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Sports gambling will earn D.C. nearly $16 million less than projected, officials say

D.C. Council member Jack Evans (D-Ward 2), who played a central role in promoting sports gambling legislation, is now the subject of a federal investigation. (Jahi Chikwendiu/The Washington Post)

D.C. government officials have lowered by nearly $16 million the revenue they estimate legalized sports gambling will generate over the next 15 months.

Lawmakers passed a bill in December to legalize and regulate sports wagers, joining a handful of states seeking to capi­tal­ize on a U.S. Supreme Court decision that authorized the practice. But they have not approved a contract for a company to run the city’s gambling operation.

Beth Bresnahan, director of the D.C. Lottery, testified before a D.C. Council committee Wednesday that the revenue projections have been revised downward, a recalculation she said was made at the end of February.

In response to follow-up questions from The Washington Post, a spokesman for the city’s chief financial officer said the District’s sports betting operation is now expected to earn just $750,000 during the current fiscal year — which ends Sept. 30 — and generate $17.1 million during the next fiscal year.

Combined, that is a little over half the amount that Chief Financial Officer Jeffrey S. DeWitt originally estimated sports gambling would bring to the District’s coffers over the same period. In late November, DeWitt released an analysis stating that sports wagers would generate $7.7 million during the current fiscal year and $26 million during the next fiscal year.

The revised revenue estimate for fiscal year 2021 is $27 million, in contrast to the original estimate of $28.3 million.

Bresnahan testified that the downsized projections stem from a delayed rollout date for a mobile app associated with the city’s gambling operation.

$215 million sports gambling contract includes political insiders

The original July launch has been pushed to January 2020, a delay she attributed to the fact that the council has not yet approved a proposed no-bid contract with Intralot, the city’s chosen vendor to run the gambling operation.

“We did not have the capability to launch the platform without a contract,” Bresnahan said, adding that the rollout could begin within six months of the Intralot deal’s approval.

But as the council weighs approval of that contract — worth up to $215 million over five years — the shifting revenue estimates are fueling worries among lawmakers who say the city is rushing into a questionable deal.

“There are questions about the rosy forecast that the CFO gave us and the reality of this contract,” said D.C. Council member Elissa Silverman (I-At Large). “We have now found out that the CFO and Intralot’s forecasting was, I would say, overly optimistic.”

DeWitt did not attend the hearing Wednesday. His spokesman, David Umansky, said the chief financial officer was on vacation.

Umansky said in an email that the CFO’s analysts had initially believed that a July launch was feasible, but that “simply put, it took longer than expected to arrive at a solution” for how to implement sports gambling.

Council members are scrutinizing multiple aspects of the Intralot contract, which The Post reported this month would benefit several politically connected subcontractors.

Also of concern to some lawmakers is the central role played in promoting the sports gambling legislation by council member Jack Evans (D-Ward 2), who shepherded the bill through his finance and revenue committee.

Evans, whose home was searched at dawn Friday by the FBI, is the subject of a federal probe into whether he used his public office to benefit friends and clients of his private consulting firm.

The registered agent for Evans’s firm, William Jarvis, also lobbied D.C. elected officials in support of the sports gambling bill.

Federal agents search Georgetown home of D.C. Council member Jack Evans

Council member David Grosso (I-At Large) said at Wednesday’s hearing that Evans should have recused himself from the sports gambling bill in light of that relationship.

“There is and was an obvious need for recusal,” Grosso said, adding that Evans’s potential conflict of interest “calls into question not just this contract but also the underlying legalization of sports wagering.”

Bresnahan testified Wednesday that Jarvis had no involvement in the Intralot contract, and said the FBI has not made contact with the D.C. Office of Lottery and Gaming as part of its probe of Evans.

Evans did not return calls Wednesday.

He made a brief appearance at the committee hearing Wednesday, arguing in favor of the contract.

Failure to approve it, he said, “will have an impact, because in the budget we just passed there are funds that are anticipated to be collected from the lottery that will no longer be collected. So, we will have to revisit our budget and fill that hole.”

Last week, Evans announced he would resign from the board of the Metro transit agency — which he chairs — after a law firm hired by the board to perform an ethics investigation found Evans had used his position to benefit a parking company that was secretly paying his consulting company $50,000 per year.

Also last week, D.C. Council Chairman Phil Mendelson (D) announced that he would seek to strip Evans of his chairmanship of the powerful finance committee and create a council committee to investigate him for possible ethics violations.

An earlier version of this story incorrectly stated that the District’s estimated revenue from sports gambling in fiscal years 2019 and 2010 has been revised downward by $20 million. The estimate has been revised downward by $16 million. The story has been updated.

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