Jack Evans’ business with a lobbyist is an ethical cloud over the advent of sports betting
Words and Photograph by Jeffrey Anderson
Ward 2 Councilmember Jack Evans has reported income of up to $350,000 in recent years from a consultancy he formed in 2016 with lobbyist N. William Jarvis, who has lobbied Evans since then on behalf of a client seeking a contract extension should the Council pass the sports betting bill that Evans is promoting.
In September, Evans and five other D.C. Council members introduced the Sports Wagering Lottery Amendment Act of 2018. The bill proposes to legalize sports betting in the District to give it a competitive advantage over Virginia and Maryland, which already has brick-and-mortar gambling at National Harbor.
The D.C. Lottery will regulate and operate sports wagering through a digital platform and brick-and-mortar retailers, says the Office of the Chief Financial Officer, which oversees the lottery. The lottery contract currently belongs to Intralot Inc. and Jarvis’ client, DC09, a local company that installs and maintains lottery terminals and communication lines.
With the lottery contract due to expire in 2020 and sports betting drawing interest from casino and gambling interests around the country, Jarvis’ business relationship with Evans, who as chair of the Committee on Finance and Revenue oversees the whole shebang, gives DC09 and Intralot a distinct advantage over competitors.
Evans, a lawyer, formed the consulting firm in 2016 at his primary residence in Georgetown with Jarvis, also a lawyer, serving as Organizer and Registered Agent. The limited liability company reported revenue from undisclosed clients for undisclosed services in 2016 and 2017, according to government records, even as Jarvis lobbied Evans on behalf of DC09.
Yet despite what ethics experts describe as a clear conflict of interest—or perhaps worse—D.C. elected officials don’t seem concerned that the two are in business together. Evans’ colleagues don’t seem to even want to know anything about the firm’s clients or sources of revenue.
D.C. ethics law requires that Evans disclose his outside income, but does not compel him to disclose his clients or the services he provides. Evans has rarely if ever voluntarily disclosed this information while working for two decades at law firm/lobbying shops Patton & Boggs and Manatt, Phelps & Phillips, but the appearance of impropriety has never hit so close to home. Literally.
Sports betting is as contentious as it is inevitable, and the word “transparency” is at the center of any business or political discussion—at least in theory. The home-based business, first reported by District Dig, and Jarvis’ lobbying of Evans on sports betting legislation, are serious ethical breaches, according to Craig Holman, a lobbyist for the nonprofit government watchdog Public Citizen.
Holman sees Evans as a frequent player at the ethics roulette wheel: “Even if Evans was a highly ethical person, this arrangement is a direct and substantial conflict of interest,” says Holman. While the financial arrangement between Jarvis and Evans is unclear, and Jarvis does not serve as a director or executing officer, the business relationship and Jarvis’ representation of a client with business before Evans is an “egregious overlap,” he says.
The firm’s undisclosed consulting services presents a different, equally troubling problem, according to Holman. “If I wanted to do business in D.C., I’d want to hire Evans,” he says. “You’re essentially renting Jack Evans.”
“Isn’t that brilliant that you can hire the committee chair’s business [associate] to lobby the committee chair,” quips Kathleen Clark, a professor at Washington University Law School in St. Louis. Clark is a former ethics lawyer for the D.C. government who has served as counsel to the Senate Judiciary Committee and currently serves on the Rules of Professional Conduct Review Committee of the D.C. Bar. “I don’t see how a key decision-maker like Evans can be impartial in matters where he’s lobbied by someone he’s in business with. It’s almost like being lobbied by your spouse.”
Evans’ co-sponsor of the sports betting bill, however, Ward 3 Councilmember Mary Cheh, a law professor at George Washington University, seems irritated by such suggestions. “If there’s a conflict of interest we can deal with that at the time,” Cheh says, vaguely. “Whatever connection [Evans] has to Jarvis, that has to await further developments.” (Evans is not awaiting further developments: He became his own Registered Agent after his relationship with Jarvis came to light, though his ethics disclosure shows that Jarvis remains associated with the consulting firm.)
There’s a lot at stake. Sports betting figures to be a watershed moment for the D.C. Lottery, and the impact of competition from neighboring states was a defining theme at the October 17 hearing before the finance and revenue committee, as Evans made a case for D.C. to seize “first mover” status over Maryland and Virginia.
