Can A Small Business Like Handle19 Break Into Sports Betting?

Shane August, a former Norfolk State University quarterback who now runs Handle19, hopes to emerge as the sports betting kingpin of the DMV.

The“DMV” consists of Washington DC, Maryland, and Virginia. All of those locales are in varying states of legal and regulated sports betting.

Many of the country’s biggest, best-known, and best-funded sportsbooks have focused their attention on the burgeoning market. They’ve spent millions in campaigning, licensing, and marketing in hopes to further their nationwide footprint.

But what about smaller operators? Can a local entrepreneur really carve out a niche in the market?

August, the founder of Handle19, thinks so. After his initial attempts to launch sportsbooks in New Jersey and Pennsylvania proved too costly, he is now focused solely on the DMV. He said the area is diverse, small business-friendly, and collaborative with neighboring governments.

“Our customer is the resident in the DMV area. We believe those people support their home, especially if it’s a good quality product, which we plan on delivering with Handle19,” he told Play Virginia. “So from a national perspective, we won’t even try to compete with those guys because DraftKings and FanDuel, their approach is just by purchasing their customers. … Our goal is to (implement an) aggressive, strategic marketing plan, specifically tailored to the individuals in the DMV area. And we believe we can win that way.”

However, it all starts with his concept for a retail location in the heart of Capitol Hill.

Handle19’s failure to launch

August, a New Orleans native, ultimately earned a communications degree from Norfolk State. He then found success with startups in the healthcare and financial services industries. To some, it might seem an unlikely success story for a man who wasn’t always focused on the classroom.

“I was a typical jock – a ladies man who wasn’t necessarily the best student,” he said with a laugh. “I had a lot of interest from other major (Division I) schools. So, on the athletic side, I passed. I passed the bar. But on the academic side, you know, I wasn’t the best student.”

However, August proved a quick study in the business world. He’s currently president and CEO of the Virginia Beach-based August Holding Corporation. He hopes to expand his empire to include a legal bookmaking operation.

Combining his love of sports and business to create Handle19 was a no-brainer, he said. So, when the US Supreme Court struck down PASPA in 2018, he pounced. However, he failed to gain much traction in NJ and PA when those states legalized sports betting and he tried to launch there.

“‘Pain in the ass’ is an understatement, man,” he said. “I’ve been involved in other highly regulated industries, but sports wagering by far has been the heaviest lift because it’s somewhat politicized. You know, I hate to say it, but it is what it is. It’s very politicized. … They didn’t really have small business and minority business inclusion in mind.”

But he found an opportunity in the nation’s capital.

Handle19’s Washington DC debut

GambetDC, a DC Lottery product, has a monopoly with online sports betting in the district. It’s been that way since DC legalized sports betting and Gambet subsequently launched in May.

But William Hill has shown what’s possible with a retail location. The William Hill sportsbook at Capital One Arena opened just a few months ago. It’s already far outpaced GambetDC’s monthly handle.

Gambet has a Class A license. William Hill has a Class B license. The lottery issues those licenses to operators whose business isn’t entirely sports betting.

August said he thinks he could receive his own Class B license by the end of the month.

August won’t piggyback off a sports arena, though. He plans to open a three-story bar and restaurant in the heart of Capitol Hill. He secured a location (319 Pennsylvania Ave. SE), a food and beverage partner (PHFBM), and a technology/software supplier (USBookmaking).

However, to August, his first sports-betting venture will be more much more than a restaurant with sports betting.

“If someone wants to simply come in place a bet and leave, they could do that. If someone wanted to come in and eat and dine while they placed their bet and watch the game, they can do that. Or on the top floor, if they wanted to come in to drink, eat and bet all day and hang with their friends, they can do that. So my main thing in creating a space was that we wanted you, when you walk into our doors, to forget that you were in DC and you felt as if you were in Las Vegas on the strip at one of those top tier luxury sportsbooks.”

Although the project has faced some neighborhood opposition, August is optimistic about Handle19’s plan to be operational soon. In fact, he told Play Virginia he plans to soon unveil some partnerships with “major sports and networks.”

It’s all a big first step for an aspiring sportsbook operator. But based on William Hill’sb early success in DC, he’s optimistic about what Handle19 can accomplish.

“When you have a retail location at Capital One that’s running circles around an online option, that’s saying something,” he said. “We’re just excited and happy that we have an opportunity to enter the market. We cannot be more excited. …

“It’ll be groundbreaking. We’ll be the first minority-owned, independent sports wagering operator in America.”

Handle19’s second act in Virginia

“We want to have more than one bow in our quiver.”

That’s how August explained his strategy to enter different states with different strategies. Handle19’s DC location could prove its ability to run a retail establishment.

However, in Virginia, he wants to showcase Handle19’s versatility. To do that, he needs to be a true online operation with robust web-based wagering.

By the end of the month, hopeful Virginia sports betting companies must formally apply for a license. The Virginia Lottery will approve at least four and up to a dozen. The entire marketplace will be online initially, likely beginning in January. However, when the first Virginia casinos open, likely in 2023, they could also offer brick and mortar options.

“Virginia is definitely in play,” August said last week. “We are actually in the process of fine-tuning and finalizing our application. We’ll be submitting it before the Oct. 31 deadline. We’re really excited about this.”

August lauded Virginia Del. Mark Sickles (D-Fairfax) and Virginia Lottery officials. He said they not only championed sports betting in The Old Dominion, but they also assured businesses such as his could compete. That’s the result of a reasonable tax rate (15%) and manageable licensing costs.

“We were happy because there weren’t these gargantuan numbers where we couldn’t participate,” he said. “The licensing fee is $250,000. That’s digestible for us, compared to somewhere like Pennsylvania, where there’s a $10 million fee and 34% tax rate. I mean, that’s just not digestible for a small business.”

Maryland sports betting – and beyond?

If the DC and Virginia plans materialize, August and Handle19 could then complete the DMV trifecta with Maryland.

Maryland voters can legalize sports betting on Election Day. The state’s popular governor, Larry Hogan, has already formally endorsed the initiative.

Like Virginia, August found some support from the state government. Del. Darryl Barnes (D-District 25) proved a valuable resource to assure smaller operators, including minority-owned businesses, would have the types of opportunities that Virginia offered.

August is pinning a lot of hopes on the ballot initiative. If voters legalize sports betting, August and Handle19 will again fight for their slice of the pie.

“Maryland completes the DMV triangle for us,” he said.

It may sound like an ambitious plan for someone new to a cut-throat industry. However, August said the gridiron prepared him for the fight.

“I tell everyone, sports, I believe, is the best builder of character,” he said. “It helps you develop so many necessary intangibles because realistically when you entered the business world, it’s not necessarily who is the smartest from an academic perspective. It’s just, who has the drive, the ambition, the work ethic, etc.? And that’s what sports teaches you. So realistically, I just used everything I learned in athletics and kind of just transitioned that to the business world.”

He said the Handle19 has the resources, financial and otherwise, to make the next year a successful one. Now, it’s game time.

“We just want No. 1, an opportunity to participate. No. 2, show the regulators, the residents of Virginia, and also the rest of the nation that a small store, a small business can actually do this. And No. 3, it has the wherewithal to pull this off,” he said. “So we want to be an example to others.”

“But the first order of business is to take care of the DMV area.”