Two companies that operated the District’s troubled lottery and online sports betting services agreed to pay D.C. $6.5 million in a settlement Tuesday related to charges of defrauding the local government.
Intralot is a Greek-owned company that operated the District lottery for several years before adding sports betting to their contract. Intralot hired Veterans Services Corporation, which is based in D.C., to satisfy the District’s requirement that small businesses receive 35 percent of large government contracts.
Since D.C. launched the sports betting app GambetDC in 2019, questions arose about the company’s awarded $215 million contract.
D.C. Attorney General Brian Schwalb says Intralot and VSC misled local officials about how much the local company actually performed through using false records and fraudulent claims, according to the settlement.
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“They had a complicated secret agreement where VSC was effectively funneling money back to Intralot, and that was all in furtherance of their scheme to mislead the District of Columbia into giving them the sole source contract to begin with, and then paying them under that contract for several years,” Schwalb said.
Neither Intralot nor VSC admitted any wrongdoings as part of the settlement. Intralot will pay D.C. $5 million, and VSC will pay $1.5 million as part of the settlement.
“Intralot strongly disputes the language of the Office of the Attorney General has used to characterize INTRALOT’s joint venture and actions. Intralot never engaged in fraud against the District,” the company said in a statement to News4.
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VSC sent News4 a similar statement saying the company “categorically denies that it has done anything wrong.”
“The sole reason that VSC has entered into a settlement agreement with the Office of Attorney General is to avoid the exorbitant legal fees associated with defending a frivolous case,” the statement read.
Schwalb said his office determined the companies violated the False Claims Act, and the amount of money funneled back to Intralot was $4.3 million after an investigation.
“There's meaningful terms in the agreement that are going to make sure these companies change the way they behave, make sure they follow the law moving forward. I think our actions and the amount of money that the settlements reflect speak for itself,” Schwalb said.
While Intralot doesn’t currently manage GambetDC, the company still holds the contract for the District 's lottery.
“Our focus in this lawsuit was on the false representations that were made to win the contract back in 2019 and to get paid under that contract, really for the next two or three years up until the end of 2021,” Schwalb said in response to why the settlement didn’t include barring Intralot from government contracts.
Although the initial contract was for more than $215 million, the company only billed the city for $39 million due to low revenue.
Intralot’s current lottery contract expires in July.