D.C. Lottery seeking new platform for troubled sports betting app

Date:

D.C.’s Office of Lottery and Gaming is attempting to salvage its poor-performing sports gambling app, GambetDC, by turning it over to a private operator with a more established platform, the agency’s director said Thursday.

The decision, revealed at a D.C. Council hearing, came as a surprise to the lawmaker who arranged the discussion to chart a path forward for the troubled app before a five-year, no-bid contract with its maker, the Greek gaming company Intralot, was set to expire in July.

That agency head Frank Suarez had worked with Intralot to identify a possible subcontractor prompted fresh questions from city leaders unhappy with the performance of GambetDC. The app’s rollout in May 2020 was marred by technical problems, poor odds and other issues that damaged its reputation among D.C. bettors. The platform has brought just a fraction of the $20 million in annual revenue that D.C.’s former chief financial officer forecast in 2019, when the council awarded Intralot $215 million to develop city’s sole sports betting platform.

Suarez said the move would rapidly reverse negative trends while making the District more competitive with Maryland and Virginia, which launched sports betting operations after the District, and allow gamblers to choose from a variety of popular companies.

“It’s no secret that the private operators have a very strong brand, so they’re really able to use that branding and that advertising to draw in more players,” Suarez said at the hearing. “We want a bigger brand. We want something that players are used to and highly satisfied with, which is why we’re looking to make the change.”

Suarez said his agency will probably seek to extend a modified contract with Intralot beyond this summer, a plan that was immediately met with skepticism from council member Kenyan R. McDuffie (I-At Large), who led the hearing and chairs the council’s business and economic development committee.

Auditor: D.C.’s sports betting company is far behind on requirement to hire locally

McDuffie painted GambetDC’s shortcomings in stark terms: instead of the $84 million D.C. was projected to see by now, he said, the program over its lifetime has brought the city just over $4.3 million. Its performance declined in the last fiscal year, a dip Suarez attributed to increased payouts to bettors and businesses that host GambetDC kiosks.

In his opening remarks, McDuffie said he’s heard complaints from residents about usability, customer service and declining returns for D.C. — concerns that have only grown in recent years.

“Simply put, sports betting in the nation’s capital is not working,” McDuffie said at the hearing. He instructed OLG officials to “tell the public what’s gone wrong, and more importantly, what precisely they intend to do to fix the mess that’s been made.”

Suarez, who began leading OLG in 2021, said those initial revenue projections were too high. McDuffie contrasted D.C.’s troubles with Virginia and Maryland, the latter of which began its mobile sports betting program in 2022. Like most states that allow mobile sports gambling, users in those states can pick from a selection of big-name companies such as FanDuel and DraftKings.

These alternatives have spurred some frustrated D.C. gamblers to go across the city’s border for a better experience.

But Suarez said the growth of sports betting across the region has also driven down tax revenue derived from the city’s big, private betting operators that are only available to Washingtonians at professional sports venues: FanDuel at Audi Field, Caesars Sportsbook at Capital One Arena and BetMGM at Nationals Park. Some of them have their own mobile platform.

Suarez said that the popularity of private operators’ platforms, combined with GambetDC’s underperformance, spurred Intralot around November to come to OLG with a proposal to subcontract with an unnamed private operator that could replace D.C.’s platform.

Intralot, he added, realized “the platform they created just isn’t able to provide everything that our players are asking for.”

D.C. sports betting app now functional after Super Bowl outage, officials say

And even though GambetDC has seen improved odds for bettors and a revamped interface since its launch — its previously abysmal 1.6-star rating on Apple’s app store is now up to about 3.75 out of 5 stars — he acknowledged the brand has struggled to overcome its negative reputation.

“There’s an opportunity for us to get one of the private operator apps that players feel is much better than what we’re providing,” Suarez said. “It launched with a sort of clunky, not user-friendly app. And I think even with the changes we made to the interface, there’s still player perception the odds aren’t as good, and the app isn’t going to work as well … we just realized those perceptions would be difficult to change and it would be best to go ahead and just replace the platform.”

Suarez said that the Office of Lottery and Gaming had already submitted a proposal to the city’s Department of Small and Local Business Development to modify Intralot’s contract, though he did not name the private operator under consideration. He said his agency was asking for conditions as part of the subcontracting deal, like minimum guarantees while removing the D.C. Lottery’s obligation to pay operating expenses for the subcontractor.

But Suarez said he could not share revenue projections developed by the potential subcontractor until his agency approves the plan, fearing it could threaten the integrity of the process. (Intralot’s contract allows the company to enter into subcontracts, with the Office of Lottery and Gaming’s approval.)

Suarez called the subcontracting plan the “fastest” way to see an improvement, compared to rebidding the contracts, an option the agency is still considering but could also take up to a year. In comparison, he estimated that the subcontracting plan could come together by the end of February.

But the entire process raised concerns for McDuffie, who noted the city was similarly motivated by speed when it approved the sole-source contract in 2019 (McDuffie was among the seven lawmakers who ultimately voted yes in a contentious 7-5 vote that year). He questioned how the proposal came together and whether Intralot had considered other subcontractors.

Suarez said he wasn’t sure if Intralot talked to any other potential subcontractors but said he was confident in the process.

Betting inside a poke shop, he put D.C.’s sportsbook under attack

“I think you would understand that I’m incredulous,” McDuffie said. “What you’re suggesting is you’ve identified a subcontractor through some fairly opaque process you can’t share with the committee.”

Representatives for some private operators such as DraftKings and BetMGM testified at Thursday’s hearing in favor of another alternative: opening up D.C.’s marketplace similarly to Maryland’s and Virginia’s, with a tax rate that would ensure the city gets a sizable share of revenue. Former council member Elissa Silverman (I-At Large) introduced legislation to do just that in late 2022.

But Suarez warned an open mobile betting market in the District would come at the expense of retail businesses that have gotten a boost from operating GambetDC kiosks, a concern that was shared by McDuffie.

Lottery officials are expected to testify about the betting program again Feb. 14 as part of the council’s annual oversight process.

Share post:

Popular

More like this
Related

In major change, college athletes set to be paid directly by schools

The NCAA and its five power conferences completed voting...

Russell Whitaker Hired as Washington State Swimming Coach

Washington State University Athletics has tabbed Russell Whitaker to...

Montgomery County teachers protest as budget shortfall and possible job cuts loom

Montgomery County teachers protested outside a school board meeting...

FanDuel rakes in record revenue from DC sports bettors in its first month – Washington Examiner

Washington, D.C., has hit the jackpot with its new...