Washington DC Sports Betting Bill Advanced by Committee

Washington DC Sports Betting Bill Advanced by Committee

A proposed Washington D.C. sports betting legalization bill calls for a “hybrid” system of operator access and now omits a data “royalty fee” after City Councilmembers updated the proposal during a finance committee meeting Wednesday afternoon.

The developments highlighted the latest review of the high-profile bill, which took up the majority of the council’s time at what was the longest meeting of the year for the Committee on Finance and Revenue.

It now heads to a first reading before the full council at its Dec. 4 legislative meeting.

If approved by the full Council, it would then go to a second reading and final approval at an ensuing meeting. As with any legislation passed by the Council, it still requires approval from the City Mayor as well as the United States Congress before it comes into law, but it appears neither body would vote down the proposal at this time.

Heading into the finance committee meeting, both the data fee and operator access were key sticking points in ongoing discussion over the legislation. While the meeting underscored momentum for legalized betting in the district, it also showed the complexity of negotiations for a major new gambling expansion in a jurisdiction with few traditional gaming entities.

That exacerbated concerns over implementation. Without any horse tracks, slot parlors or casinos, District officials turned to the government-run lottery, the most viable gambling entity in the city, as the chief purveyor for sports betting.

City CFO Jeffery DeWitt championed the lottery model as the best way to maximize tax revenue for the District. In supporting the de facto monopoly for the Lottery, he estimated the District would keep 20 percent of all money wagered, a disproportionally bullish projection when compared to historical trends. Most gambling operators keep about five percent of handle, or total money wagered.

In part as way to appease outside operators, the council decided against lottery exclusivity. Its current bill allows gambling companies to partner with other entities for exclusive arrangements at certain locations.

Councilmember Jack Evans said at the meeting that would include MGM’s partnership with Nationals Park, which would block the Lottery’s sports betting app for users in the stadium and only allow the MGM offering. He said this could also extend to partnerships between gambling companies and the city’s other stadiums, as well as bars or restaurants.

Those private partnerships would still pale in comparison to the reach of the Lottery.

Industry observers believe a competitive array of offerings from gambling providers would ultimately garner more tax revenue than a state-run monopoly. Evans said that while the District supports its “hybrid” system for now, it could and would pivot to a different model if it would prove more lucrative.

However the current limit on access for private companies has sparked fears it could lead the Council to vote against the bill when it's discussed next month – or greatly restrict financial opportunities if the bill is passed at all.

Leagues Fees Dismissed at Meeting

The recent meeting shows there is greater consensus on “data fees” for professional sports leagues.

Though backed by Evans, the fees had been opposed by most lawmakers in the District (and across the country). Despite Evans' neigh vote, Councilmembers on the finance committee removed a proposed 0.25 percent fee on winnings from the bill’s language at the meeting Nov. 28, citing in part the cut to the government’s own revenue potentials.

The leagues themselves had even come out against the fees, believing that selling the data themselves would be more financially viable than trading it to the D.C. City government in exchange for a 0.25 percent of gambling winnings.

The data royalty fees were an offshoot of what the leagues had called “integrity fees” in the run-up to sports betting legalization expansion. Saying they needed one percent of all winnings to combat corruption and match fixing, the leagues lobbied state lawmakers to give them cut of the winnings.

This pitch gained little traction in statehouses across the country, and was eventually abandoned. D.C. Councilmembers cited this when voting against the royalty fee proposal, and noted that none of the eight jurisdictions currently taking legal wagers included any sort of return fee to professional leagues.

Though Evans, who first trumpeted the bill and has shepherded it through much of the legislative process, has supported the fees, it seems unlikely they will reappear in future incarnations.

Could DC Have Sports Betting Next Year?

With or without the fees, Evans believes the final bill could be ready before the Washington Nationals take the field for the 2019 season.

Earlier this year, the Ward 2 representative said he could see sports betting in the district as soon as February. Most of the Council, as well as Mayor Muriel Bowser, already publicly support sports betting legalization.

Congress, which has final veto authority over this and any other Council bill, has floated federal-level regulatory framework, but seems largely ambivalent to the current state-by-state legalization process and unlikely to derail the City’s efforts.

Key private sector figures like Washington Wizards, Capitals and Mystics owner Ted Leonsis also back the measure.

Leonsis believes sports betting is inevitable at American stadiums and arenas, and has publicly touted sportsbooks within the district’s Capital One Arena, home to his most visible professional sports teams. A less contentious part of the bill’s language even prohibits any would-be sports betting operators from offering the games within a two-block radius of the district’s sporting venues, a clause that’s sure to please owners like Leonsis.

This still comes down to discussions over key details in meetings such as the one Wednesday afternoon before that reality can happen. If there are no radical departures from the bill’s trajectory, its aggressive implementation timeline can be attributed in part to neighboring states on both sides of the Potomac River.

How Regional Neighbors Could Impact the Bill

The Mid-Atlantic has been the epicenter of gambling expansion in the wake of the Supreme Court ’s decision earlier this year to strike down the federal ban on sports betting. Led by New Jersey, which has long had the most proactive gambling stance of any state east of the Mississippi River, other states near the eastern seaboard sought, and later implemented, sports betting.

That list now includes New Jersey, as well as Delaware, Pennsylvania, Rhode Island and West Virginia (Mississippi and New Mexico also take bets, as does Nevada, which has offered legal wagering for decades).

In-person sports betting is now available in Dover, Delaware as well as Charles Town, West Virginia, both when a few hours drive of the nation’s capital. It may not be long till betting options are even closer.

Pushed by lawmakers in the state House of Representatives, Maryland seemed poised to take a sports bet as soon as this year. But legislation stalled in the Senate, and Maryland didn’t join its regional neighbors. Despite the setback, elected officials are still keen on sports gambling, and will likely take up legislation again in 2019.

Action is picking up further down Interstate 95.

Virginia, long opposed to most forms of gambling expansion, is rapidly moving away from decades of resistance. The commonwealth’s first-ever casinos could open in the coming years, and lawmakers have already introduced a sports betting bill for next year’s legislative session.

Maryland, Virginia and D.C. are all pushing each other toward new gambling opportunities as means to keep revenue from crossing their respective borders and into one of the other jurisdictions. The moves by elected officials in all three reflect that reality, and underscore the significance of new gambling measures – and the timeliness in which they are enacted.

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