Audit Of DC’s Lottery Efforts Reveal Potential Trouble for Intralot

An audit just completed on the lottery market in Washington, DC, has revealed what many already knew. Intralot is likely playing games with the DC Council and getting away with it. A report by Washington City Paper brings to light several discrepancies over Intralot’s handling of its contract to operate the district’s lottery activity, some of which were emphasized two years ago when the contract was being awarded.

Intralot Plays by Its Own Rules

In 2019, when Intralot was handed control of DC’s sports gambling efforts, there was no shortage of public opposition to the arrangement. The DC Council gave Intralot the keys to the market with no public bidding, as required by local law, and amid controversy surrounding one of the figures involved. A new audit by the DC Auditor shows how poorly Intralot is managing its responsibilities and how it’s willing to mock the system that gave it the $215 million lottery contract. Given that Intralot was also handed control of the district’s sports gambling market, which has been anything but successful, it’s safe to assume that it, too, is suffering as a result of Intralot’s lack of proper management.

According to local regulation, the Certified Business Enterprise (CBE) program, an outside company must subcontract a minimum of 35% of its activity to a local firm in order to be approved for any contract. On paper, that’s exactly what Intralot did; however, the just-completed audit revealed that the local company Intralot chose, Veterans Services Corporation (VSC), only has two employees – the company’s founder, Emmanuel Bailey and his mother. The DC Auditor asserts that there’s no way VSC, which makes $110 million in the five-year deal, could have the manpower needed to manage 35% of the operations with only two people.

Making matters worse, this was known ten years ago when Intralot was first being considered as the lottery operator and it announced that it had partnered with VSC. It then came up again two years ago. The DC Council, though, decided to overlook the discrepancy and handed Intralot the district’s lottery and sports gambling on a silver platter. At the time, a couple of council members tried to block the contract, but were overruled.

Intralot Forgets Its Responsibilities

The audit also revealed that Intralot has spent less than 1% of the money it was contractually obligated to spend with local businesses. With the contract recently passing its one-year anniversary, it had spent around $965,000 through the third quarter of last year, instead of the $1.19 million it should have spent according to the $119.5-million contract. The audit didn’t reveal how much may have been spent after the third quarter.

Adding to the issues, VSC and another CBE company allegedly working with Intralot have received “credit and payment” during the period, even though records don’t substantiate the work they are said to have done. VSC was given $280,000 and Octane was given $179,900, but the DC Auditor wasn’t able to match the payments to any jobs. It was revealed in the audit that Octane is owned by Everett Hamilton, who previously managed communications for Muriel Bowser, DC’s current mayor, during her first mayoral campaign.

The debacle is going to come to a head sooner or later. Despite having a much smaller footprint, William Hill is performing better than the district’s own sports gambling solution, GambetDC, which is inarguably linked to the way DC’s gaming efforts are being managed by elected representatives and private companies. As Elissa Silverman, an at-large councilmember and one of the original opponents of the Intralot deal, put it, “It just stinks.”