A bill that essentially hands the DC sports betting contract to current lottery provider Intralot comes before the district council Tuesday morning.
The wisdom behind bypassing a competitive bidding process in the name of speed continues to raise concerns in Washington, D.C. A Washington Post editorial Monday lambasted the council for its handling of the bidding, calling it a “sickening spectacle”:
“Horses, whether on racetracks or in stalls, can stir up quite a smell. The push to evade the procurement process carries a whiff of something similar. Proponents of sole-source contracting are trying to steamroll the bill through the council using the argument that time is of the essence …”
Separate from the lottery contract, the district recently put out a potentially lucrative RFP for sports betting advisory services. Written as a one-year contract with four optional extension years, the deal could provide up to 10,000 hours of advisory work.
More than DC sports betting at issue
The procurement contract would cover not just sports betting, but also the district’s lottery for the next three years.
The council decided in December to limit the DC sports betting contract to a single provider. That issue is settled, but D.C.’s CFO, Jeff DeWitt, wants to skip competitive bidding and try to start legal sports betting by fall.
DeWitt contends using the normal bidding process could delay the launch of sports wagering more than two years. He asked council chair Phil Mendelson last month to introduce a bill that gives the contract to Intralot. That bill passed committee last week on a 3-2 vote, including Mendelson, who does not sit on the committee regularly but can participate on any he chooses.
Councilmember explains reservations on process
During that committee hearing, Councilmember Elissa Silverman voiced concerns about bypassing competitive bidding and voted against passage. Speaking to Legal Sports Report this week, Silverman further detailed her hesitation.
“We want to capture the revenue from sports betting, but we also need to modernize our lottery and I can see where a competitive bidding process might bring additional value in terms of that,” Silverman said.
Only three companies — Intralot, IGT, and Scientific Games — could receive consideration for the contract. All three operate sports betting verticals in addition to their lottery arms.
Intralot promises to hold 20 to 30 percent of sports bets in a study provided to the council. In any traditional sports betting model, such a hold borders on impossible. By contrast, Nevada‘s historical hold over decades is 5.55 percent.
DC sports betting a unicorn?
The checkered history of DC Lottery bidding factors into Silverman’s reservations as well. Questions about the last lottery contract dragged on for years and became the subject of a federal investigation.
“What is special about the lottery is it was embroiled in a lot of controversy the last time it was competitively bid,” Silverman said. “Especially given that history, it would be good to competitively bid the contract.”
Silverman continued by shining some light on the players behind the scenes:
“We do know, and let’s be real, that people bet on sports. We know that there is money to be made by sports owners, by companies that provide infrastructure for gaming — Intralot, IGT, DraftKings. What we want to do as a city is to be able to capture that money.
“What makes this a unicorn is that the most well-connected businesspeople with ties to City Hall are all involved in this contract.”
Silverman “sympathetic” to lottery concerns
DeWitt and Councilmember Jack Evans believe a first-mover advantage is critical to the success of DC sports betting.
Virginia and Maryland both will consider sports betting bills in their legislatures this year.
“Sports betting makes this a bit of an anomaly,” Silverman said. “There is an argument to being a first mover, especially in our jurisdiction.”
No juice for you
Silverman also said the idea that the process is juiced for Intralot comes from those with financial motivations.
“Some people have promoted an idea that sole sourcing has been promoted by Intralot and the CFO because the process has been rigged toward Intralot,” Silverman said. “The voices who say that the loudest are politically connected insiders who would be tied to a competing bidder.”
“I have not gotten hundreds of emails on the lottery contract. I don’t go food shopping on the weekend and have people asking me, is the lottery contract rigged? The very nature of the lottery contract makes it a very high-profile sole-source contract.”
Silverman said Monday she is undecided on how she will vote on the measure.
