Sportsbook Inks Lease On Capitol Hill As D.C. Sports Gambling Goes Live
Two years after the federal government paved the way for legal sports betting, a retail sportsbook is preparing to open three blocks from the U.S. Capitol.
A new sportsbook company, Handle19, signed a lease last week to open a 6K SF bar, restaurant and gambling facility at 319 Pennsylvania Ave. SE, Bisnow has learned.
August Holding Corp. CEO Shane August, the owner of Handle19, filed an application last week for a sports wagering license with the D.C. Office of Lottery and Gaming, the first application for a Class-B retail sportsbook license.
The deal comes as D.C. launched its online sports betting platform, GambetDC, run by the D.C. Lottery, this week. Several larger companies are also moving forward with plans to open sportsbooks, from Monumental Sports to Cordish Cos.
Cordish Cos. CEO David Cordish, whose firm owns a host of major U.S. entertainment venues including the Maryland Live Casino in Arundel Mills and Power Plant Live in Baltimore, told Bisnow he is preparing to open a sportsbook in D.C.
"We will for sure 100% be operating a major sportsbook in D.C.," Cordish wrote in an email to Bisnow.
Cordish said he has narrowed his search to two spaces he described as "perfect," but he declined to identify the locations. He said his company is partnering with FanDuel. The team plans to open a sports-oriented restaurant and bar with large, flat-screen televisions.
"In every city in which we have such a facility, they become the place to watch all sporting events; not just the home team but also March Madness, the World Series, World Cup, etc.," Cordish said. "In Washington, D.C., this is crucial as the Lottery basically controls online [betting], so it is crucial to have a physical presence that is over the top to attract the in-person bettor."
The coronavirus pandemic has halted most U.S. sporting events for more than two months, but it has not stopped these sportsbook operators from moving forward as they aim to be one of the first to market in D.C.
Cordish said he sees D.C. as a resilient market that will recover from the economic crisis, and his 110-year-old company has weathered many downturns in the past.
"We will be in D.C. for the long pull," Cordish said. "Washingtonians love to bet. We are very excited about the FanDuel/Cordish venture."
D.C.'s professional sports franchises are also looking to get in on the action. Major League Soccer club D.C. United is in talks with Caesars Entertainment to open a sportsbook at Audi Field, the Washington Post reported in November. Nationals owner Mark Lerner has expressed interest in opening a sportsbook concept, and the team received approval last year to build a 35K SF restaurant and entertainment venue at Nationals Park.
Monumental Sports, the company that owns the NBA's Wizards, NHL's Capitals and WNBA's Mystics, in October announced a partnership with London-based sportsbook operator William Hill. The partnership plans to open a sportsbook in the former Greene Turtle space at the Capital One Arena in Chinatown. It has applied for a Class-A license, a designation reserved for the city's major sporting venues.
"This sportsbook will be a flagship venue for the industry and will serve the sports fans of the Washington, D.C. area unlike any other," William Hill CEO Joe Asher said in an October release.
For August, who is new to the sports betting world, being the first to market is key.
He still needs his application approval from the Office of Lottery and Gaming and building permits from the the Department of Consumer and Regulatory Affairs, but he hopes to open by September, when he expects the NFL to start on time.
"Strategically, from a business perspective, being first to market in any industry gives you tremendous upside," August said. "It also gives you a lot of pressure because you have to show the proof and you only have one time to make a first impression."
The space he leased was formerly home to bar cocktail Stanton & Greene, which filed for bankruptcy in October 2018, three years after replacing Pour House. The property sits on the same Pennsylvania Avenue block as We, The Pizza, three blocks from the Capitol.
"It's right outside the U.S. Capitol, I think that speaks volumes," August said. "What we're trying to do fits within this area. It has multiple different retail locations and restaurants, it's a tourist destination and it's within reach of other neighborhoods. Gaining traffic from other areas of the District I don't think will be hard."
Papadopoulos Properties broker John Gogos, who was retained by landlord Kodiak Properties to lease or sell the property, said he had received interest from multiple bar and restaurant operators before the coronavirus struck.
"We had a number of groups looking to buy it, and we were having some good traction, but that was basically put on hold with the pandemic," Gogos said. "Shane and his group are still very bullish, and I think they are right to be bullish on sports betting ... It was smart of them to continue their path rather than letting another group be first to market."
The 6K SF space spans three floors and has a historic quality that Gogos expects will be attractive for a sportsbook.
"This building was a good fit for them, it is just dripping with character," Gogos said. "Instead of going to a sportsbook that feels more institutional, you're going into something with more character, it has got that great historical charm to it."
The Handle19 sportsbook is planned to have a bar and restaurant on the first floor and a Las Vegas-style sportsbook lounge on the second floor, August said. In the basement it would have a booth for placing bets with live employees and completing transactions, and all three floors would have self-betting terminals.
"With three floors, we are able to structure it and plan out the space to meet the needs of every type of patron we're anticipating," August said. "If you want to place a bet and leave, we have something for you. If you want to place a bet and eat we have something for you. If you want to place a bet and watch games with your friends all day, we have something for you."
CBRE Vice President Andrew Poncher, a broker who represented August in the lease, said he was looking for second-generation retail spaces. He said he thinks August is smart to push ahead toward a fall opening.
"He's eager and ready to get open, he's not dragging his feet," Poncher said. "I think there is a strong market for it here, and especially with so much pent-up demand for professional sports because it's been gone for months, I think there's an increased opportunity for Shane and what he's going to deliver."
Sportsbooks could help D.C.'s retail market at a time when bars and restaurants are struggling to survive the shutdowns caused by the coronavirus, Poncher said. He said he expects restaurants could close throughout the city and create vacancies on prime retail corridors. Opening in second-generation spaces helps operators reduce the capital required to build out a sportsbook, he said.
"Retailers have been able to be just on the margin and survive, but now obviously with no seating, and then potentially limited seating, that's going to be pretty challenging for a lot of them, and you'll have a lot more second-generation spaces," Poncher said. "A sportsbook has an alternative stream of revenue. It's not just counting on food."
Gogos said the diversified revenue streams also give landlords confidence in leasing their space to a sportsbook.
"For a landlord, you're not just exposed to a sports bar, it's a sports bar and a betting establishment, so there's a little more diversification of risk for the landlord," Gogos said.
He said D.C. should be cautious with its license approvals so as to not oversaturate the market with sportsbooks. He expects to see sportsbooks open at each of the city's sports venues and then along each of its major restaurant corridors.
"There will be more interest in these licenses that don't want to cannibalize each other, and I don't know if we want D.C. to look like Vegas, but we will be capturing money we're now losing to Maryland," Gogos said. "I think that will hopefully be good for the city as we're entering a period where we're going to have gaps in our budget."