The D.C. Council continued its aggressive march toward launching sports betting on Wednesday when the Finance and Revenue Committee voted 3-2 to advance Bill 23-25 to a vote before the Committee of the Whole, which is scheduled for Feb. 5. The bill would allow the District to bypass the bid process for a sports betting mobile operator and give the contract to current D.C. Lottery vendor Intralot.
The committee meeting was spirited, and, as is clear from the vote tally, committee members are split on whether to move forward without a bid process. The Council legalized sports betting at breakneck speed last winter, and it appears a key driver of the process is D.C.’s desire to be a “first mover” in its region.
But industry groups have consistently spoken out against bypassing the bid process in favor of moving quickly.
“A huge motivating factor with adding gaming is wanting to be able to compete with nearby states,” Sara Slane, senior vice president of public affairs at the American Gaming Association.”The don’t want to miss out on that opportunity. It’s a case of FOMO. … But not having an open, transparent, competitive bidding process, I think that’s a huge mistake.”
At issue is that the District currently contracts with Intralot to operate its lottery. Under the contract, Intralot cannot operate sports betting, so the contract must be rewritten. But in doing so, there is concern among committee members that D.C. will not get the best deal, as Intralot won’t have to compete for the new contract. The advantage of moving forward in this fashion is that the D.C. Lottery says it can launch sports betting within six months of a signed contract.
At a hearing on Monday, it became clear that some council members, as well as public witnesses, believe that such a move brings into question the integrity and transparency of the bid process.
“The Council is using the issue of sports betting and the false urgency of being a ‘first mover’ as a Trojan Horse to justify this extraordinary move to sole source the entire lottery contract,” iDEA Growth’s John Pappas, who testified against bypassing the bid process on Monday, said in a statement Wednesday. “The purpose of the legislation is to prevent anyone from appealing this sole source contract and it will cement the lottery and sports wagering contracts into a system that lacks competition or oversight. It is very troubling that the Council is not being transparent about its motives and it erodes the public trust in this entire process.”
‘There is a chance for the District to make more’
On Wednesday, Council member Elissa Silverman proposed an amendment that would essentially split the sports betting contract from the lottery contract, but the amendment failed, 4-1.
Silverman was passionate in her plea. She said when they legalized sports betting, they “gave rich sports owners the ability to have betting within their venues and for two blocks around,” Silverman said. “We gave a chance to sports owners to make millions, and the District will make a few million. There is a chance for the District to make more.”
Under the new law, the District will have a virtual monopoly on mobile sports betting, but four professional venues within the city can have sportsbooks on site, and there is a two-block “exclusivity zone,” in which no other venues can offer sports betting. According to the new law, bars, restaurants, and even corner stores can apply for licenses to offer on-site sports betting through kiosks or via mobile within their walls.
With the amendment, Silverman sought to sole-source the sports betting piece of the contract and give it to Intralot, in the spirit of moving ahead quickly. District lawmakers have been laser focused on being a first mover in the region for sports betting. The amendment then would have allowed the District to bid out the overall lottery contract when it’s time to renew.
Council chairman John Mendelson, who is the sponsor of Bill 23-25, voiced his opposition to Silverman’s amendment, saying, “It’s not realistic, practically speaking. For all intents and purposes, [the bill] would just mean extending the current contract, and I don’t think that would be offensive. I don’t find that as problematic as some think it would be. If we want to implement sports betting quickly, then we have to append it to the current contract. … I will not support this amendment.”
Two other Council members verbally opposed the amendment, but at least one, Kenyan McDuffie, appeared interested in continuing the conversation about splitting out the sports betting contract piece, so it’s likely the issue will come again ahead of or at the Committee of the Whole vote.
D.C. seeks to launch sports betting ahead of Maryland and Virginia, both of which are at the very beginnings of exploring sports betting. There are multiple bills in the Virginia General Assembly, though no real movement. And in Maryland, it appears as though legalizing sports betting will take a constitutional amendment, which couldn’t be put onto the ballot until 2020.