A resolution passed in the D.C. Council on Tuesday evening that sole-sourced the district’s mobile sports betting contract to Intralot, despite strenuous objection from several members regarding ethical concerns surrounding the Greek gaming company’s relationship with an embattled council member.
The measure narrowly passed by a 7-5 vote, with one absence. And the final vote was cast by Jack Evans, a longtime council member, currently under multiple investigations for his private business dealings, including interactions with Intralot. Evans voted for the resolution, along with council members Vincent Gray, Kenyan McDuffie, Brandon Todd, Anita Bonds, Robert White and Phil Mendelson, the council’s chairman.
Gray, a Ward 7 Democrat, ostensibly held the swing vote. Earlier in Tuesday’s session, Gray’s bill that would have directed some future sports betting revenues to funding for violence prevention failed by a 7-5 margin.
Prior to the vote, the council stripped Evans of his position as chairman of Committee on Finance and Revenue and launched an inquiry into Evans’ business activities. The developments came several days after a report from the Washington Post detailed Evans’ relationship with William Jarvis, an Intralot lobbyist.
Jarvis, according to the report, provided Evans with legal services for his consulting firm, NSE Consultants. Jarvis only helped NSE register as a business and did not receive compensation for serving as a registered agent, Evans said.
— Debbi Wilgoren (@DebbiWilgoren) July 7, 2019
Amid the probe, several members reconsidered their vote in recent days. Under the measure, the Council approved a five-year, $215 mm contract that designates Intralot as the exclusive mobile sports betting vendor of the district. Intralot also serves as the operator of the D.C. Lottery.
Council members David Grosso, Elissa Silverman, Brianne Nadeau, Mary Cheh and Charles Allen voted against the resolution.
“The events of the last several weeks have called into question Mr. Evans’ honesty and truthfulness with every member of this body,” Grosso said during the hearing.
Both Grosso and Silverman cited Intralot’s recent financial difficulties as another factor for voting against the measure. Over the last 12 months, the company has seen its credit rating downgraded by three major agencies. Most recently, Fitch Ratings lowered Intralot’s Long-Term Issuer Default Rating in May on heightened liquidity and refinancing risks, along with negative cash flow apprehension.
Instead of sole-sourcing the contract, Cheh urged her colleagues to develop a structure that would award multiple licenses for mobile sports betting. Initially, the District looked to move quickly to sign a deal to capitalize on a first-mover advantage over Virginia and Maryland. Those worries dissipated after both states failed to legalize sports betting this year, Allen said. Grosso concurred.
“I do not understand why we all think we have to rush to judgment right now,” Grosso said. “This is a bad deal for the District of Columbia.”
White, meanwhile, argued that small businesses throughout the district could suffer if the contract was disapproved. Silverman countered that four professional sports franchises in the city will benefit from a provision that grants the teams sports betting exclusivity in the areas surrounding the venues. She pointed to an exclusive rights agreement given to the operators of Nationals Park, Capital One Arena and Audi Field that prohibits certain bars and restaurants two blocks around the facilities from launching sports betting operations.
Controversy surrounding no-bid process
In February, the Council voted to approve legislation that essentially could provide Intralot with a virtual monopoly on mobile sports betting in the District. The legislation, Bill 23-25, passed despite strong resistance from three Council members which expressed serious misgivings on awarding the contract to the Greek gaming company without a competitive bidding process.
The no-bid process received heavy criticism from Grosso, an At-Large Council Member, who voiced ethical concerns related to Intralot’s financial contributions to various Council member campaign funds. Grosso received backing from Silverman (I-At Large) who felt that the city could receive a more favorable deal by floating an RFP and decoupling the sports betting contract from the overall lottery one.
District of Columbia Mayor Muriel Bowser signed the legislation in January, several days before a key Council hearing on the subject.
Opposition to contract from leagues, rival vendors
Numerous professional sports leagues, including Major League Baseball and the National Basketball Association, as well as the PGA Tour, implored the Council to avoid a “state-run monopoly,” by opening up the bidding process. Two industry lobbyists, Christian Genetski, chief legal officer at FanDuel Group and Griffin Finan, vice president of government affairs at DraftKings also penned an editorial on Monday in the Washington Post, expressing their discontent with the Council’s plans to sole-source the contract to Intralot.
“A sole operator will have no reason to create a compelling consumer experience or invest in innovation. This will undoubtedly result in consumers going elsewhere — whether to legitimate sports betting operators in other states or to illegal offshore sportsbooks, which offer no consumer protections and will steal revenue from the District,” they wrote.
— Washington Post Opinions (@PostOpinions) July 9, 2019
It is immediately unclear if mobile sports betting will launch in the District in time for the start of the football season.
Silverman has larger concerns.
“We need to restore the public’s trust. With an approval of this contract we continue to erode it,” she said.