D.C. officials on Monday defended efforts to award a sole-source contract to run the city’s upcoming sports gambling program, insisting that the normal competitive bidding process would delay legal betting and cost the city tens of millions in lost revenue.
The D.C. Council was scheduled to vote earlier this month on legislation that would allow Intralot, the city’s Greece-based lottery operator, to also set up online platforms for sports betting and related services.
But some lawmakers balked at bypassing standard procurement rules, and the vote was delayed until a public hearing could be held.
At Monday’s hearing, D.C. Chief Financial Officer Jeffrey S. DeWitt told lawmakers that a sole-source contract is in the best interest of businesses and taxpayers.
“I do not take this lightly, what we’re doing,” said DeWitt, whose office regulates the lottery. “I assure you this recommendation is made solely with the intent of doing what our analysis shows is in the best economic interest of the District.”
Lawmakers approved legal sports betting late last year, allowing for wagers to be placed at arenas, at retail businesses like convenience stores and restaurants, and on a city-run mobile application. The app is expected to be the most popular way to gamble and the biggest source of revenue.
D.C. Lottery Director Beth Bresnahan testified that soliciting competitive bids to operate online sports gambling services and then awarding a contract would take at least 27 months — and possibly an additional year if a losing bidder appealed the decision. A sole-source contract would allow the city to launch sports betting before the NFL season starts in September, officials testified.
The finance office estimated that sports gambling at stores and on the mobile app would bring the District $61 million in revenue over the next three years — money it said is at risk if there are delays.
But some lawmakers and witnesses seemed skeptical, arguing that the purpose of competitive bidding is to ensure that taxpayers get the best value for services and to prevent cronyism.
“The benefit to a competitive process is, we will know by comparison whether or not we are getting the best deal,” said council member Robert C. White Jr. (D-At Large), who was recently selected to lead a committee overseeing procurement issues.
The D.C. Lottery has come under scrutiny over its procurement practices. The city settled a whistleblower lawsuit for $3.5 million in a case involving a contracting officer who said he faced pressure to steer the lottery contract.
John Ray, a former council chairman turned lobbyist, said the city faces a perception problem if it suspends competitive bidding.
“When you shoot an arrow through the heart of the procurement process as is proposed here, you kill the integrity of the process and the trust of the citizen,” said Ray, who added that he was testifying as a private citizen.
Lawmakers also heard from witnesses who favored suspending procurement laws, including minority-owned businesses that could subcontract with Intralot and residents of Southeast Washington who favored the use of sports gambling revenue for violence prevention and early-childhood education.
Looming over the D.C. Council’s decision is the fear that Maryland or Virginia will launch a sports betting program before the District does. D.C. officials are hoping to establish an early foothold as the go-to jurisdiction for sports gambling.
In Maryland, it’s unclear whether lawmakers will place the issue before residents as part of a referendum vote next year or whether they will advance legislation allowing the lottery to regulate it without voter approval. Virginia lawmakers considered sports betting legislation at a committee hearing Monday, but bills have yet to reach the floor of either legislative chamber.
It wasn’t immediately clear how Monday’s hearing at D.C. city hall would affect the timeline for sports gambling.
Council member Jack Evans (D-Ward 2), who convened the hearing as chairman of the Committee on Finance and Revenue, says he’ll move for a committee vote on the sports betting bill Wednesday. That would allow the legislation to come before the full council by the end of February.
Evans spent much of Monday’s hearing giving supporters of the sole-source contract a platform to respond to criticism.
At times, the chief financial officer grew frustrated as he sought to dispel suspicions that the city wants to steer a lucrative contract to Intralot.
“This is a business decision. We have no horse in the race,” DeWitt said. “We are just recommending what’s best financially. It’s your decision if you want to bid it out, but you can probably see it’s going to be a pretty contentious procurement process.”
Ovetta Wiggins and Laura Vozzella contributed to this report.