- Attorney General Brian L. Schwab announced Intralot and Veterans Services Corporation (VSC) deceived D.C. officials in sports betting contract process
- Companies conspired to secure the district’s sports betting contract through false promises
- Intralot and VSC ordered to pay Washington, D.C. $6.5 million over the deception
The Washington, D.C. sports betting contract was secured by Intralot and its small business subcontractor, Veterans Services Corporations, through false promises and deception, according to an investigation by the Office of the Attorney General.
Intralot and Veterans Services Corporations (VSC) obtained the contract on a sole-source basis, with no competitive bidding process, by promising the VSC would perform 51% of the necessary work — all with its own resources — and receive an equivalent percentage of the revenue.
According to the investigation, this proved to be untrue, as Intralot and VSC secretly agreed that, in exchange for payments from VSC to Intralot, an Intralot subsidiary would provide the majority of resources. The companies have been ordered to pay the District $6.5 million.
Awarded Under False Pretenses
After receiving the contract in 2019, Intralot and VSC teamed up to obtain millions from the District under false pretenses. VSC misrepresented that it did the majority of the work, while in reality it was Intralot’s subsidiary that performed the tasks. VSC received a majority of the compensation and funneled much back to Intralot, according to the investigation.
The contract was for $215 million for 5-years.
“This is a warning to any company that tries to manipulate and exploit District contracting laws, especially laws intended to build the capacity of the local businesses vital to our economy,” Attorney General Brian L. Schwalb said. “Intralot and VSC’s sports betting deal was a sham from the start—an elaborate scheme to secure a lucrative, high-profile opportunity on a sole-source basis while circumventing the District’s small business contracting laws. My office will continue to enforce the False Claims Act to root out contracting fraud, hold accountable anyone who tries to get over on the District and its taxpayers, and level the playing field for law-abiding companies seeking to do business with District government.”
Intralot and VSC mispresented to D.C. City Officials that work done and money paid under the deal would benefit VSC and other certified business enterprises (CBE). After being awarded the contract, Intralot and VSC falsely inflated the amount of money Intralot spent subcontracting with VSC and other CBEs. Intralot paid VSC’s owner, Emmanuel Bailey, hundreds of thousands of dollars per year for his participation.
Settlement Details
Under the terms of the settlement agreement, the OAG ordered Intralot pay $5 million to the District and VSC pay $1.5 million. Both companies must also accurately report contract and subcontract information in any future bids, contracts, or subcontracting plans with the District.
Additionally, Intralot agreed to not use any entity to provide resources to a District business with which it has a subcontracting relationship.
Intralot Struggled With D.C. Product
In addition to being less than forthcoming with its services, the Intralot sports betting platform, GambetDC, was universally reviled by District sports betting customers. The app was criticized by customers and routinely missed financial goals since launching in May 2020. It lost more than $4 million in 2021.
Intralot predicted millions in revenue for Washington, D.C., but the returns were much. Here are the following fiscal year revenue postings for GambetDC:
- 2019: $0
- 2020: $352,000
- 2021: ($4 million)
- 2022: $2.7 million
Original Intralot projections estimated more than $20 million annually.
The Office of Lottery and Gaming (OLG) had enough of the contract in early 2024. It announced in March 2024 that it reached a deal with FanDuel to be Washington, D.C.,’s lone sports betting operator, taking over for the troubled and much-maligned Intralot.
FanDuel eventually went live in the District on April 15, 2024.
Months later, the Washington, D.C. City Council agreed to open the District sports betting market up to other operators. The D.C. City Council expanded the district’s online sports betting market over the summer, allowing existing Type-A sports betting license holders to offer online sports betting and outside operators to apply for the newly created Type-C licenses.
Type-C license holders can only operate online in the district.
Currently, Caesars Sportsbook, FanDuel, and BetMGM all have a retail and online sports betting presence in D.C. with Type-A licenses. DraftKings, Fanatics Sportsbook, and ESPN BET (which yesterday announced a market access agreement) all have online sports betting access through Type-C licenses.
Intralot and VSC, two companies involved in the D.C. sports betting industry, have recently been hit with a hefty $6.5 million fine for contract violations. The fine comes as a result of an investigation by the D.C. Office of the Inspector General, which found that the companies had failed to comply with certain terms of their contracts with the D.C. Lottery.
Intralot, a Greek-based gaming company, was awarded a contract to provide sports betting services in the District of Columbia in 2019. VSC, a local company, was subcontracted by Intralot to provide certain services related to the operation of the sports betting platform.
The investigation found that both companies had failed to meet certain requirements outlined in their contracts, including failing to provide adequate financial records and failing to properly document their expenses. The Inspector General also found that VSC had failed to disclose conflicts of interest in its subcontract with Intralot.
As a result of these violations, the D.C. Lottery has imposed a $6.5 million fine on the companies. In addition to the financial penalty, both companies have been ordered to take corrective actions to ensure compliance with their contracts moving forward.
This fine serves as a reminder to companies operating in the sports betting industry that they must adhere to the terms of their contracts and comply with all regulatory requirements. Failure to do so can result in significant financial penalties and damage to their reputation in the industry.
In response to the fine, both Intralot and VSC have stated that they are committed to working with the D.C. Lottery to address the issues raised in the investigation and ensure compliance with their contracts in the future. It remains to be seen how this incident will impact their operations in the D.C. sports betting market moving forward.
