D.C. Council Suspends Competitive Bidding on Sports Betting, Handing Monopoly to Intralot Despite 2009 Contract Scandal

Posted on: February 6, 2019, 08:10h. 

Last updated on: February 6, 2019, 08:10h.

Philip Conneller @casinoorgphilc Read More
Expertise: Gaming Business, Regulation, Tribal Gaming.

The DC Council has all but handed a mobile sports betting monopoly to its Greek lottery provider Intralot. On Tuesday, the council narrowly voted, by 7 to 6, to suspend the competitive bidding process that normally precedes the award contracts to vendors.

D.C. Sports Betting
Councilmember Jack Evans believes speed is of the essence when it comes to DC sports betting, but others are concerned about the perception of cronyism that could arise from removing the competitive bidding process. (Image: Flickr)

“Ultimately, it came down to money,” said councilmember Jack Evans, who spearheaded the push to legalize sports betting in the nation’s capital, which was rubberstamped last month.

As reported by The Washington Post, DC Chief Financial Officer Jeffrey DeWitt said Tuesday that it made economic sense to award the contract to Intralot because the normal procurement procedure could take more than two years, which would mean the district would miss out on an estimated $61 million in new revenue.

Evans also cited a shooting Monday night in Southeast Washington as a reason to act with urgency. Part of the funds the district will derive from its sports betting market will go towards violence-prevention programs.

2009 DC Lottery Scandal

But dissenting voices were eager to remind DeWitt and Evans of why the competitive bidding process exists in the first place — to ensure that taxpayers get the best deals and to avoid the perception of cronyism in the awarding of contracts.

A faint whiff of corruption still lingers from the last time Intralot was given a contract in DC — to operate the lottery, in 2009 — said Councilmember Elissa Silverman.

The 2009 process became the subject of a federal grand jury investigation. While no charges were ever filed, the probe centered around possible connections between local businessman Emmanuel Bailey and several DC Councilmembers.

There are few companies in the world that have the technology at their disposal to operate lotteries. Nevertheless, DC law requires prospective operators to partner with a local subcontractor, even though there may be little the local company can offer to the equation.

Intralot initially won the contract without a local partner, and then acquired one: Bailey – a friend of former councilmember Kevin Chavous – who was offered a 51 percent stake in the venture via his company, VSC, which was established that year and registered at his mother’s house. Together, Intralot and VSC formed a vehicle called DC09 to operate the lottery.

DC Authorized then Repealed Online Gaming

The contract included a potentially lucrative right to offer online gaming should the district make it legal, which it did, briefly — a whole three years before New Jersey, Nevada, and Delaware.

In December 2010, Councilmember Mark Brown tagged an amendment to authorize online gaming onto a budget bill at the zero hour. Many of his colleagues said they were not aware they were voting to legalize online casino games and the law was ultimately repealed due to concerns about transparency.

Councilmember Evans is currently under investigation by the DC Board of Ethics and Government Accountability (BEGA) for alleged links to a lobbying firm that counts DC09 among its clients.