“You can see the cluster around us,” he said, referring to Delaware, West Virginia and New Jersey, three states within D.C’s extended gaming market that have launched full-scale sports betting in the wake of a U.S. Supreme Court decision that struck down the ban most states had.
Pennsylvania, he added, has approved a bill and is moving forward as well. “Sports betting is gonna happen,” he said with conviction. “And I believe we should move before Virginia and Maryland.”
Beth Bresnahan, Executive Director of the D.C. Lottery testified that since the Supreme Court ruling, twenty-seven states have either enacted or are considering legislation to legalize sports betting. Being “first to market” confers an advantage for states looking to build “brand affinity,” which is especially important for D.C., she said, not only with residents but with its millions of commuters and visitors.
Maryland failed to move legislation during the 2018 session that called for a voter referendum on sports betting, but casinos there are champing at the bit to move forward with sports betting. MGM National Harbor is pursuing a place in the emerging D.C. market.
“If the District doesn’t quickly take advantage of this opportunity, we will lose an important competitive edge,” Bresnahan told Evans and his colleagues, preaching to the choir. “Failure to act expeditiously on sports betting will jeopardize the financial viability of both existing gaming revenue and potential market share.”
Equitable competition is critical to the viability and success of sports betting, according to a spokesperson for a major casino interest. “We believe that competition, and the power of a legal, transparent and regulated market, will lead to better products,” the spokesperson tells The Dig, emphasizing the word “transparent.”
There are reasons to exercise caution when doing business with the District. Gaming industry observers of the pending sports betting bonanza will recall that when Greek-owned Intralot first won the D.C. Lottery contract, in 2009, the contracting process was marred by political infighting and allegations of improper influence. Those problems stemmed from the District’s insistence that a local firm partner with Intralot, which ended up with DC09.
The D.C. Lottery has not received much media attention in recent years, but reports are that revenue is way down. DC09 is led by CEO Emmanuel S. Bailey, who himself complained last year of lack of transparency after a joint venture involving his firm and Intralot lost its bid for the Maryland Lottery.
Leonard Manning, whose firm ran the D.C. Lottery for 25 years before Intralot/DC09 took over, says he expects a similarly fierce environment with sports betting upping the ante. “Whatever company they select will have to deal with smaller minority companies, and they’ll have to let them do their thing with the politicians,” says Manning, who no longer is in the gaming business.
Government consultants with Council connections already have been spotted in the Wilson Building working to generate a competitive advantage for their clients, which include major sports leagues that put the product on the field and are looking to get in on the betting action.
But none of them are known to have formed a going concern with Evans that provides unknown services to unknown clients.
Evans and Jarvis formed NSE Consultants LLC at Evans’ Georgetown home in July 2016. Evans, in a financial disclosure statement filed with BEGA (Board of Ethics and Government Accountability), reported revenue between $50,000 and $100,000 for 2016.
Evans did not originally disclose his 2017 revenue, but on May 14, about a week after he told the Washington Post he received $50,000 in checks the previous year from a digital sign vendor who would have benefited from legislation he later introduced, he reported 2017 revenue between $100,000 and $250,000. (Evans told the Post the checks from the digital sign vendor were intended for future legal services to be provided out of state, but that he returned them, explaining, “I like to be very clean.”)
Meantime, Jarvis’ January 2018 lobbyist activity report to BEGA says he had provided “lottery and gaming services” to DC09 in 2017 consisting of “government relations and legislative matters in the District of Columbia,” and that on October 16, 2017, he met with Evans to discuss the “impact of competition (Maryland casinos) on DC lottery services.”
The two met again in June to discuss sports betting, according to Jarvis’ activity report, which shows he has an “Indefinite” retainer with DC09 of $72,000 per year.
In fact, Jarvis has been lobbying the Council on behalf of DC09 since at least 2013, his reports show, and though he did not report any specifics related to the lottery for that year, in 2014, he reported at least six contacts with Evans and his staff to discuss “OCFO’s letter to DC Council regarding lottery services and instant tickets” and “OCFO’s transmittal to DC Council of contract extension for lottery services.” (He also reported a $2,000 contribution to Evans’ mayoral campaign.)
