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D.C. Council puts off decision on sole-source sports betting contract

Tom Baldwin of Paint Creek, W.Va., tries to download a new sports betting app onto his smartphone soon after the opening of the sportsbook at Mardi Gras Casino & Resort in Crosslanes, W.Va., on Dec. 28. (Chris Dorst/AP)

The D.C. Council put off a decision Tuesday on whether to skip competitive bidding and award a sole source contract for management of the city’s new venture into sports betting. Council members said they wanted to alleviate concerns about the measure by giving the public time to weigh in.

“We would lose some months,” council member Mary M. Cheh (D-Ward 3) said during the council’s breakfast meeting as she proposed pulling the emergency legislation from the day’s agenda. But “we would at least have it out there in the open and have a hearing.”

Council member Brianne K. Nadeau (D-Ward 1) agreed, saying handling the proposal as emergency legislation, which wouldn’t require a public hearing, was a bad idea.

“I’ve just not seen anyone demonstrate that this is an emergency situation,” she said.

Last month, the council approved legal sports betting, making the nation’s capital the first jurisdiction in the metropolitan Washington region to allow betting on professional sports.

The move came months after the U.S. Supreme Court struck down a federal law outlawing sports betting outside Nevada, a ruling that mobilized lawmakers across the nation looking for new sources of revenue and an industry looking to expand rapidly.

The District joins seven other jurisdictions outside Nevada that allow sports gambling. Lawmakers in Virginia and Maryland have yet to act, creating an opportunity for the District to beat its neighbors to a new source of cash.

D.C. Lottery officials, who will oversee the program, have advocated skipping the competitive-bidding process to select a vendor to set up online platforms and related services. Instead, they want the city to negotiate a contract with Intralot, the company that operates the city’s lottery.

The District has no casinos, but last month’s legislation created three ways to place a wager: at sports venues such as Capital One Arena and Nationals Park, at private establishments such as restaurants and liquor stores, or from anywhere in the city using a mobile application. The app is expected to be the most popular method, and D.C. Lottery has the exclusive ability to operate it.

D.C. Lottery Executive Director Beth Bresnahan warned in a letter last week to D.C. Council Chairman Phil Mendelson (D) that “the costs of delay are significant.” A bidding process could take up to three years and cost the District nearly $61 million in sports betting revenue over several years, she wrote.

“If Virginia and Maryland offer sport wagering before the District, these states will be better able to establish customer relationships with their residents, thus depriving the District of potential revenue from commuters, who double our adult population every work day. This revenue may never be recovered,” Bresnahan wrote.

Critics of such a move say the desire to set up the program ahead of nearby states doesn’t outweigh the value of competitive bidding.

“There’s a reason why competitive-bidding and public-procurement laws are on the books,” said Daniel Wallach, a lawyer and expert on sports betting issues. “They’re designed to promote competition and ensure that the public gets the best deal possible.”

Some council members said that they were inclined to accept D.C. Lottery’s argument that speed is critical but that they still thought it best to decide after more public deliberation.

“Most of us will not change our minds, but at least the public will have had an opportunity to understand where we are coming from,” said council member Anita Bonds (D-At Large).

Council member Elissa Silverman (I-At Large) agreed, saying intense lobbying from business interests on the issue heightens the need for public scrutiny.

“I haven’t gotten one email from a regular resident about the lottery, but I’ve gotten a lot of hallway chatter and emails from people who are going to make a lot of money from this,” Silverman said. “This is about us as an institution, in terms of we need to protect ourselves from looking like this is an insider deal, a pay-to-play deal.”

Mendelson agreed to introduce a bill through the regular legislative process and withdraw Tuesday’s emergency measure, warning his colleagues of the new “onslaught of lobbying” they would face until the matter is decided.

“If we don’t go forward today, we’re going to see that ramp up, and we just need to be prepared for that,” he said.