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D.C. Mired in Scandal Over $215M Sports Betting Deal

District of Columbia

A lawsuit that was filed just last week may have the potential to delay any plans that Washington, D.C., has for a legal and regulated sports betting industry. The District opted to legalize sports betting toward the end of 2018, introducing the Sports Wagering Lottery Amendment Act at that time.

However, Superior Court Judge Joan Zeldon brought a temporary restraining order into effect on Thursday, Sept. 26 that blocks a $215 million contract with Intralot, which was set to develop and operate a mobile gaming app alongside the District’s lottery. The judge's order came in response to a lawsuit that was filed by an alternative software developer who also wanted to compete for such a contract.

Washington D.C. Sportsbetting Halted

With the judge's decision in place, legal and regulated sports betting in D.C. has come to a grinding halt for the time being.

The Contract That Won D.C. Over

Pages of Document

In order to integrate sports betting and other gambling opportunities – perhaps someday to include online poker sites – into Washington D.C., the Council of the District voted in favor of awarding a contract to the Intralot brand, which already had developed products for the aforementioned lottery. This is the same setup that Governor Steve Bullock of Montana introduced in his state in May 2019. However, in D.C., the Council didn’t provide other companies with the chance to bid on securing a contract, which is where the controversy becomes apparent.

Logo of IntralotIntralot Was Selected to Provide Sports Betting Services in D.C.

Officials had hoped to launch the D.C. sports betting app by January of 2020, although with the judgment being to halt supplies of any money to Intralot, that time could very well pass by without a launch taking place. The initial immediate order for payments to cease was extended by the judge until Oct. 18 when the involved parties return to court.

Speaking of her ruling, Judge Zeldon said that evidence suggests that the District government was in violation of the Home Rule Act. Until the matter is brought to a suitable conclusion, no further payments will be made to Intralot. This does leave things up in the air, considering that the contract may not resume if the government is found to be in breach of the Act.

Joan ZeldonJudge Zeldon Felt the Evidence Against the D.C. Council
Was Sufficient to Suspend the Contract

Local Software Developer Files Lawsuit Against D.C. Council

It was the local software developer Dylan Carragher who proceeded with filing a lawsuit against the Council of D.C., based on allegations of the Home Rule Act being violated. Both he and his lawyer, Donald Temple, have requested that the Council annul the contract with Intralot in order to start up a new campaign where any interested party will be able to submit their own bid to develop the mobile sports wagering app.

To make things simple, the argument of Mr. Carragher is that the Council should have gone through a full procurement process as is laid out in the Home Rule Act. Doing so would see them receive proposals from one or more developers to discuss before proceeding to award the contract to a company. Instead, the Council simply chose to select the Intralot brand outright and then drew up a contract with the Greek company.

The Council has fired back though, stating that since Intralot had already made a bid for and obtained the contract to develop the D.C. Lottery app, it is completely within its rights to proceed with extending that same contract to be able to cover sports betting too. This, the Council says, is a completely normal route to take, meaning that they didn’t need to start the acquisition process all over again.

Yet, that decision to simply select the Intralot brand as its favored developer has caused quite a bit of controversy from the start, building up a stir before Carragher’s lawsuit came to light.

Background on D.C. Sports Betting Becoming Legal

Books

As noted, the District chose to legalize sports betting in late 2018, and when it did, it decided to go for somewhat of a unique model.

This vision sees private establishments have the ability to apply for gambling licenses in order to launch sports betting; yet, the lottery of the District pretty much gave itself an almost complete monopoly over online betting of all sorts.

D.C. Lottery LogoThe DC Lottery Has Secured a Favorable Position for Itself in the Sports Betting Market

Any establishments holding a retail license also have the opportunity to develop apps although users of those apps can only access them from within the premises of the retail business. That means that the introduction of the D.C. Lottery app would be the only option for betting from home or while out and about.

That framework rattled cages from the moment that it was announced as it does place severe restrictions on sports betting and other gambling opportunities within D.C. Things only intensified when Intralot was given the $215 million contract, which is essentially what led to the introduction of Carragher’s lawsuit.

