Intralot, the Greek company hired to oversee sports betting in Washington, D.C., is not living up to its legal obligation to hire locally owned businesses, according to an audit obtained by the Washington Post.
In July 2019, the District of Columbia council approved a 5-year, no-bid $215 million contract with Intralot to oversee an online sports betting and lottery programs. However, under D.C. law, recipients of large city contracts must spend at least 35 percent of what they are paid to hire local companies as part of the city’s certified business enterprise program. According to the audit, in its first year, Intralot allocated less than 1 percent to small local businesses.
District Auditor Kathleen Patterson also found the D.C. government has not “held Intralot fully accountable to the terms of the contract and to the law. While this is a pretty narrow scope, looking at a handful of certified business enterprises and one government agency, it raises a lot of very serious questions about the administration of the certified business enterprise program as a whole,” Patterson stated. She noted Intralot won’t be fined unless it come up short when the contract period ends.
When Intralot received the no-bid contract, company officials said they would spend more than $119 million on local subcontractors over five years. However, in its first year, D.C. only paid the company slightly less than $5 million from the contract, and the firm’s local spending rate reached about 20 percent, much lower than the 35 percent requirement and its own 55 percent pledge.
D.C. councilmember Elissa Silverman called for an audit after the Post’s investigation indicated issues with Intralot’s subcontracting plan. In fact, it found one of the local companies listed as a subcontractor did not have any employees.
In response, Intralot said it has paid more than $7 million to local businesses since the contract was created. Officials said the auditor’s draft report “unfortunately injected inaccurate information and mischaracterizations into the public domain. . In more than 10 years of partnership with the D.C. government, with both the lottery and now the sports betting program, Intralot has always sought to perform to the letter and intent of contract terms, and we will continue to do so.”
In addition, the contract with Intralot has produced only a small fraction of the profits the company promised from the District’s sports betting program. The Intralot contract was awarded without a competitive bidding process since city leaders said sports betting would generate significant revenue and should be implemented as soon as possible.
Instead, Office of Lottery and Gaming Interim Executive Director Ridgely Bennett noted returns have been disappointing. When the contract first was approved, Bennett’s office predicted sports wagering would bring in $26 million in revenue for the District in fiscal year 2021. That outcome was lowered to $6 million this past spring, but in reality, sports betting revenue totaled $230,00 in the first eight months of 2021.
Bennett blamed the dismal numbers in part on launching sports betting during the Covid-19 pandemic. He said as tourists and daytime office workers return to the District, sports betting will rebound, because the Gambet app requires users to be located within D.C. boundaries. Bennett stated, “You could not pick a worse time to introduce a new sports wagering product into the marketplace” than last year. He predicted a revenue would increase to $20 million in 2022, but that’s still much less than the $30 million his office once estimated.
