Intralot Could Face Washington, DC Investigation

Posted on: August 13, 2024, 03:40h. 

Last updated on: August 14, 2024, 10:10h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Intralot, the Greek gaming company that previously ran the mobile sports betting application in Washington, DC, could face an investigation in the city regarding its management of the app.

Intralot
An Intralot stand at a gaming expo. The company could be facing an investigation in Washington, DC over its management of the GambetDC sports betting app. (Image: Intralot/Facebook)

DC Attorney General Brian Schwalb has requested documents from Intralot pertaining to its more than four-year stint running the controversial GambetDC app. That could be an indication that an investigation is already proceeding, but per an order by the DC Superior Court, filings on the matter are currently sealed.

Criticism of the Intralot deal was plentiful because the bidding process for the contract wasn’t competitive, leading some members of the DC City Council to allege cronyism comparable to the 2009 decision to award the company the city’s lottery contract.

As Alex Koma of the Washington City Paper reports, it’s not immediately clear exactly what Schwalb is looking into regarding Intralot, but under DC city code, the attorney general has the power to examine violations of “false claims laws.” The publication noted the AG could pursue financial penalties against the gaming company and even bar it from doing business in the city in the future.

Intralot Now Behind the Scenes in DC Sports Betting

In what was arguably a clear indication that GambetDC was a dud and didn’t deliver on revenue expectations, in March Intralot outsourced responsibilities for what was then the lone sports betting app in the city to Flutter Entertainment’s FanDuel.

The move immediately bore fruit for the city. During its first 30 days of operation in the US capital city, FanDuel’s mobile app and website generated a handle of $30 million and $5 million in gross gaming revenue (GGR) — figures representing 673% and 887% year-over-year increases, respectively. More recently, DC’s mobile sports betting market has opened to more competitors.

Under the terms of its agreement with the DC Office of Lottery and Gaming (OLG), Intralot was able to farm out its responsibilities, but it still holds the contract with the city. It’s not clear what would happen if Schwalb’s investigation leads to the company being booted from the city, but it’s possible OLG could simply execute a new accord with FanDuel.

It is, however, clear that Intralot is struggling to meet its financial commitments to the city. As the Washington City Paper noted, the DC Department of Small and Local Business Development mandates that companies based elsewhere have to give extended slices of their large contracts to small local businesses, and Intralot has struggled to meet that objective.

Intralot previously claimed that part of the problem was that Veterans Services Corporation — one of its major subcontractors — wasn’t performing services as expected.

Where DC Sports Betting Goes From Here

Washington, DC sports betting is now more compelling than it’s ever been, jumpstarted by FanDuel and bolstered by the more recent entries of BetMGM, Caesars Sportsbook, and DraftKings. GambetDC is now a distant memory, and that’s to the liking of bettors who were dissatisfied with clunky technology and poor odds, and politicians disappointed by the app’s revenue failings.

None of that implies that Intralot is off the hook or that an investigation into the company’s potential missteps in the city will be performed with a light touch.

Rather, Schwalb’s inquiry could serve the aim of highlighting long-running issues with Washington, DC awards lucrative contracts — a process that’s long been criticized and subject to allegations of backroom dealings and cronyism.