The Greek gambling company Intralot and its sports betting subcontractor in Washington DC have consented to pay $6.5 million to the DC Attorney General's Office to resolve fraud allegations. According to the settlement documents, the payment does not imply an admission of guilt, and both companies deny any misconduct. 

In 2019, Intralot received the exclusive sports betting contract for the District. Since companies that hold substantial public contracts must subcontract tasks to small local businesses to stimulate the economy and generate jobs in DC, Intralot collaborated with a local firm named Veterans Services Corp (VSC). 

Shell Corporation 

VSC is run by Emmanuel Bailey, a business professional residing and working in Maryland. The Washington Post uncovered that VSC qualified as a "local" company since it was registered at the residence of Bailey's 75-year-old mother in DC, where she is identified as the majority shareholder. The business had no staff besides Bailey and his mother. 

According to the conditions of the $215 million, no-bid agreement, VSC was meant to handle the majority of the tasks, in exchange for receiving 51% of the sports betting earnings from Intralot. Nonetheless, this was not true.

"After securing the contract, Intralot and VSC teamed up under this covert agreement to obtain millions of dollars from the District under false pretenses, misrepresenting that VSC performed work that Intralot’s subsidiary actually did and that VSC received a majority of the compensation despite funneling much of it back to Intralot,” the Attorney General’s Office said.

Intralot proposed a “high hold” sports betting model that assured the DC Council substantial percentage returns, but it eventually turned out to be uncompetitive. “Hold” denotes the portion of wagers the operator retains after disbursing payouts for winning bets. 

Frugal Chances 

Although a high hold could result in a larger percentage for the District, it was only feasible by providing some of the tightest odds in the United States. 

Intralot’s sports betting application, GamBetDC, was excessively inflated and did not have a competitive advantage compared to its competitors in Virginia and Maryland. 

Following three years of underperformance, FanDuel took over as a subcontractor to Intralot, replacing GamBetDC and significantly enhancing the District's sports betting revenues.

"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 Schwalb said in a statement.

“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,” Schwalb added.