States that have legalized sports gambling have typically relied on seasoned operators of casinos, overseas sportsbooks or online fantasy leagues to launch their betting markets.
But in the nation’s capital, the majority of a contract to oversee sports wagering — worth up to $215 million over five years — would go to a handful of local companies without an extensive record in the industry, under a deal pending approval before the D.C. Council.
Confidential city records obtained by The Washington Post show that those who would benefit from the no-bid contract include a former D.C. State Board of Education official, the head of a marketing company that worked on the political campaigns of Mayor Muriel E. Bowser (D) and her protege, council member Brandon T. Todd (D-Ward 4), and an executive whose company lost a contract at a city homeless shelter because of allegedly falsified documents.
The local companies are subcontractors for Intralot, a Greek gaming company that the city selected — without the standard competitive bidding process — to run mobile and online sports betting. The subcontractors would earn more than half the $215 million contract, which is set to come before the D.C. Council for a vote July 9.
Awarding the bulk of the contract money to a small circle of insiders — including $110 million for a single company headed by Emmanuel Bailey, a prominent Washington business executive and political donor who holds a stake in the city’s lottery contract — is further worrying some lawmakers who are questioning the deal.
“This clearly is a setup in some way,” said Council member David Grosso (I-At Large). “This is why we have a competitive process to begin with, to make sure that this kind of stuff doesn’t happen and you don’t give a contract to your friends.”
Grosso, who opposed the legalization of sports betting, said the council should reject the contract and reconsider its approach to setting up a gambling market.
It is unclear how Intralot settled on this small set of subcontractors, most of them with connections to D.C. elected officials or previous contracts with the city government. Intralot officials did not respond to requests for comment Friday, and the subcontractors either did not return calls or refused to discuss their involvement.
Beth Bresnahan, director of the D.C. Office of Lottery and Gaming, testified at a council hearing Wednesday that she did not know how the Greek gaming company had picked its subcontractors. David Umansky, a spokesman for D.C. Chief Financial Officer Jeffrey S. DeWitt — who has played a key role in negotiations with Intralot — declined to comment.
“We certainly cannot comment on documents that are not supposed to be public, that are proprietary and that contain corporate confidential information,” Umansky said.
Council Chairman Phil Mendelson (D) said in an interview Wednesday that it was inevitable that politically connected subcontractors would be included in large contracts, which require that a certain amount of work be performed by local businesses — called certified business enterprises, or CBEs.
“Every time, there will be politically connected CBEs attached to a contract of this size,” Mendelson said. “The subs will come to [the principal contractor] and say, ‘Pick me, because I know the mayor. Pick me, because I know council member so-and-so. Pick me.’ ”
Mendelson said he was speaking generally and did not know how the Intralot subcontractors were chosen.
“It’s how business is done everywhere,” he said. “I don’t want to say it’s a great thing, but I don’t know how you avoid it.”
DeWitt’s office had previously identified the businesses but declined to publicly release the amounts they would be paid or details of the work they would perform. The contracting plans obtained by The Post show the extent to which the city’s entrance into sports gambling could benefit the companies.
In December, the District joined a growing number of states to legalize sports wagering in the wake of a U.S. Supreme Court decision that authorized the practice nationwide. DeWitt said that bypassing the competitive bidding process would enable the city to quickly roll out sports gambling and realize revenue for the city.
City officials negotiated the proposed five-year, $215 million contract with Intralot, which oversees the D.C. lottery. The deal would extend Intralot’s lottery contract and add on sports betting. About 75 percent of the overall sum is related to sports betting, with the rest dedicated to the lottery, city officials say.
The amounts are upper limits on the city’s contract payments, and they could be lower depending on how much revenue sports gambling generates.
Bailey’s company, Vital Services Corporation, will be awarded up to $109.65 million to serve over five years as “operations manager for the lottery and sports betting contract,” according to the documents. Bailey sits on the boards of the D.C. Chamber of Commerce and the Greater Washington Urban League. Representatives of both organizations testified in favor of granting a sole-source contract to Intralot at the D.C. Council last year.
Bailey did not respond to requests for comment Friday.
