D.C. Appears To Be Investigating Intralot Over Sports Betting Operations

D.C. Attorney General Brian Schwalb has ordered Intralot to turn over documents as part of an unspecified investigation, according to local media outlet Washington City Paper, which cited D.C. Superior Court records.

According to the news outlet, the attorney general’s office cites a section of the D.C. code that gives it the authority to investigate any alleged violation of “false claims” laws, which has brought the spotlight back on Intralot and its controversial dealings in the district. The court papers, filed on July 22, are under seal, as are any records Intralot provides.

The controversy surrounding Intralot dates back to its $215 million sports wagering deal with D.C. Intralot, a Greek gaming and lottery operator, allegedly established as a local shell company to win the sole online sports betting contract with D.C. This move raised numerous questions and concerns about the company’s business practices and its compliance with local laws.

The D.C. Department of Small and Local Business Development (DSLBD) has repeatedly warned Intralot that it is at risk of violating the city’s “Certified Business Enterprise” (CBE) requirements. The CBE law stipulates that out-of-town firms must allocate a portion of large contracts to small, local businesses. However, Intralot has struggled to meet its commitments in this regard.

The shell game

Intralot’s troubles began when it subcontracted the district’s sports betting contract to Veterans Services Corporation (VSC), a company that was supposed to fulfill the CBE requirements. However, investigations indicated that VSC was essentially a shell company with no employees and no substantial operations. This revelation has cast a shadow over Intralot’s dealings and has led to calls for a thorough investigation into the company’s practices.

Three years ago, D.C. Auditor Kathy Patterson raised similar concerns in a report. The report highlighted that Intralot had not managed to spend the tens of millions of dollars with the local firms that it had originally promised.

The ongoing investigation by Attorney General Schwalb could have significant implications for Intralot. Schwalb may not only impose financial penalties on Intralot but could also consider prohibiting the company from conducting business with D.C. in the future.

Intralot still winning

Despite these potential challenges, Intralot remains a key contractor for the city. While its initial five-year contract to oversee sports betting ended in July of this year, the D.C. Council approved a one-year extension worth $39 million, lasting through July of next year.

This extension also covers lottery services that Intralot has long provided to D.C. Initially, the D.C. Office of Lottery and Gaming sought a contract extension that would run for two years, but that request was retracted after the council passed the 2025 budget changes related to sports betting.

The extension of Intralot’s contract has not been without controversy. Critics argue that the company’s failure to meet its CBE commitments and the ongoing investigation should have disqualified it from receiving an extension. However, supporters of the extension argue that Intralot’s experience and established presence in the district make it a valuable partner for the city’s lottery and gaming operations.

Intralot launched its Gambet DC mobile platform in March 2020, but after three years of operation filled with controversy and underperformance, the D.C. Lottery made a shift from Gambet to FanDuel.

The investigation by Schwalb is expected to shed more light on Intralot’s business practices and its compliance with local laws.