more revenue.
The impact of the novel coronavirus (Covid-19) also proved to be a major contributing factor, due to reduced commuter traffic and the cancellation/postponement of major sporting events.
The state suffered a month on month revenue drop in July as well as a 34.4% drop in handle.
OCDA’s suggestions for how to increase revenue in the state included granting more licenses to privately owned sportsbooks, and increasing the tax rate on gaming revenue which currently stands at 10% – although OLG noted that the tax rate is set by the laws of the state.
In addition to establishing a retail presence for Gambet DC, it was also proposed that increased payouts would lead to further wagers, and that OLG should revise their obligation to cover Intralot’s operating costs.
OLG says they are reviewing the contract with Intralot to determine if those costs should be added to the percentage of GGR paid to the contractor or if the services covered under the direct costs should be transferred to a separate contract.
“Sports wagering in the District has the potential to generate revenue similar to that received by other states and OLG should consider options reflected in this report. Overall, 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.”
In response to the findings from the audit, OLG executive director Frank Suarez said: “OLG management generally accepts the assessment of the sports betting landscape in the District with some exceptions that are further detailed in our responses.
“Despite the initial negative impact of the COVID 19 pandemic on professional sporting events and the number of commuters and tourists that visit the District, significant progress has been made since launching sports wagering in the District. We are excited about the future and developing a robust and lucrative sports betting business that supports the economic vitality of the District.”