Internal Council Resistance Displays Concerns from Within

Two People Arguing

When it came time for the Council to vote on the contract being handed to Intralot, it approved of the deal by a narrow 7-5 margin on July 9 this year. Several members were clearly against such an operation taking place at the time.

It was only after Chairman Phil Mendelson warned his councilmembers of the problems with a negative outcome that a few of his colleagues came around to his way of thinking. A rejection of Intralot taking the contract, he said, would mean that $17 million would be lost in revenue while years of delays in finding an alternate developer to create the app would occur.

Phil MendelsonChairman Mendelson Was Successful in Persuading His Colleagues to Go With Intralot

Mendelson has since stated in public that he doesn’t believe the judge’s ruling on the contract will stand. Yet, this is not only the lawsuit dispute over the Home Rule Act that is affecting proceedings, because the CEO of Veterans Services Corp. (VSC), Emmanuel Bailey, is at the center of another scandal relating to the contract.

Subcontracting Impossible Due to Zero Employee Count

One of the points in the contract between the D.C. Council and Intralot is that the majority of the work must be carried out locally, meaning within the District. Therefore, because Intralot only has offices in Greece, it has had to subcontract with a company from within D.C.

Enter VSC. However, there’s quite a funny issue with this company as it doesn’t have any employees at all, meaning that it’s literally impossible for the work to be done locally – at least through VSC.

When the initial Lottery contract was given to Intralot, VSC possessed a head office which was located within the home of Bailey’s mother Barbara, and it was made up of two desks and a single computer. In order to have the company relocated to Washington, a 51% share of the company was transferred over to his mother from its original owner – Bailey’s stepbrother, Vernon.

Bailey managed to secure Intralot the contract with the D.C. Council because he serves as a member of the D.C. Chamber of Commerce while his mother is a District homeowner, meaning that VSC was easily able to be touted as a local business. Yet, that still means that the work has to be done locally, so how could VSC do so without a workforce?

Well, VSC and Intralot would unite together and form a third company known as DC09, with a $12 million loan coming from the Greek business to fund the startup. The requirement that the job be done locally was intended to stimulate D.C. employment figures and businesses.

VSC did not qualify as a local business in the eyes of city inspectors back in 2009. Yet, a manager proceeded to overrule that decision, proving that corruption isn’t something that's unknown within the august chambers of the Washington, D.C., local government.

Delays Remain as the Sole Certainty for D.C. Sports Betting

Hourglass

While bettors in the D.C. area may have been hoping for a positive outcome to the fact that the District legalized sports betting last year, it seems as though those hopes are in danger of being dashed. In fact, many have speculated that the most likely outcome is a long delay in legalized sports betting coming to the District.

Officials primarily wanted to get the sports betting app in operation for the start of the NFL season, but that never happened, which led to them targeting the beginning of 2020.

John A. Wilson BuildingThe D.C. Council Meets in the John A. Wilson Building

If the contract with Intralot is invalidated, then it could take many months for prospective software companies to prepare their own bids and several more for the Council to discuss these and make a final decision. Once done, it will take a long time after that period for the development of the actual app to begin too.

It’s a shame that even within the regulated gambling industries, corruption can still mar the proceedings of sports betting, casino gaming, and even poker providers. This tends to invalidate one of the main reasons given for licensed gambling as opposed to offshore wagering, i.e., that the industry will be kept honest and secure with governmental oversight. Sadly, it is the government itself that often seems to have its hand in the till.

You Can Bet Right Now

$100 Bill

Regardless of how the scenario now playing out in the D.C. courts is resolved, anyone in the District and indeed the rest of the country can bet immediately regardless of the shady dealings entered into by those in power. You see, an extensive menu of international betting operations caters to the U.S. market, and they're outside the effective reach of federal law enforcement. To learn more about these sites and how they work, read our guide to the best online sportsbooks U.S.A. residents can wager at.

To instead locate a US-friendly online poker site that isn’t affected by corruption, check out our informative page on U.S. internet poker.