Two major contractors in Washington, D.C.’s controversial sports betting program have reached a settlement to pay a combined total of $6.5 million after an investigation uncovered fraudulent practices in the awarding and execution of a lucrative contract. Intralot, a Greek-based gaming company, and local subcontractor Veterans Services Corporation (VSC) are accused of misleading District officials to secure a $215 million contract for managing D.C.’s lottery and sports betting operations.
Intralot and VSC pay $6.5 million to resolve D.C. sports betting fraud claims:
The investigation by the D.C. Office of the Attorney General (OAG) revealed that the two companies fabricated their relationship with local small businesses in order to win the contract. In particular, they falsely claimed that VSC would handle 51% of the work required under the agreement. This misrepresentation allowed the District Council to bypass the usual competitive bidding process and fast-track the contract in a bid to establish sports betting in D.C. ahead of neighboring Maryland and Virginia.
The deal, awarded in 2019, was positioned as a win for local businesses in compliance with the Small, Local, and Disadvantaged Business Enterprise Development and Assistance Act (SBE Act). The Act mandates that a certain percentage of government contracts be allocated to certified local businesses. However, the companies involved failed to meet these requirements. Instead, an Intralot subsidiary performed the majority of the work, and VSC returned significant payments to Intralot, which undermined the intent of the law and allowed them to improperly profit from the contract.
The investigation uncovered that, in addition to the false claims made about VSC’s involvement, over 100 fraudulent invoices were submitted by Intralot and VSC. These invoices misrepresented the companies’ compliance with District laws and the terms of the contract. Attorney General Brian Schwalb stated, “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.”
Intralot and VSC have both agreed to settle the claims without admitting to any wrongdoing. Intralot will pay $5 million, while VSC will contribute $1.5 million. Furthermore, the two companies have agreed to implement new policies to ensure transparency in future contracts with the District. These measures include more accurate reporting of subcontractor information and restrictions on using undisclosed third-party resources in future District-related projects.
The ongoing fallout of the GambetDC controversy:
The settlement comes at a time when D.C.’s sports betting program is under intense scrutiny. The GambetDC platform, managed by Intralot, has faced significant criticism due to its underperformance. In fact, the sports betting app’s failure was a key reason for the District opening up the market to third-party operators. The original sole-source contract for Intralot, which bypassed a competitive bidding process, has long been a subject of controversy, with critics arguing that it provided unfair advantages to politically connected companies.
While Intralot has since been replaced by FanDuel, which began managing sports betting operations in D.C. in 2023, the damage to public trust remains. FanDuel’s performance has far surpassed that of the GambetDC platform. In May 2023, FanDuel reported a staggering 450% increase in wagers compared to the previous year under Intralot’s management.
The controversy surrounding the D.C. sports betting program is compounded by the fact that the contract with Intralot was championed by former D.C. Councilmember Jack Evans, whose involvement in the deal raised ethical concerns. Evans faced allegations of using his political influence for personal gain and was later forced to resign from the D.C. Council after a bribery scandal.
The outcome of the investigation paints a troubling picture of how D.C.’s government contracting system was manipulated to favor certain contractors. As Schwalb noted, the scheme involving Intralot and VSC “was a sham from the start,” and the settlement represents an attempt to hold the companies accountable for their actions. According to WUSA9, Schwalb emphasized that this case serves as a cautionary tale for others seeking to exploit public contracts, stating, “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.”
Despite the settlements, VSC maintains that it did nothing wrong. In a statement, the company denied all allegations and insisted that the actions taken were fully disclosed to the appropriate District agencies. VSC also expressed frustration over the legal costs associated with defending the case, which they called “frivolous.”
