A D.C. Superior Court judge has extended a temporary order blocking the District from moving forward on a controversial no-bid contract with a Greek company to manage the city’s planned foray into online sports betting.
At a hearing Tuesday, a different Superior Court judge, John Campbell, extended the restraining order until Oct. 18, saying he hoped to decide on the lawsuit by then without a lengthy legal process.
“It seems to me that we might as well just grapple with the issue,” Campbell said. “The merits are what they are. The legal argument is fairly straightforward.”
The judge allowed existing D.C. Lottery operations by Intralot to proceed. The company has held the contract to operate the city’s lottery for the past decade.
This summer, the D.C. Council narrowly voted to suspend competitive bidding rules and allow Intralot to continue running the lottery but also manage the city’s planned foray into online sports gambling.
At issue in the lawsuit is whether by suspending competitive bidding rules for the contract, District officials violated the Home Rule Act, which established local government in the capital.
Under the Home Rule Act, the District’s chief financial officer is to carry out his office’s procurement of goods and services but must follow District procurement law. Carragher’s lawyer, Donald Temple, argues that because the D.C. Lottery falls under the purview of the chief financial officer, the D.C. Council was not entitled to exempt the contract from the procurement law.
The lawsuit asks the court to declare the contract in violation of law and to order the District to bid out the work “in a fair, open, and transparent procurement process in accordance with the D.C. Procurement Practices Reform Act of 2010.”
In his legal challenge, Carragher said his business was not afforded an opportunity to compete in the D.C. sports wagering marketplace. He also said, as a taxpayer, he was harmed by the District’s decision to circumvent competitive bidding because it eliminated the possibility of securing a better deal for taxpayers.
In a brief filed this week, D.C. Attorney General Karl A. Racine’s office said Temple’s argument relies on a “strained reading of the Home Rule Act.”
The Home Rule Act doesn’t prevent the D.C. Council from amending District procurement law, which District lawyers argue is what the council did by exempting the sports betting contract from the law.
“In the Home Rule Act, Congress stated that the CFO must follow the procurement law established by the Council, but nothing prevents the Council from amending or creating exemptions to that procurement law,” the District’s brief said. “Ultimately, there is no indication that Congress intended to constrain the Council’s authority to legislate with respect to one category of procurements — those involving” the chief financial officer.
Temple told the judge that he would file a response to the District’s brief within a week. In an interview after the hearing, he disputed the District’s assertion that exempting the contract from procurement law is equivalent to amending the law itself.
In pushing for a no-bid contract this year, the District’s chief financial officer, Jeffrey DeWitt, argued that it would allow the city to quickly launch and tax sports betting ahead of neighboring Maryland and Virginia, neither of which has legalized the practice.
Top executives at two of the country’s largest mobile sports betting platforms, FanDuel and DraftKings, argued against a monopoly model for the District, saying that an open, competitive market of licensed sports betting operators would yield the most revenue for the city and deliver a better product to consumers.
An investigation by The Washington Post found that the business Intralot has listed as its main subcontractor, Veterans Services Corp., had no employees, and that its website touted executives who didn’t work there. The small firm’s chief executive is an employee of Intralot’s subsidiary, DC09, and lives in Maryland. Local law requires companies with large public contracts to share some of that work with small local firms as a way to strengthen the local economy and grow jobs.
The deal with Intralot divided D.C. Council members, but in July they approved the contract with Intralot in a 7-to-5 vote. Several council members on the losing side of the vote have said the lawsuit validates their concerns.
D.C. Lottery officials say the lawsuit is delaying the intended January 2020 start date for a citywide mobile sports wagering app and hurting small businesses that hope to profit from the betting.