Earlier this year, the D.C. Council narrowly voted to suspend competitive bidding rules and allow Intralot, which already held the contract to operate the D.C. Lottery, to continue running the lottery and manage online sports gambling and related services as well.

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The lawsuit alleges that by suspending competitive bidding rules for the contract, District officials violated the Home Rule Act, which established local government in the capital.

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The D.C. Lottery falls under the purview of the District’s chief financial officer. The lawsuit says that under the Home Rule Act, the CFO’s office must follow D.C. procurement laws, which call for competitive bidding. According to the lawsuit, the D.C. Council was not entitled to exempt the chief financial officer from the Home Rule Act.

In her ruling, Judge Joan Zeldon said there was a “substantial likelihood” that Carragher would succeed in demonstrating that the city had violated the federal law.

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Carragher’s lawyer, Donald Temple, said he was “prayerfully surprised” by the judge’s order, which he called “monumental.” Handing Intralot the city’s mobile application for sports betting without seeking competitive bids was illegal, he said.

“Now the real question is, if it’s illegal, whether the city is going to continue to defend that which is illegal, or are they going to reconcile the illegality of their actions,” he said.

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A spokeswoman for D.C. Attorney General Karl A. Racine (D) said his office was reviewing the judge’s order and would have no comment on the pending litigation.

D.C. Council Chairman Phil Mendelson (D) said he thinks the city will ultimately prevail.

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“My understanding is that the essence of the judge’s action was to buy time for the parties to brief this and for the court to figure this out,” he said. “The argument by the plaintiff focuses on an arcane reading of the Home Rule Act, and it’s an incorrect reading.”

A spokeswoman for the D.C. Lottery, Nicole Jordan, said in an email that the judge’s order will delay the modernization of lottery operations at retailers across the District.

“The major impact of the judge’s ruling will be on the small local businesses that intend to participate and profit from sports wagering,” as well as “on the January 2020 start date for the Lottery’s citywide mobile wagering app,” Jordon said.

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In his legal challenge, Carragher said his business was not afforded an opportunity to compete for the contract. He also said, as a taxpayer, he was harmed by the District’s decision to circumvent competitive bidding because it eliminated the possibility of securing a better deal for taxpayers.

Temple represented a D.C. contracting officer in a whistleblower lawsuit over his firing and the award of the city’s lottery contract a decade ago. The former contracting officer, Eric W. Payne, said he was terminated for refusing to yield to pressure to cancel a contract won by Intralot and a local partner.

The contract ultimately was rebid and awarded to Intralot. A federal jury found that Payne was wrongfully fired for objecting to the contract. In 2017, officials reached a $3.53 million settlement with him.

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Against the backdrop of the Payne lawsuit, according to Temple’s latest suit, city officials decided “to circumvent the competitive contract procurement process altogether.”

The restraining order is good for two weeks; the court has ordered the parties to appear Oct. 1 for a hearing on Carragher’s motion for a preliminary injunction.

Before the contract was awarded to Intralot, some council members said they were concerned about suspending competitive bidding rules and about some subcontractors’ ties to local politicians.

Several council members said they had additional questions about the legality of the contract after an investigation by The Washington Post last month found that Intralot is subcontracting work to its own subsidiary. A local law requires companies with large public contracts to share some of that work with small local firms as a way to strengthen the local economy and grow jobs.

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The Post investigation found that the business Intralot has listed as its main subcontractor, Veterans Services Corp., had no employees, and that its website touted executives who didn’t work there. The small firm’s chief executive is an employee of Intralot’s subsidiary, DC09, and lives in Maryland.

Council member Elissa Silverman (I-At Large), who has been outspoken in her opposition to the no-bid contract, said the court’s order on Thursday validates her position.

“I’ve said all along that this contract stinks. It continues to stink, and now the court’s saying it stinks as well,” she said. “We made a decision that we were going to have sports betting in our city, but we need to do it with a contracting process that is fair and upright and that the public has confidence in.”

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