A beneficial move
As the futures of the NHL’s Washington Capitals and NBA’s Washington Wizards in DC remain uncertain, the state of Virginia just revealed it had its least-profitable month of sports betting in 2023.
preliminary and exploratory” discussions about moving the teams
According to the Washington Post’s June report, Monumental Sports & Entertainment (MSE)—which owns the Wizards and the Capitals—met with government officials to have “preliminary and exploratory” discussions about moving the teams out of the nation’s capital and into Arlington, VA.
MSE has not submitted a formal plan to move either of the franchises, but it prompts an interesting question: could the answer to the plummeting sports betting figures be relocating the Capitals and Wizards to Northern VA?
On a downswing
The Virginia Lottery reported retail and online sports betting handle of $322m in June, a 20% month-on-month decrease on May’s figure. It was also the least-trafficked month since August 2022, although the total was still up more than 10% year-to-year.
Sportsbooks paid out nearly $293m in winnings, resulting in just under $30m in gross gaming revenue for the operators. That number ultimately ended in $26.4m after deductions, which resulted in $3.9m in tax revenue based on the state’s 15% tax rate.
Despite the lowest returns of 2023, sportsbooks still maintained a 10% hold. That marked the fourth time this year the hold stayed above 10%, and every month has been above 9%.
July and August are expected to be even worse for sportsbooks
Based on the precedent established since sports betting was legalized federally in 2018, July and August are expected to be even worse for sportsbooks from a handle and revenue perspective. There could be an injection of funds from Women’s World Cup bettors, but the NBA, NFL, and NHL all being out of action will cause operators to take a hit.
Despite that, the potential relocation of the Wizards and Capitals just about 20 minutes south of their current home in the Capital One Arena could have massive short and long-term effects on sports betting participation—even when they are out of session.
Is relocation realistic?
The Capitals and Wizards averaged 18.6k and 17.3k game-attending fans in 2022-23, ranking seventh and 21st in their respective leagues. They were also unsurprisingly two of the most popular teams to bet on for residents of the DMV (DC, Maryland, and Virginia).
Although the NFL is the king of the sports betting world, it has been proven that fans are incentivized to place bets with greater regularity if there are teams nearby, especially if those teams are competitive.
Ohio, for example, drew a betting handle of $1.11bn in its first month with legal sports betting in January 2023. It came as little coincidence that the Cincinnati Bengals were in the midst of a playoff run, helping drive bettors to the kiosk windows and online apps.
Arlington was the seventh-wealthiest county in the US based on median income
According to Yahoo Finance data, Arlington was the seventh-wealthiest county in the US based on median income in 2022. Nearby Fairfax, Falls Church, and Loudon—all Northern Virginia entities—were in the top five.
According to a study by Seton Hall University, 48% of sports fans said that they have placed at least one bet on a sports event. The takeaway from that is that the rumored Arlignton home would have not only the financial power from locals to fund sports fandom and patronage, but their affluence would also likely spill over to sports betting.
Opportunity for relocation
The Capitals already practice in Arlington at MedStar Capitals Iceplex, a 1,200-person arena right at Ballston Quarter. The rumored new home for them and the Wizards would be near Amazon’s new HQ2 in Crystal City, an urban site in southeast Arington.
the worst building deal in professional sports”
One of the reasons that MSE founder and CEO Ted Leonsis met with DC officials was to discuss the need for renovations at Capital One Arena. In 2016, the Post revealed that Leonsis called it “the worst building deal in professional sports,” and that it cost him $36m annually in mortgage payments.
Leonsis believes the venue, built in 1997 and renovated in 2007, is in need of upgrades. He also addressed downtown DC’s violent crime rate, which is the 30th-highest per 100,000 people in America.
For comparison, Arlington has a violent crime rate of 200 per 100,000, more than 25x lower than DC’s.
Virginia has professional sports teams such as the Richmond Flying Squirrels (a Minor League Baseball team) and Loudoun FC (of the USL Championship) but does not house a top-level franchise. It was once home to the American Basketball Asosciation’s Richmond Squires, which was left out of the league’s partial merger with the NBA in 1976.
While nothing more than a hypothetical at this time, there is a strong chance that if VA finally gets its franchises (the Capitals and the Wizards), it would cause an influx in local patronage and replenish the dwindling sports betting figures.