Budget Oversight Hearing on the Office of Lottery and Gaming – May 4, 2026

On May 4, 2026, from 9:07 AM to 11:37 AM, the Committee on Human Services, chaired by Councilmember Matt Freuman (Ward 3), held a budget oversight hearing on the Office of Lottery and Gaming (OLG). The hearing examined OLG's proposed fiscal year 2027 budget, operational challenges, and potential expansions of gaming in the District. Public witnesses testified on off-track betting (OTB) and historical horse racing (HHR), games of skill, and regulatory oversight. Government witnesses, led by Executive Director Randy Burnside, addressed the agency's budget, a recent drawing error, and the status of the lottery system contract.

Public Comments & Testimony

• Panel 1 – OTB and HHR Supporters:
  • Jordan Briggs (attorney, IFRA Law) argued that federal law does not prohibit the District from authorizing OTB sites and HHR machines, citing exemptions under the Johnson Act. She noted Virginia's HHR generated $6 million in statutory withholdings in 2024, benefiting the general fund and a veterinary college.
  • Elise Cohn (managing member, Long Shots LLC) urged the District to authorize OTB and HHR, projecting $92–$130 million in annual recurring tax revenue from a fully mature market of about 1,500 machines. She contrasted HHR's in-person, facility-based model with iGaming's online risks.
  • Christopher Khalitri (director of historical horse racing, Ainsworth Game Technology) explained that HHR terminals use paramutual wagering on anonymized past races, not random number generators, and are deployed in licensed in-person facilities as in Kentucky and Virginia.
  • Rich Baldwin (managing partner, GGHM) estimated a right-sized HHR market could support 1,500–2,000 terminals, generating $300–$350 million in annual gaming revenue, translating to $80–$115 million in direct tax revenue at a 25–35% tax rate. He noted that 90% of current sports betting revenue in DC is online.
• Panel 2 – Technical and Small Business Perspectives:
  • Steve May (Gaming Laboratories International) offered independent technical support for HHR, iGaming, and OTB, emphasizing GLI's role in certifying gaming devices and conducting audits.
  • Tori Key (Key Play Advisors) advocated for inclusion of small businesses and Certified Business Enterprises (CBEs) in any gaming expansion, suggesting satellite models like Arizona's OTB agents or Virginia's Rosie's facilities.
  • Janice Richardson Sloan (legal counsel, Art Gaming) requested the District raise its maximum payout per play from $599 to $1,999 (to avoid federal reporting triggers) and expand games of skill terminals to off-premise alcohol retailers (Class A and B licenses). She estimated that these changes, with about 4,000 machines, could generate $141 million annually.

Discussion Items

• OLG Budget and Revenue:
  • Executive Director Randy Burnside testified that OLG's proposed FY27 operating budget is $222,201,452, a decrease of 18.4% ($49.99 million) from FY26, primarily due to the Sports Wagering Amendment Act of 2024, which moved sports wagering operations to commercial operators. The lottery transferred $32.5 million to the general fund in FY25, and the FY26 forecast is just over $30 million. Burnside noted that the District received over $51 million in total gaming revenue in FY25, the highest since 2017.
  • Burnside expressed concern about a funding gap of roughly $1.5–$2 million for regulatory oversight, as sports wagering and games of skill fees are low. He highlighted that 10 vacant positions provide flexibility but warned that future demands—such as commercial bingo, growth in games of skill, or new sports wagering operators—could strain resources.
• DC 3/4/5 Drawing Error:
  • Burnside reported that from March 31 to April 21, 2026, a coding error in the RNG system prevented duplicate numbers (e.g., 111, 7765) from being generated in midday and evening drawings. The error was identified and corrected within 24 hours. OLG is providing coupons, free plays, and a second-chance drawing with $150,000 in prizes to affected players. He noted that the vendors (Smart Play International and GLI) have taken responsibility, and OLG is seeking to recover costs.
• Lottery System Contract RFP:
  • Burnside explained that the previous RFP for the central gaming system, ticket printing, and iLottery was canceled after only one qualifying bidder declined to sign the contract. A revised RFP is expected to be sent to the Office of Contracts by the end of the week (May 8, 2026). The current contract expires July 15, 2026; a one-year renewal (with three options remaining) will be submitted to the Council for approval before the summer recess. Burnside emphasized the need for a balanced RFP that protects the District's interests while attracting bidders.
• Advertising and Responsible Gaming:
  • OLG's FY27 budget authorizes up to $9 million in advertising, but actual spend was $7 million in FY26. Expenditures include sponsorships with local sports teams, signage, streaming ads, and bus wraps. All advertising includes a responsible gaming message. Burnside noted that the advertising contract is competitively bid and that the current contract is being renewed.
• Commercial Bingo and Games of Skill:
  • Rules for commercial bingo are being drafted and expected to be filed by April 2026. One potential operator has expressed interest but is challenged by the need for large venues (~25,000 sq ft). Burnside clarified that pop-up events at the Howard Theater were not bingo but talent-based game shows, falling outside OLG's regulation.
  • Games of skill machines are currently in about 30 bars/taverns, generating only $128,000 in tax revenue annually. Burnside anticipated growth but noted limited funding for oversight.

Key Outcomes

• No formal votes were taken. The hearing was informational, focusing on budget oversight and policy exploration.
• Councilmember Freuman acknowledged the new proposals for OTB/HHR and stated they would not be considered in the current budget process but would be on the radar for future discussion.
• OLG will proceed with issuing a revised RFP for the lottery system contract by the end of the week and will submit a one-year contract renewal to the Council for approval before July 15, 2026.
• OLG will continue to remediate the DC 3/4/5 drawing error, with vendors expected to cover costs. The agency will strengthen internal controls and certification processes.
• The committee will accept written testimony until 5:00 PM on May 11, 2026.
• The hearing adjourned at 11:37 AM, with the next hearing scheduled on the Internet Gaming and Consumer Protection Act (Bill 26-0656).