On Monday, the DC Council’s Committee on Finance and Revenue held a public hearing into its plans to authorize sports betting under the control of the DC Lottery, which is powered by technology provider Intralot. DC Mayor Muriel Bowser signed the Sports Wagering Lottery Amendment Act last week.
Since DC contains no casinos, the legislation authorizes the DC Lottery to offer mobile wagering. Monday’s discussion centered around Council chair Phil Mendelson’s controversial proposal to allow the DC Lottery to skip the required competitive procurement process to identify a mobile betting tech provider, effectively handing the contract to Intralot while leaving other firms out in the cold.
Some of the day’s sharpest criticism of this proposal came from Dorothy Brizill, exec director of DC Watch, a longtime watchdog of DC’s occasionally sketchy local politics. Brizill called the attempt to exempt the DC Lottery from the procurement process “simply unprecedented.”
Mendelson’s push to exempt the DC Lottery from normal procurement rules was in part based on a report prepared by Spectrum Gaming Group that claimed DC would lose out on hundreds of millions of dollars if it followed normal procurement rules.
The report claimed that identifying a betting tech supplier could take three years, during which DC would supposedly lose bettors to operators in neighboring states like Maryland and Virginia (which haven’t yet authorized legal betting). The report further claimed that skipping the procurement process would allow Intralot to launch betting in six months and thus maintain the state’s “first mover” advantage over these other states.
Brizill said she didn’t put “a lot of faith” in Spectrum’s numbers and also expressed concern that no one had seen the contract that commissioned Spectrum’s report and thus “we don’t know what [Spectrum] were asked to look at.”
Regarding the whole process under discussion, Brizill observed that “it just smells.” Brizill warned that freedom of information act requests would eventually drag this whole process out into the public eye and she predicted that “this is not going to come out good.”
Brizill took pains to point out that the DC Council was still wearing egg on its face from the “anomalies” surrounding the awarding of Intralot’s initial 2009 contract and the approval of online gambling legislation that was never implemented.
Last September, Spectrum submitted a different Intralot-commissioned report to the DC Council’s chief financial officer on projections for sports betting revenue. The report claimed that an Intralot-only wagering system would deliver greater returns to DC than a model featuring multiple providers. However, these greater returns depended on Intralot offering a payout rate to bettors of as little as 70%, a number that no sportsbook operator would dare utter in public, at least, not with a straight face.
But the day’s most eye-opening moment came courtesy of John Pappas, former head of the Poker Players Alliance and current CEO of Corridor Consulting. During one exchange, Pappas argued that there was no shortage of prospective tech partners out there, only to be told by a committee member that there were only three qualified parties: Intralot, Scientific Games and IGT/Gtech.
Puzzled, Pappas queried whether the hearing was about bidding out the sports betting contract or the underlying lottery contract, and the answer he received appeared to indicate the latter. “We’re doing the lottery contract so that we can actually implement the sports betting.”
Pappas later tweeted that the hearing was “a Trojan horse,’ in that 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.” The DC Lottery’s current contract with Intralot expires on March 29, 2020.
The Committee now plans to vote on the sole-source plan on Wednesday, setting up a possible vote by the full Council next Tuesday, February 5.