A Legal Earthquake in the Capital
The U.S. sports betting boom has hit a surprising legal snag in Washington, D.C., where five of the industry’s biggest operators—FanDuel, DraftKings, BetMGM, Caesars, and Fanatics—are facing a lawsuit that questions the very legality of their operations in the district. But this isn’t your standard regulatory complaint; it’s a constitutional curveball that could reset the market entirely.
At the heart of the lawsuit is a provocative claim: that the law used to legalize sports betting in D.C.—the Sports Wagering Lottery Amendment Act (SWLAA)—has no legal grounding because the 2018 Supreme Court ruling (Murphy v. NCAA), which invalidated PASPA and gave states the power to regulate sports betting, doesn’t apply to Washington, D.C., which isn’t a state.
The Constitutional Twist
The 2018 Murphy decision rested on the Tenth Amendment, which reserves certain powers to the states. But D.C., being a federal district, lacks those same powers. If the lawsuit succeeds in arguing that PASPA’s federal ban still applies to D.C., it could nullify the SWLAA and render the operations of all five sportsbooks illegal.
The implications are massive—not just for operators, but for the regulatory precedent. If D.C.’s sports betting market is unconstitutional, what does that say about how non-state jurisdictions should approach legalization? And how will this shape the expansion of sports betting in places like Puerto Rico or tribal lands that don’t hold state status?
Big Players, Bigger Stakes
FanDuel and DraftKings launched aggressively in D.C., following the collapse of the poorly received GambetDC platform. FanDuel alone handled nearly $30 million in wagers in May 2024. The city’s betting market was gaining momentum and recovering from its failed Intralot-led monopoly. But now, a case filed by a new entity—DC Gambling Recovery LLC—is challenging everything.
Adding fuel to the fire, the lawsuit is seeking damages under a little-known British law from the 1700s still active in D.C., arguing that gambling losses over $25 are legally unenforceable. If successful, sportsbooks could be forced to repay customers—and then some.
Beyond the Courtroom
This lawsuit doesn’t just target sports betting operators—it exposes how fragile and legally untested some betting frameworks really are. While most states followed clear legislative paths after PASPA, D.C.’s status as a federal district has always made its legal infrastructure unique. The case serves as a reminder that a booming market doesn’t always equal a secure one.
Operators moved fast to seize market share once Intralot’s exclusive grip was broken, but rapid launches can come with long-tail legal exposure. D.C. may become a cautionary tale for other jurisdictions looking to fast-track betting legislation without ironing out constitutional specifics.
Conclusion:
The D.C. sports betting lawsuit is more than a legal curiosity—it’s a potential turning point for how we understand regulatory authority in non-state jurisdictions. Operators, regulators, and legislators nationwide should be watching closely. If the foundation cracks in D.C., similar cracks could appear elsewhere.
