Opening Statement of Councilmember David Grosso, Member

Committee of the Whole hearing on

CA23-168, Proposed multi year contract CFOPD-19-C-041 with Intralot, Inc.
June 26, 2019

Thank you, Mr. Chairman. I wanted to take a few moments to share my continued concerns
regarding the $215 million multiyear, sole-sourced contract with Intralot that is currently
before the Council.

Last year, the Council rushed legislation authorizing sports wagering in the District of
Columbia under a false sense of urgency created by the Chairperson of the Finance and
Revenue Committee, DC Lottery, and the Chief Financial Officer.

The Council was told that the District would miss a significant opportunity to increase our
revenues and capture the market ahead of Maryland and Virginia by being the first out of the
gate to implement.

The Council was also urged to sole-source the contract with the coincidentally soon-to-expire
lottery contractor, Intralot, in order to avoid a lengthy and costly delay of full implementation,
and to avoid contract protests.

All of this urgency, of course, was informed by a report compiled with a vendor who lists
Intralot as a client.

Now we find ourselves in a unique confluence of events:

First, Neither Maryland nor Virginia have passed sports wagering legislation, and who knows
when they will.

Second, despite the CFO’s rhetoric about how we should always be concerned about our own
credit rating, including just recently during our budget debate, we have before us a contract
with Intralot, who has seen their credit rating downgraded three times since September 2018,
in part, due to limited historic growth track record, substantial cash leakage, and potential for
underperformance of the core businesses in 2019 and 2020. We don’t even have a complete
picture of Intralot’s financial woes, including liquidated damages levied against them by

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various government entities or the total dollar value because Intralot wants to keep that
information secret.

Third, I have stated before that I was concerned about Intralot’s involvement in pay-to play,
and my remarks at the February 19th Legislative meeting note how Intralot and its associates
spike their political contributions when contracts are up for renewal. Now we see a contract
before us containing subcontractors with even more significant political connections, and poor
track records such as Life Deeds, which was ousted from operating a homeless shelter due to
falsifying documentation. Yet, we don’t know what the subcontractors’ scopes of work will be,
or how much they will be paid because it’s been withheld from the public. This still reeks of pay
to play—even more now.

Finally, the Council is about to embark upon an investigation of one of our own, the current
Chair of the Finance and Revenue Committee, due in part to a document that makes claims
that he served “the interests of his clients and friends—putting their interests above” those he
was supposed to serve.

I’ve been reviewing the Council’s Code of Conduct and the need for recusals, and given what
has come to light in the recent weeks, I believe there is and was an obvious need for recusal
from the current Chair of Finance and Revenue given the conflict, or at the minimum an
appearance of a conflict, which calls into question not just this contract, but also the underlying
legalization of sports wagering.

It has been widely reported in the press that the current Chair of the Committee on Finance
and Revenue had assistance with his business from the same individual who lobbied this
Council to legalize sports wagering, and sole source this contract.

At a time when the trust in this body is in dire need of repair, I believe we should be scrutinizing
every contract and every piece of legislation that comes through this body to ensure that there
is not even an appearance of impropriety, and to help rebuild the public trust.

I have not supported this sports wagering boondoggle from the outset and even less so now.

This contract will have a negative impact on our impoverished residents, creating more
problems and exacerbating income inequality.

I never believed that sole-source was the way to go, and still believe that we should disapprove
this contract and allow for it to be competitively bid. This is simply a bad deal.
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