Jarvis discussed the lottery with Evans and his finance committee director Ruth Werner on separate days in 2015, and contributed another $500 to Evans’ campaign. He continued to receive his retainer though he did not report further lobbying activity until his October 2017 meeting with Evans to discuss gaming competition from Maryland.
In addition to his meeting in June to discuss sports betting legislation with Evans—and Werner—he contributed $500 to Evans’ constituent services fund.
Professor Clark says that disclosure of campaign finance contributions, lobbyist activity and even outside employment and revenue is not enough to pass the smell test. “One of the goals of transparency is to find out if Evans is benefitting from anyone with an interest in the lottery deal or sports betting,” she says. “The fact that he is in business with a lobbyist who is lobbying him on those matters is troubling. It makes sense that we would want to know the source of his revenue. Is it from his partner? Is it from a third-party? Is it influence peddling? Or not?”
In May, Evans told the Post that he cannot disclose such information because of an attorney-client privilege. “The identity of clients and amount of fees generally are not subject to the attorney-client privilege,” says Clark, leaving aside the question of whether Evans actually does any lawyering. “There may be a duty of confidentiality that gives way to other legal obligations, but that duty does not necessarily prevail over accepted ethical standards.”
As sports betting transforms the D.C. Lottery’s role, Evans will be presiding over the legislation that shapes it, and eventually over the approval of any contract awards, which could be lucrative. The OCFO says it is looking to broaden its branding through mobile apps and creation of new categories of businesses such as restaurants, bars and social venues where sports betting kiosks may go.
Evans has said he believes the District can launch sports betting within four to six months after the law passes, which is all but a certainty. And the OCFO believes that “The floodgates are now open for technological advances to expand the field of competition to the infinite world of iLottery, online gaming, and now sports betting.”
Competitors, regulators, and perhaps Congress will be watching. Industry observers expect Intralot and DC09 to have a competitive advantage by virtue of existing relationships, perhaps chief among them, the one between Evans and Jarvis. And as major casino companies, gaming operators and innovators size up the local landscape, “transparency” will be a frequent refrain.
Evans’ colleagues are unwilling to confront him on his entanglements. Ward 4 Councilmember Brandon Todd, Ward 7 Councilmember Vince Gray and At-Large Councilmember Anita Bonds, co-sponsors on the sports betting legislation, did not respond to questions from The Dig.* Neither did Ward 5 Councilmember Kenyan McDuffie, At-Large Councilmember Elissa Silverman (who both serve on the finance committee) nor Council Chair Phil Mendelson. At-Large Councilmember Robert White, who serves on the finance committee and co-sponsored the sports betting bill, declined to comment.
Evans already came under investigation by BEGA earlier this year for allegations of taking action that affected his or “an affiliated person’s” financial interest, “lobbying on behalf of a client for a law firm at which he was employed,” and making false statements and violating rules regarding outside employment.
Neither he nor Jarvis responded to The Dig’s inquiries.
A frequent complaint among government observers, watchdogs and some in the business community is that D.C. is too comfortable with corruption. Holman and other vocal critics say there are stronger ethics laws in more progressive states, but that the District’s are out of date.
One former prosecutor sees it in regressive terms: “Part of the problem is that the conflict of interest laws are written so poorly that it’s easy to move around them, and Evans is able to use that to his benefit. The Council has purposely not re-written them, so it’s not out of the ordinary to not ask questions about things that are questionable.”
* A spokesman for Bonds replied to written questions as this story was being published, and stated, “As it pertains to Jack Evans, Councilmember Bonds is not aware of his personal relationships or involvement with NSE, but, for the record (and as you are well aware), Councilmember Bonds supported the sweeping ethics reform that created the Board of Ethics and Government Accountability. She believes that D.C. has a robust disclosure process and is a very transparent place.”
** This post has been updated to include a link (also provided below) to the most recent report by Jack Evans that appears on the Department of Consumer and Regulatory Affairs website. The report shows lobbyist Bill Jarvis as “Organizer” of Evans’ firm, NSE Consulting LLC. Stay tuned for further updates: https://corponline.dcra.dc.gov/BizEntity.aspx/ViewEntityData?entityId=4170121