When Virginia decided to legalize digital sports betting in 2020, it did what any sensible government would do: It allowed privately owned sports betting applications to compete among each other to deliver the best product, and then, it taxed the revenue of those companies.
The District of Columbia chose a different path. Instead of inviting private companies to compete against each other in one market, the district decided to give one company a virtual monopoly on all digital betting in the city. In exchange for granting this company a monopoly, the city government would then take a bigger chunk of the company’s revenues.
Problem is, before a government can tax a company’s revenues, there must be some revenues to begin with. And for 2021, the company the district contracted with to create the city’s sports betting app, GamBetDC, lost money.
It’s not that GamBetDC lost money on actual betting. It did manage to produce $1.5 million in gambling revenues. But GamBetDC also spent $6.2 million advertising the app, leaving the project almost $5 million in debt.
There were trouble signs about the venture from the beginning. Not only did the district elect to grant one company a gambling monopoly in the district, but it also awarded that monopoly on a no-bid basis. There wasn’t even a competition between companies to get the monopoly!
And then guess what, most of the subcontractors identified in the contract just happened to have ties to city politicians, such as Mayor Muriel Bowser and Councilman Brandon Todd. Everett Hamilton, who ran communications for Bowser’s mayoral campaign, was paid millions to provide “end to end digital marketing and advertising services for sports betting and online products.” Unlike district taxpayers, at least he made some money off this.
It’s not that district residents are against gambling. A private company called William Hill has been making millions from in-person and digital betting at Capital One Arena. (The William Hill app only works within two blocks of Capital One Arena.) So, experienced sports betting companies are managing to turn a profit in Washington just fine. It is just the no-bid government monopoly company with ties to the mayor that can’t seem to get it together.
Maybe the district’s residents are getting the best deal here. Sports betting is essentially a tax on lower-income residents. Maybe the district’s incompetence is preventing district residents from losing more money! But if the residents are losing money, and corrupt contractors are managing to skim off the top so taxpayers get nothing, then that is a double whammy for district voters.
