Intralot to Pay $6.5 Million to Settle Washington DC Sports Betting Fraud Case
The Greek gambling powerhouse Intralot and its Washington DC sports betting contractor have consented to pay $6.5 million to the DC Office of the Attorney General to resolve fraud allegations. According to settlement documents, the payment does not imply guilt, and both companies deny any misconduct.
In 2019, the District granted Intralot the exclusive sports betting contract. Due to the requirement for companies holding significant public contracts to outsource tasks to small local firms to enhance the economy and generate employment in DC, Intralot collaborated with a local business named Veterans Services Corp (VSC).
Shell Corporation
VSC is managed by Emmanuel Bailey, a businessman residing and working in Maryland. VSC was classified as a “local” firm since it was registered at the residence of Bailey’s 75-year-old mother in DC, who is identified as its primary shareholder, as reported by the Washington Post back then. The business consisted solely of Bailey and his mother as employees.
According to the conditions of the $215 million, no-bid agreement, VSC was expected to perform most of the work, earning 51% of the sports betting profits 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 presented a "high hold" sports betting model that assured the DC Council substantial returns, yet it ultimately turned out to be uncompetitive. "Hold" signifies the portion of wagers that the operator retains after paying out winning bets.
Frugal Chances
Although a high hold could produce a larger percentage for the District, it was only feasible by providing some of the lowest odds in America.
Intralot’s sports betting application, GamBetDC, was excessively priced and did not have a competitive advantage against its counterparts in Virginia and Maryland.
Following three years of underwhelming results, GamBetDC was succeeded by FanDuel as a subcontractor to Intralot, which quickly affected the District’s sports betting earnings.
"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.
