Makers of D.C.'s sports gambling app pay $6.5M to settle fraud probe
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Two key contractors for D.C.'s controversial sports betting and lottery program will pay a combined $6.5 million to settle claims they deceived regulators to win the contract and submitted fraudulent invoices, Attorney General Brian Schwalb announced on Tuesday.
The big picture: The District is already confronting eroded public trust over its contracting, rocked by Council member Trayon White's bribery scandal, and questions surrounding how taxpayer dollars are spent.
Zoom in: Greece-based gaming giant Intralot will pay the District $5 million. Local subcontractor Veterans Services Corp. (VSC) will pay $1.5 million.
- Schwalb's office alleged that in 2019, the two "conspired to secure approval" of the contract to manage the lottery and build D.C. a sports betting app by "falsely claiming that VSC would perform 51% of the work."
- That guarantee — that more than half of the $215 million contract would go to local subcontractors — paved the way for the D.C. Council to approve the contract without a competitive bidding process.
- But the AG office alleged they instead concocted a scheme in which VSC would return payments to Intralot in exchange for a subsidiary of Intralot to perform much of the work.
What they're saying: "Intralot and VSC's sports betting deal was a sham from the start," Schwalb said in a statement.
- "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," his statement added.
The other side: Intralot and VSC do not admit wrongdoing in the settlement.
- "VSC categorically denies that it has done anything wrong," the firm said in a statement, adding 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."
Flashback: As the GambetDC sports betting app flopped, the owner of VSC collected a lavish paycheck, according to documents obtained by Axios in 2023. Maryland businessman Emmanuel Bailey was receiving at least $1.4 million annually.
- Intralot's former U.S. CEO, Byron Boothe, wrote in a 2022 letter to District officials that "VSC cannot perform anywhere close to 51%" of the work it was contracted to do "on its own."
- Axios reported the existence of Schwalb's investigation into the contract late last year.
State of play: VSC is still a subcontractor to Intralot.
- VSC will receive $19.8 million of a nearly $39 million contract extension that was approved in July 2024, according to contract files Axios obtained.
- Although the one-year extension requires Intralot to continue providing lottery services, it states that Intralot is "not required to operate or offer any retail, mobile and internet sports wagering in the District," after the city opened its marketplace to third-party apps.
Editor's note: This story has been updated to add comment from Veterans Services Corp.