Controversy over a plan to quickly name Washington D.C.’s lottery provider the sole provider of sports betting in the district was at the center of arguments before a District City Council committee hearing considering the plan.
The council’s Committee of Finance & Revenue met discussed a plan to bypass the bidding process for the DC Lottery contract, which will include sports betting operations.
Council Chairman Phil Mendelson prevailed with a controversial proposal allowing the D.C. Lottery to skip the required competitive process for a provider—essentially handing the contract to Intralot. At the hearing, D.C. Watch Executive Director Dorothy Brizill said the move was “simply unprecedented.”
But Mendelson noted a report by Spectrum Gaming Group claimed the District would lose multimillions of dollars while the normal procurement process took up to three years. During that time D.C. would miss out on capturing the 450,000 commuters from Maryland and Virginia who travel to the District daily and who could be converted into loyal patrons before those states launch sports betting, even though they are unlikely to legalize sports betting soon.
However, several committee members raised concerns over the plan, which would essentially hand the lottery a monopoly on sports betting in the district.
“What our city’s chief financial officer is advocating for in this legislation is quite extraordinary,” said Councilmember Elissa Silverman according to Legal Sports Report. “He, along with the head of our lottery, are arguing that we should waive our normal process of contracting and procurement—awarding vendor through a competitive bid process—and saying that it’s actually in the best interest of the District taxpayer to waive that process.
“A competitive bid process is not only considered a general best practice for both getting a price that is in the best interest of the taxpayer but also a process that is transparent and not subject to political pressure,” Silverman said. “And that’s certainly been an issue with our lottery contracting in the past.”
Opposition also came from gaming industry experts that warned that without legally licensed competitors in the market, many gamblers will continue to use illegal offshore gambling sites. They argued that a competitive marketplace would also lead to greater consumer choice and growth in the market.
Poker Players Alliance former Director John Pappas also questioned whether the hearing was about the sports betting contract bids or the lottery’s contract with Intralot. A committee member said, “We’re doing the lottery contract so that we can actually implement the sports betting.” Later Pappas tweeted that the hearing was “a Trojan horse. It isn’t really about the lottery’s sports betting contract, rather it is about sole sourcing the entire lottery (all games) without a normal procurement process.”
Lobbyists have been prowling the D.C. Council for months, including those from Major League Baseball, the National Basketball Association and the Professional Golf Association. Each have been lobbying for the new D.C. law to include an integrity fee but the District council refused it. In fact, no state with legalized sports betting has included it.
The D.C. Lottery’s current contract with Intralot will expire on March 29, 2020.
However, supporters of the plan want the district to move quickly before the neighboring states of Virginia and Maryland also start sports betting.
District CFO Jeff DeWitt testified that moving quickly on a deal with Intralot was best for the district financially and that delaying implementation could cost the district millions in revenue.
The Spectrum Gaming has projected nearly $92 million in city revenue from DC sports betting over the first four years of regulation. Implementation with a different vendor would delay launch for 27 months and cost the city $60 million, he said.
No decision on moving the plan forward was made at the meeting and more hearings are scheduled. The district’s council approved sports betting in December, but the bill is still in a 60-day Congressional review. Council, however, also passed emergency legislation which allows the lottery to move forward with implementation pending that review.
