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Intralot, VSC Fined $6.5 Million Over D.C. Sports Betting Contract

Robert Linnehan

By Robert Linnehan in Sports Betting News

Published:


Scales of Justice
Photo by Pavel Danilyuk
  • 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.

Max Voldman, a legal partner with the Washington, D.C. based firm Whistleblower Partners, told Sports Betting Dime that the settlement arising out of the District’s False Claims Act is “unusual.”

“It’s unusual to see in this context, healthcare cases alleging fraud against Medicaid programs are the vast majority of actions brought under the law, but as more states expand sports betting, and outsource that expansion to government contractors like DC did, we’re likely to see more of this,” he said.

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.

“The settlement sends a clear signal that sports betting companies have to play by the same rules as any other government contractor. Deception over who owns a contractor, who actually performs the work, and where the money goes, is likely to lead to serious consequences, including fraud cases,” Voldman said.

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.

Robert Linnehan
Robert Linnehan

Regulatory Writer and Editor

Rob covers all regulatory developments in online gambling. He specializes in US sports betting news along with casino regulation news as one of the most trusted sources in the country.

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