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This past week, the Washington, D.C., Council voted to approve a sole-source, no-bid D.C. sports betting contract with Greek gaming company Intralot.
The award of the contract to Intralot appears to have been given a kick forward by a report from market research company Spectrum Gaming Group.
The crushing impetus for D.C. to move forward with such urgency stems from a purported first-mover advantage. West Virginia launched sports betting, and Maryland and Virginia discussed it, but never advanced bills to a point where it was likely to pass.
The urgency to pass the bill and not going through the normal Request For Proposal (RFP) process was two-fold, according to the Spectrum report.
Based at least partially on these suggestions, the D.C. Council moved forward without allowing competitors IGT and Scientific Games to bid.
As what happened in D.C. settled in, and there was time to digest the absurdity of a no-bid contract being awarded in a hypercompetitive market, the situation gained more attention.
Back in June, the Washington Post ran a story with the headline:
“Most of the District’s $215 million sports gambling contract to benefit companies with ties to city hall”
In fact, the report revealed that the beneficiaries included:
Councilmember David Grosso said, “You don’t give a contract to your friends.”
Chairman Phil Mendelson argued that the awarding of subcontracts to politically connected groups was just the nature of D.C. business. It is a result of a requirement that a certain amount of contracted work was to be performed by local entities.
This is not the first time that D.C. Council’s awarding of a contract with Intralot has come under fire. Indeed, an even bigger contract (without adjusting for inflation) caught the attention of federal authorities less than a decade ago.
The original D.C.-Intralot deal came about after a contractor with another provider was rejected as a result of connected parties being too close to the then-mayor. After the initial deal was rejected, the contract was sent out for the second round of bids, this time with Intralot as the sole bidder.
The 2009 Intralot contract generated significant federal law enforcement attention, including FBI investigation, a possible grand jury investigation, and the commissioning of a report by the D.C. Office of the Inspector General.
The D.C. Office of the Inspector General released its report of an investigation into the “Chief Financial Officer’s Lottery Contract Award” on Jan. 20, 2012.
The request for the inspector general to investigate the awarded contract originated from the D.C. Attorney General and the district’s then-chief procurement officer.
The inspector general’s office was looking into four related issues:
In regard to the first question for inquiry, the inspector general found that when major players were added to the team, that “changed the contract requirements in a material fashion.” This should have caused the issuing of an amended RFP and “allowed the three bidders to resubmit a best and final offer.” These should have then been resent to the council for review.
The second route of inquiry was regarding a sufficient review of a “responsibility assessment” by the contracting officer. The inspector general found that the conduct was within the requirements of the D.C. Code.
In respect to the allegations mentioned in the article, the office of the inspector general determined:
“even though the purported misrepresentations largely were substantiated, there was insufficient evidence that [the Chief Financial Officer] was aware of the misrepresentations let alone considered them.”
Did D.C. councilmembers act improperly in the eyes of the office of the inspector general? No, or at least there was insufficient evidence that the councilmembers had:
“violated standards of conduct in the Council’s review and consideration of either awarding of the lottery contracts or drafting and enacting of online gambling.”
The 2012 report, which concluded that councilmembers had not acted improperly, ruffled some feathers but ultimately resulted in the Intralot deal remaining in place.
The circumstances are different this time around for D.C. sports betting. No longer are we talking lottery contract and iGaming. Now we are looking at sports betting, although many of the same characters are involved in another questionable contract.
That includes Intralot and Bailey. There is one cast member that has not been confirmed for the D.C. sports betting sequel: the office of the inspector general.
Whether the inspector general will take a look at this contract —let alone reach a different conclusion than the one reached in 2012 — is unknown. There certainly appears to be a lot of smoke generated any time the D.C. Council and Intralot get together, even if there is not an obvious fire.
Editor’s note: A previous version of this article linked to the incorrect Spectrum report.