Tuesday morning, Dylan Carragher, a Washington, D.C. sports betting app developer got a small legal victory — about a week after a D.C. Superior Court judge issued a temporary restraining order against the Office of the Chief Financial Officer to keep it from making the first installment of a payment to vendor Intralot. Judge John Campbell extended that order by seven days, set a hearing date and promised a decision in the case by Oct. 18.
Prior to the decision, on Monday night, the OCFO filed an opposition motion to the injunction.
The decision is the latest in a drama that started last fall when the D.C. Council, at the request of now defrocked Councilmember Jack Evans, raced through legalizing sports betting in the hopes of being a “first mover” in its region. Months later, the Council, after multiple contentious meetings, voted to issue the District’s sports betting contract to current Lottery vendor Intralot, in the hopes that single-sourcing the contract would speed up the process.
The ultimate effect has proven just the opposite.
Delayed payment will also delay potential launch
The Office of the Chief Financial Officer, which oversees the Lottery, was scheduled to make the first payment to Intralot on its $215 mm contract today. But last week, a 14-day temporary restraining order was issued, delaying the payment. Campbell extended that window to make it a total of 21 days.
The OCFO released the following statement after today’s action:
“The major impact of the judge’s ruling will be on the small local business that intend to participate and profit from sports wagering and on the January 2020 start date for the Lottery’s citywide mobile wagering app. The new contract provides the platform and equipment necessary to launch lottery-operated sports wagering at retail locations and via mobile. In addition, the ruling will serve to delay the modernization of lottery operations at more than 400 retailers across the District.”
The OCFO did not make that scheduled first payment, and according to an attorney working on Carragher’s case, no matter the ruling on Oct. 18, it’s likely to be appealed.
Award for most politically corrupt process in a jurisdiction to legalize sports betting (and mostly likely to fail):
— Sports Handle (@sports_handle) June 12, 2019
The two potential outcomes on Oct. 18 are that Campbell rules in Carragher’s favor, meaning the OCFO can never make a payment to Intralot, or he rules in D.C.’s favor. Either way, D.C. sports betting is now going nowhere fast.
At issue is the Council’s decision to single-source its sports betting contract — a decision the Council has never before made. In the past, the Council has decided to skip the bid process for contracts that fall under the purview of the D.C. Office of Contracting and Procurement, but it has never done so for a contract handled by the OCFO.
“That’s the first time that has ever happened,” Zach Molloie, an attorney in Donald Temple’s office told Sports Handle Tuesday. “So, almost regardless of what happens, on the 18th, the losing side is likely to appeal to D.C. Court of Appeals.
App developer just wants ‘opportunities’
BREAKING: The D.C. Council has approved a no-bid $215 million sports gambling contract, despite concerns about the patron's business relationship with a lobbyist associated with the company and politically connected subcontractors https://t.co/8ybOprchp7
— Fenit Nirappil (@FenitN) July 9, 2019
Molloie said Carragher just wants a shot at proposing his app — and that the new law does give the D.C. Lottery the “opportunity to give as many contracts as it wants. So for the D.C. Lottery to sole source a $215 million contract to Intralot creates a public perception that there are significant backdoor dealings involved. The contract just doesn’t pass the smell test.”
Temple is lead counsel on Carragher’s case. He told WTOP in September that “The city needs to follow its procurement laws, certainly, and the process should be competitive and open. That would allow not only our client, but others who own sports bars and others like that, to compete in the marketplace for what is going to be a very lucrative business opportunity.”
A spokesperson in the OCFO said it will release a statement later today.
“This lawsuit will finally bring clarity to a process that since we started it almost a year ago has caused angst amongst the sports betting community that would have allowed for a robust, competitive market,” said consultant Brendan Bussmann of Global Market Advisors. “This all started off the premise of we need to hurry up and get this done, and is based a study that people still question today to have a single-source provider.
“This is one of many continued delays in the overall process that D.C. has faced since it began legalizing sports betting over a year ago, all of which could have been avoided had you just done your homework from the beginning to craft an ideal market for the District of Columbia.”
Open, competitive marketplace is the standard
Nearly every other jurisdiction that has legalized sports betting since the Supreme Court in May 2018 struck down the Professional and Amateur Sports Protection Act has opened its contracts to bids. In fact, New Hampshire is currently reviewing 13 proposals from potential operators, and Tennessee is seeking a partner to help vet proposals when they open their Request for Proposal process.
In Montana, which also contracts with Intralot to run its Lottery, the Lottery was on the cusp of giving its sports betting contract to Intralot without looking at other bids when lawmakers stepped in and waved a red flag. The launch of sports betting has been put on hold in that state, as it continues to discuss who and how to award the contract.
Back in D.C., the net result of the Council’s decision to not only rush to legalize, but also to skip the bid process is that the District won’t meet its goal of launching sports betting within six months of striking a deal with Intralot. Since legalizing, the launch date has been a moving target — first by summer 2019, next by fall 2019, and the latest, by early 2020. Two of those dates have passed and it’s highly unlikely the third is unreachable.
“We’ve talked to several sports betting consulting groups,” Molloie said, “and they said, ‘The way that D.C. has gone about this is going to be opposite of moving sports betting along quickly in the city because after someone challenges this contract, D.C. is going to have to restart the process from the beginning and competitively bid the contract. At this rate, D.C. is almost never going to get this started because the court challenges will go on forever.’”
And here we are.