Washington, D.C., Attorney General Brian Schwalb announced a $6.5 million settlement with the two contractors behind the problem-plagued GambetDC sports betting app for allegedly defrauding the district to get approval.
Intralot, a Greek company, and Veterans Services Corporation, a D.C.-based subcontractor, won the contract to develop the sports betting and lottery programs in the district in 2019 without a bidding process under the promise that the D.C.-based subcontractor would do 51% of the work. The council reluctantly approved the agreement quickly to beat Maryland and Virginia to the sports betting market under the pretense that it would support a local company.
The D.C. attorney general’s office alleged the larger company entered into a scheme where the D.C. firm would send money given under the contract to Intralot in exchange for a subsidiary of Intralot to do most of the work. The settlement announced Tuesday requires Intralot to pay $5 million, while Veterans Services Corporation will pay D.C. $1.5 million.
“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,” 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,” he added. “My office will continue to enforce the False Claims Act to root out contracting fraud, hold accountable anyone who tries to get over on the District and its taxpayers, and level the playing field for law-abiding companies seeking to do business with District government.”
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The two companies were responsible for creating the GambetDC app, which had various problems and underperformed financially for the D.C. government. Last year, the district opened up the sports betting market to third-party operators, beginning with FanDuel Sportsbook, and shuttered GambetDC.
In the first month of using FanDuel Sportsbook, it generated $1.9 million in revenue for the district from bets, far outpacing the prior app.