Fraudulent Deal Uncovered in D.C.’s Sports Betting Program
Two major contractors involved in Washington, D.C.’s controversial sports betting initiative have agreed to pay a total of $6.5 million following an investigation into fraudulent practices. The settlement concludes an inquiry by the D.C. Office of the Attorney General (OAG) into the actions of Greek-based gaming company Intralot and its subcontractor, Veterans Services Corporation (VSC). The companies faced accusations of deceiving officials to secure a $215 million contract to manage D.C.’s lottery and sports betting operations.
Misrepresentation and Fraudulent Claims
The investigation revealed that Intralot and VSC misrepresented their partnership to bypass competitive bidding processes and win the contract. They claimed VSC, a local subcontractor, would perform 51% of the work, a key requirement under the District’s Small, Local, and Disadvantaged Business Enterprise Development and Assistance Act (SBE Act). This Act aims to ensure significant participation by local small businesses in government contracts. In reality, an Intralot subsidiary handled the majority of the work, with substantial payments funneled back to Intralot, undermining the Act’s intent.
Adding to the controversy, over 100 fraudulent invoices were submitted to the District, falsely indicating compliance with local laws and contract terms. D.C. Attorney General Brian Schwalb criticized the scheme, stating, “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.”
Settlement Terms and Accountability Measures
Under the settlement, Intralot will pay $5 million and VSC $1.5 million. While neither company admitted wrongdoing, they have agreed to implement measures ensuring transparency in future contracts. These include accurate reporting of subcontractor information and restrictions on undisclosed third-party involvement in District projects.
The GambetDC Fallout
The settlement is another chapter in the turbulent history of D.C.’s sports betting program. The GambetDC platform, managed by Intralot, faced widespread criticism for underperformance, prompting the District to open the market to third-party operators. Since FanDuel’s 2023 takeover, the platform has reported significantly higher wagering volumes, marking a stark improvement.
The original no-bid contract with Intralot, pushed through in 2019, had been mired in controversy from the start. It was championed by former D.C. Councilmember Jack Evans, who resigned amid a bribery scandal. Critics argue the deal favoured politically connected companies while sidelining competitive bidders.
A Troubling Precedent and Lessons for the Future
Schwalb described the Intralot-VSC partnership as “a sham from the start,” noting it highlights systemic vulnerabilities in D.C.’s government contracting processes. He vowed to continue enforcing the False Claims Act, saying, “My office will 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.”
Despite the fines and reforms, VSC continues to deny the allegations, calling the claims “frivolous” and expressing frustration over legal costs.
A Brighter Future for D.C. Sports Betting?
In 2023, D.C. moved to an open-market model for sports betting, attracting major operators like DraftKings, BetMGM, and ESPN Bet. With more robust oversight and competition, the District aims to restore public trust in its sports betting program while ensuring compliance with contracting laws.
The settlements mark an important step toward accountability, but the GambetDC saga serves as a cautionary tale for government officials and businesses alike.
