jonetta rose barras: Approving the sports-wagering contract
As expected, the DC Council’s Committee on Finance and Revenue pushed online gambling forward this week by approving the Sports Wagering Procurement Practices Reform Exemption Act of 2019. The vote was 3-2, with Ward 2 member Jack Evans, at-large member Anita Bonds and Council Chairman Phil Mendelson agreeing on the bill’s passage, and at-large member Elissa Silverman and Ward 5 member Kenyan McDuffie in opposition.
It appears that Evans invited Mendelson’s participation after learning that Ward 7 member Vincent Gray would not be attending the markup. According to council rules, the chairman can serve as a member of any committee. Without Mendelson, the vote would have been 2-2, which means the legislation would have died in committee.
If the exemption act is approved by the full council, it will provide DC Chief Financial Officer Jeffrey DeWitt the authority to negotiate a sole-source contract with the District’s current lottery provider, Intralot. That contract would call for Intralot to refresh the DC Lottery’s current games and to create a sports wagering system as soon as September 2019 that could include betting parlors across the city and online gambling through mobile apps.
The full council is expected to take up the procurement legislation next month. The vote in committee suggests it could be difficult, though not impossible, to secure the seven votes necessary for final passage.
In my view, the council should endorse the finance committee’s decision. Here’s why: The majority of the members already agreed they wanted the District to be first among the Washington region’s jurisdictions to offer online gambling, believing that position would allow the city to pull in more players and more profits. Last month, the council voted 10-2 to approve the underlying sports wagering bill, giving the CFO the authority to set up and regulate online gambling while also allowing the lottery office to serve essentially as a license holder and operator. If legislators weren’t going to support the CFO all the way, they probably should not have approved the sports wagering proposal to begin with.
The city’s current infrastructure of lottery retailers and suppliers, many of which are small or minority-owned businesses, would be leveraged to help build the new system. Further, legislators, including McDuffie and at-large member Robert White, pushed through a measure that made it possible for small, local, minority businesses to participate in a new training program that would help them learn about and participate in the gaming industry.
In response to amendments from Gray and McDuffie, council members also agreed to set aside a significant portion of the money from betting toward early childhood education and violence prevention. That promise of additional funding has excited many local residents and advocates, including at least one parent whose child was killed recently: Katrina Barksdale pleaded with finance committee members during a recent public hearing to quickly pass the exemption act. Under the law approved by the council, money would also be available for gambling addiction treatment.
It is ironic that McDuffie voted in committee against the procurement act, after having won two amendments to the underlying law. What was on his mind? Has he been listening to the debate? Does he understand that those minorities he claims to want to help from sports wagering profits likely won’t get a thing unless and until DeWitt gets what he needs? Maybe McDuffie wants to provide an assist to a particular group of minorities and not a more global group.
After listening to the testimony at the hearing and speaking directly with DeWitt, I am convinced that the failure to approve the waiver would imperil that entire plan, while opening the proverbial Pandora’s Box.
“Do not open the door to chaos, confusion, delay and corruption,” Erika Wadlington of the DC Chamber of Commerce urged the finance committee Monday. “Now is the time … to pass this legislation so that the city, retail operators and small businesses can start to realize the economic impact of your actions.”
Of course, not everyone shared her view. For example, Dorothy Brizill, executive director of DC Watch, and Marie Drissel — two well-respected civic leaders who have stopped past attempts to establish casino-type slot machine and Internet gambling in the District — argued for the council to deny the waiver, which they described as an invitation to misdeeds or at least mistakes. “I am stunned that any of you will support a waiver of competitive bidding for a large contract,” Drissel added.
Moreover, there are lobbyists hoping to derail the lottery’s involvement. They do not want the city to have complete control of the mobile apps.
Normally, I would be on the same page as Brizill and Drissel. While the city’s procurement process often is manipulated to meet the needs of one government manager or another, I have seldom if ever advocated avoiding it; it’s a necessary element of managing how business gets done and how the public’s money gets spent.
This case is different, however. There is a huge revenue impact that could accrue to District residents — if sports wagering is executed properly. The city could also see as many as 281 new jobs, according to figures that George H. Lambert Jr. of the Greater Washington Urban League cited Monday. That projection comes from a report completed at the CFO’s request by Spectrum Gaming Group.
“If you do not move forward, this is a missed opportunity,” Lambert told the finance committee. Ditto for the full council.
In casting doubt on the findings of that study, Brizill noted that Emmanuel Bailey — head of DC09, the local minority partner that has worked in DC with Intralot for nearly a decade — is a member of Lambert’s board of directors. (Full disclosure: Bailey also has provided a small grant to my nonprofit for the past three years — not through his lottery company, however. He likewise has helped other groups like the Boys & Girls Clubs of Greater Washington.) Bailey likely will remain Intralot’s partner; his management with Intralot of the lottery contract — not his charitable activities — has fueled many people’s support for the CFO’s waiver.
Another argument in favor of approval is DeWitt’s own reputation since becoming CFO in 2014. I was first among the journalists to have a face-to-face interview shortly after his appointment. His predecessor had left a mess, including an issue related to the printing of lottery tickets. Minority business owners were attempting to get in on the action. DeWitt negotiated with those individuals until he found a way to satisfy their concerns along with the lottery’s needs. Each year, his office has met its quotas for hiring or engaging local certified businesses in the current gaming system. I have found DeWitt — unlike his predecessor — to be somewhat apolitical, choosing to stay behind the scenes while providing sound fiscal advice to elected officials and government managers. He’s not perfect and I certainly don’t always agree with him, but I find him to be a person of integrity and high ethical standards.
DeWitt has said if the full council does not support his request, he will do the best job he can based on whatever decision is made. According to Evans, private license holders like the sports leagues would not be adversely affected. Legislators shouldn’t handicap the CFO, who is attempting to work in the best interest of District residents.
If DeWitt is forced to follow the typical procurement regimen, that could take more than a year. That process also could destabilize the current lottery infrastructure, injecting anxiety into its pool of retailers. Equally important, it could snatch a potentially lucrative opportunity from minority small-business owners — the very people the council has said it wants to help.
And, if none of that is persuasive, council members may want to follow the money. In 2019, the revenue projection from sports wagering is about $8 million — $1.9 million from private betting parlors and $6.4 million from the lottery-operated retail sites and mobile apps. In 2020, online gambling could bring $26 million, most of that generated through the lottery operation. That’s a lot of funding for early childhood programs and violence prevention — both worthy of more funding than the District can otherwise provide.
Plainly put, the council could lose its wager on sports betting if it decides not to grant the CFO the procurement waiver he is seeking.
jonetta rose barras is a DC-based freelance writer and host of The Barras Report television show. She can be reached at thebarrasreport@gmail.com.
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