Why Capital One Arena Likes Its Chances

It's wagering it can get you interested in sports gambling

Nov 07, 2019
Finance

SMITH BRAIN TRUST  Capital One Arena is wagering that it can get you more interested in sports gambling. And, according to Maryland Smith’s Steven L. Heston, that’s a fairly safe bet.

The arena is poised to bring sports betting to Washington, D.C., capitalizing on a recent Supreme Court ruling that overturned a federal ban that blanketed all states except Nevada.

Now, international betting firm William Hill is partnering with Ted Leonsis, the CEO of Monumental Sports & Entertainment and the owner of the Washington Capitals, Wizards and Mystics. They’re looking to open the nation’s first on-premises sportsbook within an arena.

Heston, a professor of finance at the University of Maryland’s Robert H. Smith School of Business, believes says the move increases the level of competition in the gambling industry and adds to the fans’ overall viewing experience.

“It can liven up the action because you have to put your money where your mouth is,” he says. “Certainly it does get you much more engaged in the game if you are trying to predict all of these different outcomes.” It’s similar, he says, to the effect that fantasy sports has.

Current plans for the sportsbook, which is tentatively slated to open next year, include a multi-floor bar and restaurant that are accessible from both the arena and street regardless of whether there’s a game on.

Heston says the new sportsbook might not overwhelmingly encourage people to gamble that wouldn’t have otherwise done so, but its new accessibility is likely to have an impact. He likens its potential effects to a behavior like speeding; motorists tend to be cautious around cameras and police officers, while less reserved without those deterrents.

“When you lower the cost, people do something more,” Heston says. “I don’t know that legalizing sports gambling is going to make people gamble who wouldn’t otherwise gamble at casinos or horse racetracks or lotteries. However, there will probably be more sports gambling, because gamblers will always find something to bet on.”

Some 13 states already have passed laws allowing live betting, while four other states and the District are taking their first steps in a similar direction. New Jersey and Pennsylvania were among the early adopters of online betting, while other states continue to restrict the practice to brick-and-mortar locations.

In several other states, sports organizers and lawmakers are considering approving in-stadium wagering, including at New York’s Yankee Stadium and Citi Field, but have not approved any plans to move forward. That’s why, Heston says, Capital One Arena’s move signals a major development for the gambling industry.

“This will be a foot in the door. Eventually I imagine they will want to expand online. It will spread the way casinos and state lotteries did,” Heston says. “Once this is there I don’t see what would stop them from having general gambling, especially if nearby states already have it.”

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About the Expert(s)

HestonSteve

Steve Heston graduated with a BS double major in Mathematics and Economics from the University of Maryland, College Park in 1983. He attended the Graduate School of Industrial Administration and earned an MBA in 1985 followed by a PhD in Finance in 1990. He has held previous faculty positions at Yale, Columbia, Washington University, and the University of Auckland in New Zealand. He has worked in the private sector with Goldman Sachs in Fixed Income Arbitrage and in Asset Management Quantitative Equities. He is known for analyzing options with stochastic volatility and international stock risk.

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