Greek gambling powerhouse 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. The settlement documents state that the payment does not imply guilt, and both companies refute any allegations of misconduct.
In 2019, Intralot received the exclusive sports betting contract from the District. As firms with significant public contracts must subcontract tasks to small local enterprises to enhance the economy and generate jobs in DC, Intralot collaborated with a local firm known as Veterans Services Corp (VSC).
Shell Corporation
VSC is managed by Emmanuel Bailey, a businessman residing and working in Maryland. VSC was deemed a "local" company since it was registered at the residence of Bailey's 75-year-old mother in DC, where she is identified as its majority shareholder, as revealed by the Washington Post at that time. The firm had no workers besides Bailey and his mother.
According to the $215 million, no-bid agreement, VSC was tasked with the majority of the work, for which it would earn 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 wagering model that guaranteed the DC Council substantial returns, yet it ended up being noncompetitive. “Hold” denotes the proportion of wagers retained by the operator following the payout of winning bets.
Greedy Chances
Even though a high hold could produce a larger percentage for the District, it was only viable by providing some of the most unyielding odds in America.
Intralot's sports betting application, GamBetDC, was excessively inflated and failed to offer a competitive advantage compared to its counterparts in Virginia and Maryland.
Following three years of underperformance, FanDuel took over as a subcontractor to Intralot, replacing GamBetDC, which promptly affected 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.
