Stadium Sportsbooks Multiply, but Face Growing Online Challenge
DC’s Competitive Market Offers Glimpse of How Sports Betting Could Play Out Around the Country
The sportsbook inside Washington, D.C.’s Audi Field was the first to open in a Major Soccer League stadium. (FanDuel)
Across the country, fans attending professional sports games can expect to see something new inside their stadiums and arenas: the sportsbook.
It can look like a typical sports bar that’s been dipped in the brand of a sports gambling conglomerate such as Caesars Entertainment, DraftKings or FanDuel. With televisions displaying half a dozen different sports games and scores, customers can relax at the bar with a beer, or make things a little more interesting at a betting kiosk or window.
While these establishments that take and pay out bets on sporting events can vary — a kiosk at a local bar, a sleek ballpark lounge, an app in the Apple store — they are becoming the topic of collaborations between professional sports teams and major gaming companies almost as quickly as states are legalizing sports betting.
Those partnerships have the potential to affect real estate across the country by offering a new opportunity to develop high-end entertainment retail space inside multimillion-dollar sports venues. But, like the rest of the physical retail market today, it faces competition from online gaming.
“A lot of people are interested in sports wagering,” said Brian Vasile, a self-described pioneer in the industry who opened Washington, D.C.’s first and only independent sportsbook inside his bar, Grand Central. “I think there will be many, many more sportsbooks. Whether it’s via a mobile app or retail, I think it’ll be pretty standard in probably 10 to 15 years.”
D.C. is on the forefront on brick-and-mortar sports betting, with sportsbooks inside three of its four major professional sports arenas. The nation's first in-stadium sportsbook opened at D.C.’s pro basketball venue, Capital One Arena, in May 2021, thanks to a partnership with Caesars subsidiary William Hill. The two-story, 18,000-square-foot venue features 17 betting windows and 12 kiosks, as well as 100 TVs.
This year, D.C. welcomed the first sportsbooks to operate in a Major League Baseball and Major League Soccer stadium, comprising betting sites with BetMGM at Nationals Park and FanDuel at Audi Field. Other major sports markets have followed, with Arizona closest behind, opening sportsbooks in its pro basketball, baseball and football arenas in the past year. Major cities such as Chicago, Cleveland and New York are considering or building in-stadium betting lounges.
The Chicago Bears are planning a $5 billion stadium complex with a sportsbook in Arlington Heights, Illinois. (Chicago Bears)
Boosting Tax Revenue
The shift reflects a change in societal attitudes toward gambling. Once considered an immoral pastime, sports betting has won the hearts of more than half the states, largely because of its positive economic impact. Since the U.S. Supreme Court struck down the federal ban on sports betting in 2018, sportsbooks have raked in close to $6 billion, generating more than $700 million in tax revenue, according to Legal Sports Report.
As of November, 34 states have legalized sports betting, with even more states considering legislation. This has allowed sports wagering to spread beyond the traditional gaming epicenters such as Las Vegas, Nevada, and Atlantic City, New Jersey. Because the industry is new for so many states, regulation and policy issues are cropping up, threatening to limit the economic benefits of gambling.
The idea is catching on fast enough that newly constructed stadiums are likely to include a sportsbook. The Chicago Bears franchise is developing plans for a new $5 billion home field and campus in a suburb northwest of the city. In early November, Arlington Heights, Illinois, officials approved a zoning change at the development site for the new arena to include sports betting.
The Buffalo Bills, also looking to build a new football facility in Orchard Park, New York, entered into a multiyear partnership making Caesars Entertainment the “official mobile sports betting partner” of the team. The partnership gave Caesars naming rights to a new sportsbook lounge at the existing Highmark Stadium and has the potential to continue until the new stadium’s planned opening in 2026.
Some newer arenas, such as SoFi Stadium, which opened near Los Angeles in 2020, are without sportsbooks as they wait on state governments to legalize sports betting.
Grand Central is Washington, D.C.’s only independent sportsbook. The other three retail sportsbooks are located inside professional sports arenas. (Grand Central)
For brick-and-mortar sportsbooks, room for growth may be limited once all the major arenas get them, as smaller-scale operations could struggle to compete.