Octane LLC — the marketing company run by Everett Hamilton, who managed communications for Bowser’s 2014 mayoral campaign and Todd’s 2016 council campaign — would receive up to $3.5 million to provide “end to end digital marketing and advertising services for sports betting and online products.” Hamilton declined to comment.
Goldblatt Martin Pozen LLP would receive up to $300,000 for what the contract documents describe simply as “legal services.” The firm was paid $20,000 by one of Bailey’s companies to lobby council members last year and convince them to approve sports betting legislation, according to city records.
Its managing partner, Thorn Pozen, was general counsel for a since-disbanded political action committee Bowser launched in 2015 to promote her agenda. Pozen is also chairman of the mayor’s constituent services fund and accompanied her on a trip to Israel this week.
Pozen did not return calls.
District Services Management will take in up to $1.2 million to “host primary data center and provide cloud services for sports betting system.” It is unclear where that operation will be located; the company lists as its business address a single-family home in Southeast Washington owned by Allieu Kamara, its head.
Kamara also ran Life Deeds, which in February lost a $3 million city contract to manage a Ward 7 homeless shelter after officials with the D.C. Department of Human Services said they could not verify the company’s personnel records.
Kamara, who did not return calls Friday, blamed a vendor for falsifying the documents and previously said he planned to appeal the agency’s decision.
M. Jones Companies would receive up to $1.25 million for “lottery agent support, including equipment installation, retailer recruitment and warehouse staff augmentation and support,” the documents state. The firm is owned by Mark Jones, who served as a deputy director of the D.C. Lottery in the late 1990s and represented Ward 5 on D.C.’s State Board of Education until this year.
Reached on his cellphone, Jones referred questions to the D.C. chief financial officer and Intralot.
“I am a legitimate business person, and I understand the industry. There’s nothing peculiar about any of this stuff,” Jones said.
Another subcontracting deal would award up to $600,000 to SBC LLC, a shuttle bus company that would offer “vehicle fleet management services, commercial vehicle acquisition, disposition and storage services,” the documents state. SBC’s chief executive, identified in the documents as Kianna Fowlkes, did not return calls.
One subcontractor whose involvement in sports gambling was previously disclosed by the District’s chief financial officer is not listed in the documents obtained by The Post: Potomac Supply Company LLC.
City records describe it as an office supply provider that was formed in March 2019. Bresnahan testified Wednesday that the company was responsible for producing “paper products” and betting slips that are “vital” to operations, despite the increasingly digital direction of both sports betting and the lottery.
The firm’s principal is Northeast D.C. resident Okera Stewart, who has raised political donations for Council member Kenyan R. McDuffie (D-Ward 5).
Stewart declined to comment Friday.
McDuffie said he has known Stewart for decades but was not aware he was involved in Potomac Supply Company.
“I actually saw him the other day, but I didn’t know he had a contract,” McDuffie said in a phone interview. He also noted that Pozen was his campaign lawyer and that he knows Jones, who is politically active in Ward 5.
“The fact that I know people who have subcontracts on its face is not a reason for me to vote against the contract,” McDuffie said. “I’m a third generation Washingtonian. I have friends that I have developed over the years and supported me to run for office.”
McDuffie originally opposed the idea of a no-bid contract but said he has not made up his mind on whether he will vote for the Intralot deal next month.
The sports gambling legislation and Intralot deal were on the fast track after DeWitt, the chief financial officer, urged elected officials to beat neighboring Virginia and Maryland to the gaming market.
But those states did not ultimately advance sports gambling bills, and now some lawmakers appear to be struggling with buyer’s remorse.
Some states that rushed into sports gambling have reaped only a fraction of the revenue they expected. DeWitt has already lowered the District’s projected revenue from sports wagering over the next several years, citing delays to approve the Intralot contract.
The sports gambling bill is also facing new scrutiny in light of the key role played in its passage by council member Jack Evans (D-Ward 2).
Evans, who introduced the bill and shepherded it through his finance and revenue committee, is now the subject of a federal probe into whether he improperly used his public office to benefit paying clients of a consulting business he owns. His Georgetown home was searched at dawn this past week by federal agents.
Also this past week, Evans announced that he would resign from the board of the Metro transit agency, which he previously chaired, after an investigation performed by an outside law firm for the agency found he had committed ethics violations.