Christian Genetski is chief legal officer at FanDuel Group. Griffin Finan is vice president of government affairs at DraftKings.
Months ago, the D.C. Council wisely moved ahead to consider legalizing sports betting. Since the Supreme Court declared the ban on a state’s right to authorize sports betting to be unconstitutional, states across the country have been racing to take advantage of the revenue opportunity sports betting presents and to eliminate — via legalization and regulation — the predatory, illegal, offshore market that has grown to more than $150 billion a year. Eighteen states have legalized sports betting; those up and running have demonstrated sports betting can be safely regulated, with proper age restrictions, advanced consumer protections and compulsive gambling safeguards, while bringing in revenue to fund local priorities.
Unfortunately, the D.C. Council authorized a unique, monopoly model, permitting one vendor to pursue the contract without competitive bidding, making it the sole provider of online sports betting. The council’s goal of bringing sports betting to the District is well-intentioned, but a monopoly model is fundamentally flawed.
Further, a series of problematic reports already have emerged about the contract with the selected vendor, including details that the contract will use inexperienced operators, will not bring the revenue anticipated and its implementation will continue to be delayed.
A simple solution exists: Open up the process.
The sports betting experience across the country has clearly shown an open, competitive market of licensed sports betting operators is the path to netting the most revenue and eliminating the illegal market.
Putting aside for a moment the clear problems with the current no-bid contract, any monopoly model is a mistake, as having one player in the sports betting space will make it impossible, for the District (or any location) to ever reach its peak growth potential. A sole operator will have no reason to create a compelling consumer experience or invest in innovation. This will undoubtedly result in consumers going elsewhere — whether to legitimate sports betting operators in other states or to illegal offshore sportsbooks, which offer no consumer protections and will steal revenue from the District.
We have some deep experience here: our companies are the world’s two largest daily fantasy sports platforms and two of the nation’s leading mobile sports betting platforms.
While we compete aggressively against each other for customers and market share, that competition has driven a better experience for consumers and generated more tax revenue into the states where we operate. Why? Because competition in any marketplace drives a better consumer experience, and competition for customers will bring more tax revenue to support important District priorities, all while breeding innovation, creativity and, ultimately, a more competitive product.
You don’t have to look far for evidence that open, competitive sports betting markets will thrive. After only a year of full operation, New Jersey has already surpassed Nevada (yes, Nevada) in monthly sports betting revenue.
How did it grow so quickly? New Jersey recognized the primacy of mobile betting and instituted a comprehensive licensing process that carefully vetted multiple operators, including our companies. Along with other operators, we have been competing fiercely for customers via marketing and innovative products. The competition is driving incredible success for the state, its budget and its sports fans. We are seeing the same pattern emerging across the country — competitive markets drive success.
More operators in the District’s future sports betting market will only lead to better products, greater customer engagement and, ultimately, more revenue for the District. Further, a competitive market will allow sports betting operators to partner with the District’s small businesses and spend major marketing dollars with local businesses, creating jobs and pumping more money into the D.C. economy.
The law passed by the council in December allows the D.C. Lottery to issue licenses to multiple, qualified sports betting mobile operators, so the problematic monopoly contract can quickly be scrapped and a more effective competitive market can take its place. Equally important, private operators could begin operating as early as one month after the issuance of regulations, which would help alleviate the revenue and budget shortfalls caused by the current contract. Renegotiating another sole-source contract could delay implementation for as long as a year and a half.
Illegal sports betting is happening on a massive scale, and it’s in everyone’s best interest to bring it into the sunlight, regulate it and tax it to fund schools and the needs of the District. States across the country are jumping at the opportunity, including the District’s neighbors, and first movers will have the advantage. If the council is serious about eliminating the illegal market, protecting consumers and maximizing revenue for the District, then an open, competitive online sports betting market is the only model and the no-bid, monopoly contract should be voted down.