Like most jurisdictions with specific legislation for stadium sportsbooks, D.C. mandates “geofencing,” a way of containing sports betting within a certain space. In D.C. that translates to two-block enclaves surrounding sports venues. In the case of the Capital One Arena, users are only able to make bets in person or using William Hill apps inside the two-block radius surrounding the venue. This forces users to switch apps if they leave that radius, and it excludes independently owned sportsbooks.
One “challenge experienced by some local businesses is the two-block exclusion zone surrounding the Class A sportsbooks,” the D.C. Office of Lottery and Gaming, known as D.C. Lottery, said in a statement to CoStar News. “Businesses located within this two-block zone are prohibited from operating a sportsbook.”
While D.C.’s in-stadium or Class A sportsbooks are almost at maximum capacity, with the St. Elizabeth’s East Entertainment and Sports Arena the only facility left in the city eligible to open a sportsbook, its independent Class B sportsbooks market has seen very little business.
In the fall of 2021, Grand Central, a 15-year-old bar in D.C.’s bustling Adams Morgan neighborhood, became the first restaurant in D.C. to open a sportsbook. A year later, it remains the only Class B sportsbook in the District, according to D.C. Lottery.
Owner Vasile has said this is because of the high barriers to entry: Prospective business owners have to pay a $100,000 nonrefundable application fee if they want to open a sportsbook in D.C.
“You kind of have to gamble to gamble,” Vasile said. “The barrier for entry can be intimidating.”
Even after he made it through the application process, Vasile struggled to compete with the stadium sportsbooks at first. After attempting to advertise on Google and Hulu, he switched his focus to “hyper local” marketing using word of mouth, local social media influencers and bus signs to publicize his business.
“Our marketing kind of switched from macro to micro because I can’t spend a billion dollars in marketing like MGM did in 2021,” he said.
Vasile said he is planning to open a second location by 2023 and there is currently one other sportsbook application in the D.C. Lottery portal. Still, that pales in comparison to a state such as Indiana, which has 13 retail sportsbooks and legalized sports gambling around the same time as D.C., per SportsBook.com.
A sportsbook opened at Phoenix’s Footprint Center in September 2021. (Troutfarm27/Wikimedia Commons)
Perhaps the biggest competition for brick-and-mortar sports wagering, like most physical retail today, is the internet. Bets made using mobile apps and websites have surged since 2018. In the first few months of being legal, sports gambling was cordoned off to casinos and made up less than 1% of wagers. Mobile betting overtook retail during the pandemic, however, and now makes up more than 80% of all bets, according to a Bloomberg report.
“I think there still will be a market for the brick-and-mortar retail physical sports gaming places, but I do think the way of the world is mobile apps,” said D.C. Councilwoman Elissa Silverman, who is pushing for legislation to expand the city’s mobile betting offerings. “Advertisements from FanDuel and DraftKings is much more about betting on your phone than going to a bar or restaurant to bet.”
The gap in mobile versus in-person betting is slightly smaller in D.C. While the number of dollars wagered online grew 59% in the city, wagering increased 44% in retail locations during fiscal year 2022, according to D.C. Lottery. The gap could also close more next year because two of D.C.’s four sportsbooks opened halfway through the year.
D.C.’s brick-and-mortar retail has found success partly because of its mobile app shortcomings. The city only allows one sports betting app, GamBetDC, which is owned and operated by D.C. Lottery. GamBetDC has been fraught with technical problems that came to a head when the app crashed on Super Bowl Sunday this year, preventing users from placing bets.
“What a lot of residents have told me is the D.C. GamBet [app] is so bad that they will travel to Virginia to place bets on their phone,” Silverman said. She responded to the complaints by introducing a bill in October asking the Council of the District of Columbia to allow other sports betting apps besides GamBetDC.
If passed, the legislation would help D.C.’s gambling market compete with Virginia, which allows a wider variety of online sports betting options. Maryland will also probably pile on the competition, as state officials launched its first 10 mobile sportsbooks Wednesday, more than a year after the state legalized sports wagering. Virginia now offers at least 13 different sports betting apps, and in Maryland, there are five apps offering early registration to bettors, according to Legal Sports Report.
While the policy would most likely improve convenience for users, it could put a dent in the retail sportsbook market.
“It would be detrimental to me if someone can sit at a bar stool in my sportsbook and wager on an app,” said Grand Central’s Vasile. “They can do that now with GamBet, but the more competition you add, it would make it more difficult for me.”