Washington, D.C. Attorney General Brian L. Schwalb announced Tuesday the District had secured a $6.5 million settlement from Intralot and the Veteran Services Commission (VSC) for conspiring to defraud officials about compliance with small business contracting laws.
Per the settlement agreements, Intralot will pay $5 million to the District, while VSC will pay $1.5 million. The settlement is a result of the AG’s effort begun in July, investigating potentially false claims associated with Intralot’s D.C. contract.
“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 business vital to our economy,” said Schwalb.
“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.”
A secret deal and poor performance
Intralot managed D.C. sports betting under the brand GambetDC starting in 2019. The company secured a five-year, no-bid contract with the DC Lottery, which was set to expire in July 2024. To secure those lucrative provisions, Intralot promised that VSC – a small business – would perform more than half the work on the contract. That, however, was false. The work was not done by VSC, but instead by an Intralot subsidiary.
VSC funneled funds it received from the District back to Intralot per a secret agreement.
From the very start, the operation was plagued with technical issues and fell drastically short of revenue projections. Intralot had only generated $4.3 million in tax revenue by that point, instead of the projected $84 million, according to a January Washington Post article.
D.C.’s new competitive market
In March, D.C.’s Office of Lottery and Gaming announced that FanDuel would replace GambetDC as its online sportsbook. FanDuel projects revenue to the District to be $119 million in its first five years, nearly 30 times greater than the amount raised by GambetDC. GambetDC officially closed its doors to D.C. patrons in April.
FanDuel, however, was just the first new online sports betting provider entering the D.C. market. No longer tied to an exclusive, no-bid provider, D.C. embraced a more competitive online landscape. Caesars and BetMGM augmented their existing D.C. retail operations with online apps. Meanwhile, DraftKings entered the D.C. market in July.
