The Clown Files: D.C. Disaster! Millions for ‘Doing Nothing’ in Sports Betting Deal?

The monopoly that is Intralot in D.C. sports betting may be no more....Well, actually, don't hold your breath.

The Washington City Paper reveals this week just how big a disaster GameBetDC has been since its launch.

Oh and there is much blame to be passed around.  But as you will soon see.  Intralot may be having its own Sybil moment.  And Sybil has multiple enablers it seems.

You know things are bad when Alex Koma's piece begins with this paragraph: 

Is the main subcontractor set to run D.C.’s sports betting operation actually doing the work it promised to do? Top D.C. officials and even the city’s main sports wagering vendor have joined a growing list of skeptics asking that question about Veterans Services Corporation, the small firm run by political insider Emmanuel Bailey.

New: Behind the scenes, DC's sports betting contract is coming apart.

DC officials say Intralot, the firm running @GambetDC, isn't living up to the terms of its deal. Intralot blames VSC, its politically connected subcontractor. #FOIA docs reveal a mess:https://t.co/8LwY3JjzmC pic.twitter.com/vEpzy48YWF

— Alex Koma (@AlexKomaWCP) June 12, 2023

It's Washington, D.C. after all, so cronyism, back room deals and the like are to be expected.  But the sports betting arrangement here takes things to a whole other level.  Somewhere disgraced gambling lobbyist Jack Abramoff is wondering what the hell he did wrong to spend time in prison.

D.C. regulators say Intralot isn’t meeting the terms of its deal to run the city’s sports wagering system. And, in turn, the company blames the politically connected subcontractor, that being Emmanuel Bailey.

The D.C. regulators further assert the Greek company that won the District’s controversial $215 million sports betting contract back in 2019 continues to violate the terms of its deal with the city by not sending enough work to Bailey’s firm, according to internal emails and letters recently released to Loose Lips via a Freedom of Information Act request, as reported by the Washington City Paper.

The dynamics of this relationship get a bit complicated so here is a little history:

Bailey's firm, Veterans Services Corp. or VSC, has been a lottery and gambling subcontractor for more than a decade. 

Veterans Services Corp. has played a central role in running the DC Lottery for the last 12 years as a subcontractor for the Greek company Intralot.

“Our partnership, as vendor to the DC Lottery, has returned over $500 million to the district,” Emmanuel Bailey, president and CEO of Veterans Services Corp., said in a statement.

Okay, if you are confused after reading this, join the club.  Even a village idiot realizes all of this reeks of shadiness. 

In 2019, when Intralot received a $215 million contract to bring sports gambling to Washington, D.C., and run its lottery, they were also supposed to have given half the work to VSC, according to The Washington Post.

But Veterans Services Corp didn’t appear to have any employees to give the work to.  Bailey appeared to be the only person associated with the firm.

The Post later reported that the district’s small and local business director, Kristi Whitfield, said the companies appeared to be compliant with the local business subcontracting requirements.  Whatever that means.

Interlot claims VSC is not doing any of the work, assuming they were assigned work to begin with.

“Thus, the current situation is one where Intralot must perform that work,” Byron Boothe, then-CEO of Intralot’s American division, wrote in a January letter to prominent D.C. officials, arguing that the city is “effectively locking Intralot into subcontracts that require it to pay its vendors whether or not they provide adequate services.”

Boothe asked that the work be given to another company not named VSC and for Intralot to be relieved from its legal obligation to designate the predetermined percentage of work to VSC, and presumably its ghost employees.

Koma writes:

Essentially, these internal communications closely mirror concerns raised for years by D.C. councilmembers and other watchdogs that VSC and Bailey would rake in millions on the contract without meeting its contractual obligations.

Speaking of ghosts, Mayor-for-Life Marion Barry is being blamed for this whole debacle.  For those of you unfamiliar with Marion Barry, Google his name. On January 18, 1990, Barry was arrested with a former girlfriend, Hazel Diane "Rasheeda" Moore, in a sting operation at the Vista International Hotel by the FBI and D.C. police for crack cocaine use and possession.  This might rank among his least egregious indiscretions.  Barry was accused of stalking and racism during his tenure as Mayor.  He's a fun read. 

But in this matter, he helped create a system requiring small businesses in the District to get a piece of the pie when big outside companies like an Intralot are introduced to the equation. On the surface, that doesn't sound like a bad thing.  But again we're talking D.C. here.  Small local businesses back then likely meant "friends of Mayor Barry".

Koma also points to a December 2021 letter whereby one of Intralot’s attorneys accused city officials of “enrich[ing] favored CBEs and their principals” by forcing the company to keep sending so much work to VSC.

D.C.’s Department of Small and Local Business Development is there to balk at the Intralot allegations.  They oversee all of Certified Business Enterprise (CBE) expenses. They've accused the Greek firm of violating CBE policies and later accused company executives of being “duplicitous” as they tried to meet local spending targets.

Intralot worked with VSC previously. 

Just as you may have thought you were starting to grasp this incestuous relationship, Koma provides even more background.

Intralot and VSC formed an unusual joint venture as their lottery business blossomed in 2010: a new company called DC09. VSC owns 51 percent of the firm, but Intralot’s own financial statements show that it funded DC09’s creation and generally controls its operations, as the Washington Post documented back in 2019. This structure allowed Intralot to claim that any work performed by DC09 should count toward the city’s local business spending requirements, even though Intralot was effectively the one operating it.

With the new sports betting deal in 2019, the companies wanted to repeat the prior arrangement. DC09 quickly attracted scrutiny from D.C. officials.  SURPRISE!!!  Intralot assured these officials that DC09 "was not a subcontractor on the contract.”

The City Paper gets into more explicit detail.  It's all craziness and one has to wonder if the D.C. sports betting situation will ever get resolved.  Probably not.

But here's the best part.  Neighboring Maryland just approved VSC's partnership with a London-based company to run sports betting in that state.

And Bailey? 

He cited his firm’s experience running D.C.’s sports wagering operation to help win the deal.

Talk about a circus!

- Jagajeet Chiba, Gambling911.com