Greek gambling giant 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 allegations. The settlement documents state that the payment does not indicate an admission of guilt, and both companies deny any misconduct. 

In 2019, Intralot received the exclusive sports betting contract for the District. Due to the requirement for firms with significant public contracts to 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 

Emmanuel Bailey, a businessman residing and working in Maryland, operates VSC. VSC was deemed a “local” business as it was registered at the residence of Bailey’s 75-year-old mother in DC, with her noted as the majority shareholder, as reported by the Washington Post during that time. The business had no staff other than Bailey and his mother. 

According to the conditions of the $215 million, no-bid agreement, VSC was expected to handle most of the tasks, earning 51% of the sports betting profits from Intralot. Nevertheless, 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 guaranteed the DC Council considerable returns, but it ultimately turned out to be uncompetitive. “Hold” indicates the proportion of wagers the operator retains after paying out winning bets. 

Frugal Chances 

Although a large hold could produce a higher percentage for the District, it was only feasible by providing some of the most restrictive odds in the United States. 

Intralot's sports betting application, GamBetDC, was overly inflated and did not possess a competitive advantage compared to its counterparts in Virginia and Maryland. 

Following three years of lackluster results, GamBetDC was succeeded by FanDuel as a subcontractor for Intralot, significantly affecting 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.