The DC sports betting saga continues publicly this week as district officials push for a sweetheart deal for their current lottery provider.
The Committee of Finance & Revenue met Monday to discuss a proposal to bypass the bidding process for the DC Lottery contract, which will include sports betting operations. Even if that happens, officials pushed back their anticipated launch date from April to September.
Citing a report from Spectrum Gaming, lottery officials testified for several hours in defense of an expedited, single-vendor implementation. According to Director Beth Bresnahan, “retaining Intralot is the most economically advantageous option” for regulated sports betting.
The committee will readdress the bill in a markup hearing as soon as Wednesday.
Quick DC sports betting catch-up
The primary DC sports betting bill cleared the council in December, and it became a law-in-waiting with the signature of Mayor Muriel Bowser on Jan. 23. The proposal now sits on the desk of Congress for its required 60-day review.
Meanwhile, the council also passed emergency legislation which allows the lottery to move forward with implementation pending that review. Most of the included language is agreeable, but one provision has proven especially sticky.
The district wants to bypass open bidding for DC sports betting, instead awarding the lone contract to Intralot. It is, by most accounts, an unorthodox attempt at an end-around aimed at shielding a vendor with problematic assertions from the competition.
The bill that would skirt the procurement process is Bill 23-25.
Committee tries to pump the brakes
Councilmember Jack Evans, who is spearheading the push, opened the hearing as the chair of the committee. Thereafter, several of his colleagues expressed their concerns over his game plan.
Councilmember Elissa Silverman provided the primary voice of caution at several points throughout the hearing. Silverman had plenty of questions about the efforts to deviate from the established procedures.
“What our city’s chief financial officer is advocating for in this legislation is quite extraordinary,” she opened her admonition, continuing:
“He, along with the head of our lottery, are arguing that we should waive our normal process of contracting and procurement — awarding a 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. And that’s certainly been an issue with our lottery contracting in the past.”
Much has been written about those issues, and Silverman cited conflicting data in the Spectrum report as further cause to reconsider. The general sense among skeptics is that proponents are being disingenuous in moving forward imminently with Intralot.
Public testimony on DC sports betting
Just prior to the meeting, the committee published the full list of 17 witnesses. Many of those who testified echoed councilmembers’ doubts.
Perhaps the most vocal pushback came from Dorothy Brizill representing DC Watch. Citing a “lack of clarity” into the contract with Spectrum, Brizill did not withhold her concerns:
“I don’t believe any of their numbers. I just really don’t believe any of their numbers. And it’s not just me. What I did was — in preparing for this hearing and this issue coming down the pike — I went to the industry standards, to the articles by professionals in the industry. They question greatly the numbers that Spectrum has thrown out. They don’t believe that they’re realistic.”
Industry concerns voiced as well
The gaming industry argued from experience that competition is key to maximizing the benefits of regulated sports betting. Here’s John Pappas, representing iDEA Growth:
“Having only one legal option for consumers means that unlicensed and unregulated websites based offshore will maintain their firm grip on the DC market. To help minimize the illegal market, it should be a top priority for the City Council to demand competition, not promote a monopoly.
“Competition for DC’s sports betting consumers would lead to more revenue for DC. The Council should not be debating whether to fast track a sole source contract, rather it should be shifting gears to ensure that DC gets the most out of a fully competitive market place.”
Those with knowledge unanimously worked to convince Evans that his effort is, at best, misguided. At worst, his attempt to shoehorn a single operator into a hurried contract would be detrimental to long-term revenue potential.
City wants DC sports betting now
City officials and local stakeholders, however, generally offered support for the emergency proposal.
The DC Chamber of Commerce expressed concerns about losing any early-adopter advantage to neighboring states. Indeed, Virginia and Maryland are both working on their own sports betting legislation this year.
District CFO Jeff DeWitt, who requested the expediting legislation, testified for hours in defense of moving forward with Intralot. His most substantive remarks came in closing, following a prompt from Evans to clear the air. DeWitt tried to tackle the many concerns voiced by Silverman and others head-on:
“I’m just gonna tell ya, there’s nothing there. This is a business decision. We have no horse in this race other than — not to use a sports betting analogy; unfortunately I just did — we’re just recommending what’s best financially. It’s your decision if you want to bid it out. But you can probably see that it’s going to be a pretty contentious procurement process …”
Spectrum projected nearly $92 million in city revenue from DC sports betting over the first four years of regulation. Implementation with a different vendor, the city argues, would delay launch for 27 months and cost the city $60 million.
Policymakers in Rhode Island might argue with those projections. The RI sports betting industry launched last year after following just such a competitive bidding process.
As for DC, Bresnahan indicated that expediting the contract would allow the city to begin issuing licenses by Sept. 1.