The D.C. Council approved a sole source contract Tuesday for the Greek gaming company Intralot to manage a lucrative online sports betting and lottery program in the nation’s capital.
The contentious 7-to-5 vote came after a majority of the council’s 13 members expressed concerns about the $215 million, five-year deal, which became mired in an ethics scandal involving its chief champion, council member Jack Evans (D-Ward 2).
But several lawmakers ultimately voted yes despite earlier qualms about Evans’s involvement and the council’s decision to suspend competitive bidding rules, paving the way for Intralot to have a monopoly on sports wagers placed on phones and computers.
“If we turn this down, there will be another two years, some have said three years, before we have a contract in place,” Council Chairman Phil Mendelson (D) said. “We just know there will be a protest, there will be a lot of controversy, a lot of dispute, and a lot of delay. And there is a significant cost to a delay of a couple of years.”
Most of the contract would benefit a handful of local subcontractors without an extensive record in the sports gambling industry, several of whom have political connections.
Among the subcontractors are a former D.C. State Board of Education official, former campaign aides to Mayor Muriel E. Bowser (D), a friend of council member Kenyan R. McDuffie (D-Ward 5) and a law firm that lobbied D.C. Council members to pass the gambling legislation.
Opponents said the proposal was deeply flawed and passage would undermine trust in city government.
“This stinks,” said council member Elissa Silverman (I-At Large). “Given all the ethics clouds over this building and this contract, we need to hit pause. We need to restore the public’s trust, but with the approval of this contract, we will continue to erode it.”
But Mendelson said the subcontractors who stand to profit from the deal should not be a concern because the subcontractors were not selected by the District government and because rejecting the sole-source contract would likely create a new lobbying blitz of local companies trying to win a new contract.
“The District has no relationship with the subcontractors, did not choose them, cannot fire them, does not direct them, does not pay them,” Mendelson said.
Mendelson, Anita Bonds (D-At Large), Robert C. White Jr. (D-At Large), Brandon T. Todd (D-Ward 4), Vincent C. Gray (D-Ward 7, Evans and McDuffie voted for the contract.
Council members David Grosso (I-At Large), Brianne K. Nadeau (D-Ward 1), Mary M. Cheh (D-Ward 3), Charles Allen (D-Ward 6), and Silverman voted against it, as they announced before the meeting. Council member Trayon White Sr. (D-Ward 8) was absent because of the birth of a child.
Gray said his support hinged on lawmakers dedicating revenue from sports betting for early childhood care and violence prevention programs. But the contract’s five opponents voted against his bill to do that, denying him the supermajority support he needed. Gray still voted for the bill, saying he would revive his efforts to redirect the revenue in the fall.
White said he decided to vote for the contract despite reservations because he wanted to help small businesses that would be awarded subcontracts by Intralot.
District residents and visitors may be able to legally place sports wagers at arenas and local businesses as early as this fall. Intralot would manage the mobile app, which is expected to go live in early 2020 and, proponents and analysts say, become the most popular way to bet.
Three council members — Cheh, Grosso and Silverman — said Evans should recuse himself from voting on the contract because of his private business relationship with William “Billy” Jarvis, a lobbyist associated with Intralot.
Evans has said Jarvis’s role in his private firm, NSE Consulting, was limited to helping him file paperwork establishing the business. But The Washington Post reviewed documents showing that Jarvis, a lawyer, had negotiated contracts for Evans ’s firm and its clients.
“It’s an issue that presents at a minimum the appearance of a conflict of interest: Jarvis is the lobbyist for the contract, and Jarvis aided you in your consulting firm,” council member Cheh told Evans during the council’s breakfast meeting before the vote.
Asked if he would recuse himself, Evans simply responded, “No.”
Mendelson (D) said Evans did not need to abstain from voting.
Evans championed the legalization of sports betting in the District and the bill that allowed Intralot, which already operates the D.C. lottery, to bid on the contract to run mobile sports betting without competition.
He and other city officials argued a sole-source contract would allow the city to launch and tax sports betting ahead of neighboring Maryland and Virginia, neither of which has yet legalized the practice.
Top executives at two of the country’s largest mobile sports betting platforms, FanDuel and DraftKings, have 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.
Evans has been under heightened scrutiny after federal investigators searched his home and a law firm’s investigation that found multiple ethics violations while he chaired the board of the Metro transit agency.
Federal authorities are probing Evans’s private business dealings with companies that have interests before the D.C. government.
The council voted Tuesday to strip Evans of his chairmanship of the Committee on Finance and Revenue and to hire the law firm of O’Melveny & Myers to investigate his private business dealings and his actions as a public official.
At the same time the vote on the betting contract was pending and looked like it would be close, Mendelson was parceling out assignments on what had been Evans’s powerful committee to other lawmakers.
Mendelson refused to answer questions from reporters about whether he was trading votes on the betting contract for new clout for council members. Pressed by Silverman on the council dais, he said he was “offended” but did not deny it.
Those who gained committee assignments included McDuffie, who originally voted against sole-sourcing the Intralot contract and had said he was undecided on the bill, and Robert C. White Jr., who said Monday he was inclined to oppose the contract.
White said Tuesday he supports the contract now because he believes officials would not be able to negotiate a better contract for the city and its small businesses. He denied a connection between his vote and his newfound legislative power, calling the insinuations “bulls---” and saying he did not consider having the public transportation agency Metro under his committee’s purview a personal benefit.
Revenue projections for legalized sports betting have fallen short of expectations in other states that have legalized the activity.