In its first full year of operation, Washington DC sports betting is only expected to bring in $1.5 million. However, due to steep marketing costs, the District betting app GamBetDC actually ran up a $4 million deficit.
Documents submitted to the DC Council show estimates as high as $20 million for the first full year. In February, the council estimated GamBetDC would bring in around $6.2 million for 2021.
What went wrong for DC sports betting?
For starters, operator Intralot had technical issues on Super Bowl Sunday, which made the mobile app inaccessible for iPhone users.
DC Lottery director Frank Suarez said the blunder caused “reputational damage.”
According to a lottery spokesperson:
“The Office of Lottery and Gaming’s (OLG) mobile app provider did not obtain approval from Apple for a required update resulting in the temporary removal of the GambetDC mobile app from the Apple iOS platform.
“OLG is reviewing the impact of Sunday’s outage on sales. It is important to note that GambetDC was operational, and players could bet using our website (desktop or mobile), Android app or at one of our 39 retail locations throughout the District.”
In 2018, before DC awarding Intralot the $215 million no-bid contract, former DC CFO Jeffrey DeWitt projected DC sports betting would bring in $27 million by 2021.
Lottery officials have said the 2018 estimates were inflated. Regardless, the District Lottery told the council marketing cost played a significant role in pushing the app into the red.
Competition spends marketing dollars
Other prominent sports betting operators know the cost of doing business in new markets.
Recently, Caesars Entertainment undertook a $1 billion advertising campaign focusing on customer acquisition and retention.
Similarly, DraftKings CEO Jason Robins noted the company spent $278 million on sales and marketing in the fourth quarter of 2021.
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Where does DC go from here?
The DC Council chose the single-operator model to maximize revenue. However, that formula has not paid off.
Some gaming analysts have noted that DC sports betting could shift its model to allow district-wide mobile betting. In doing so, it could tax private to operate 20%.
The only other available options in DC are BetMGM and Caesars Sportsbook. Each operates retail locations with a two-block mobile sports betting radius.
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