No matter what phrase you use, the D.C. Council is in a hurry to get sports betting up and running.
Beating neighboring Maryland and Virginia to the punch is apparently of such paramount importance to the Council, and the D.C. Lottery, which will operate and regulate sports betting in the District, that both, as well as the Office of the Chief Financial Officer spent more than four hours fending off accusations, suspicions that “the fix is in,” and defending the option to bypass the bid process for an operator. Never mind that neither Maryland or Virginia is anywhere close to legalization.
The committee did not make any recommendation following the hearing, but Chairman Jack Evans hopes to get the bill marked up this week and onto the full Council agenda by Feb. 5.
D.C. seeking vendor for lottery, not just sports betting
Part of the initial confusion at the hearing stems from the name of the bill in question. Bill 23-25 is called the “Sports Wagering Procurement Practices Reform Exemption Act of 2019.” The title implies that the city is seeking a vendor to operate mobile sports betting. But the city is seeking an operator to run its lottery, which now includes sports betting. Only three companies are currently qualified to run a lottery that includes sports betting — current vendor Intralot, Scientific Games and IGT.
And a quick, albeit significant update: the Council bill would allow for a sole-sourcing of the entire lottery contract, not just the sports betting part of it. Initial idea was to separate out the sports betting part, but CFO says more benefits to doing full lottery.
— Martin Austermuhle (@maustermuhle) January 28, 2019
The common themes throughout the hearing were time, money, and trust. How long will it really take Washington, D.C. to enact regulations and launch a sports betting platform? The lottery says six months, if it’s allowed to give the contract to Intralot. When pressed, Beth Bresnahan, Executive Director, Office of Lottery and Charitable Games, said her office could roll out regulations by July and approve licenses in September.
Should the city have to put out an RFP, Bresnahan said it would take a minimum of 27 months to launch. And during that time, according to a study by independent gaming consulting firm Spectrum Gaming Group, the District would lose hundreds of millions of dollars.
The Spectrum study was picked apart at the hearing. Lawmakers questioned if the study makes too many assumptions, particularly that neighbors Maryland and Virginia would get sports betting up and running quickly, and D.C. would lose its advantage as a “first mover” in the region.
‘This is a unicorn,’ the chance to be first
Witness Adam Zuckerman compared launching sports betting to launching any sort of app or new technology, and said in the tech world, being first is critical.
Bresnahan echoed his sentiments when she said it was unwise to “overestimate the value of being first.”
In his opening comments, Evans said the goal is “to keep our spot as first in the region.” He went on to suggest that revenue from sports betting would help to mitigate the negative effects of the government shutdown, which he estimates have cost the city $40 million.
Said DeWitt: “Ninety-five percent of the time, I’d recommend a competitive bid process. But this is a unicorn, a once in a lifetime opportunity, and being first matters.”
Adding to the chorus was witness Shane August of the August Holding Corp., who said, “If D.C. is first (in sports betting), people will come here first … and if we’re first, we’ll win.”
But all of the bluster about the import of being first didn’t sway at-large Council member Elissa Silverman, who asked pointed questions throughout. She questioned the Spectrum study, how the lottery came at its timetable for launching sports betting and how a delay would cost the city, and a lack of transparency, not just with the bill at hand, but also the legalization of sports betting.
“What our CFO is advocating for is quite extraordinary,” Silverman said at the start of the hearing. “If we sole-source, then we can get this up and running quickly, we will benefit. But this is based on a lot of assumptions.”
Lottery chief, CFO defend position
Re: D.C. sports betting convo: The DC Lottery came under fire from Council members and witnesses Monday at a hearing to bypass the bid process in finding a sports betting vendor. 1/2
— Sports Handle (@sports_handle) January 28, 2019
Bresnahan and DeWitt deflected, described and detailed everything from the process of putting out an RFP to Bresnahan’s background as head of the Massachusetts Lottery and her ties to Spectrum employees to the issue of transparency. Whether it was enough to convince doubtful council members is unclear.
There’s certainly a vocal group that fears D.C. sports betting is heading down a path to controversy, similar to the one taken by the Lottery during a 2008 scandal.
“I want to express my outrage at this unusual attempt to bypass the procurement process,” said former Council member John Ray, who was around for the 2008 scandal. “If you shoot an arrow through the heart of procurement process, you kill the integrity. … This isn’t a 100-yard dash, it’s a marathon.”
Added Dorothy Brizill of D.C. Watch: “The bottom line is… chasing the dollar in D.C. is not necessarily for the public benefit. It smells.”
