The Greek gambling powerhouse Intralot and its sports betting subcontractor in Washington DC have consented to pay $6.5 million to the DC Office of the Attorney General to resolve fraud accusations. 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. Due to the requirement for companies holding substantial public contracts to subcontract tasks to small local enterprises to enhance the economy and generate employment in DC, Intralot collaborated with a local firm known as Veterans Services Corp (VSC). 

Shell Corporation 

VSC is run by Emmanuel Bailey, a businessman residing and working in Maryland. VSC was classified as a “local” business since it was registered at the residence of Bailey’s 75-year-old mother in DC, and she is identified as its primary shareholder, as uncovered by the Washington Post then. The business had no workers except for Bailey and his mother. 

According to the agreements of the $215 million, no-bid contract, VSC was expected to handle the majority of the work, earning 51% of the sports betting revenues.

"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 significant returns, but it ultimately turned out to be uncompetitive. “Hold” denotes the proportion of wagers that the operator retains following the payout of winning bets. 

Frugal Chances 

Although a high hold could provide a larger percentage for the District, it was only viable by providing some of the lowest odds in America. 

Intralot's sports wagering application, GamBetDC, was excessively inflated and didn’t have a competitive advantage compared to its counterparts in Virginia and Maryland. 

Following three years of lackluster results, FanDuel replaced GamBetDC as Intralot's subcontractor, which significantly boosted the District's sports betting income.

"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.