The makers of Washington, D.C.'s former sports betting app will pay $6.5 million to settle allegations of fraud (Photo illustration by Tasos Katopodis/Getty Images)
The Greek gaming operator that oversaw Washington, D.C.’s sports betting operation and its subcontractor will pay a $6.5 million settlement to the city after being alleged of defrauding local officials.
Intralot, which operated the District lottery for several years before adding sports betting to its offering, and D.C.-based Veterans Services Corporation allegedly misrepresented their relationship to receive approval on a $215 million contract in 2019. They promised that VSC would perform 51% of the work using its own resources. In accordance with the District’s Small, Local and Disadvantaged Business Enterprise Development and Assistance Act, the companies would also equally share the revenue.
Instead, an investigation found that Intralot and its subcontractor misled officials about the makings of their partnership in order to expedite the District’s bidding process.
The settlement announced Tuesday requires Intralot to pay $5 million, while VSC will pay $1.5 million. Additionally, both companies agreed to accurately report future bids with the District.
“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,” Schwalb said.
“Intralot and VSC’s sports betting deal was a sham from the start,” he added.
“[It was] an elaborate scheme to secure a lucrative, high-profile opportunity on a sole-source basis while circumventing the District’s small business contracting laws.”
The Small, Local and Disadvantaged Business Enterprise Development and Assistance Act, passed to create new opportunities for small businesses in the District, requires at least 35% of large government contracts to be subcontracted to certified business enterprises.
GambetDC, the app created by Intralot, was shuttered last year after experiencing numerous technical problems and underperforming financially. It was later replaced by FanDuel, which generated $1.9 million in revenue from bets during its first month as the District-wide operator. Since then, the single-source operator has been scrapped in favor of an open market. That’s paved the way for other popular sportsbooks like BetMGM, Caesars, DraftKings, ESPN Bet and Fanatics to join.
Intralot — which is still contracted to run the District’s lottery — and VSC have both denied any wrongdoing. VSC said in a statement that it settled to “avoid the exorbitant legal fees associated with defending a frivolous case where we strongly believe we would prevail on the merits.”
Schwalb said his office will continue to “root out contracting fraud” and enforce accountability while leveling the playing field for law-abiding companies across the District.
“There's meaningful terms in the agreement that are going to make sure these companies change the way they behave, make sure they follow the law moving forward,” Schwalb added. “I think our actions and the amount of money that the settlements reflect speak for itself.”
Doug is a seasoned sports writer/editor with bylines for the New York Times, Associated Press and CBS Sports. He also has extensive experience in the betting industry, including work for Point Spreads. Prior to that, he covered UConn women's basketball and football for Hearst Connecticut Media.
