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Intralot and its Washington DC-based subcontractor will pay a combined $6.5m to settle allegations that the two companies misrepresented their compliance with the District of Columbia's contracting laws.

DC Attorney General (AG) Brian Schwalb announced Tuesday (January 14) that Intralot will pay $5m and Veterans Services Corporation (VSC) $1.5m to settle allegations of deceiving city officials to win the DC Lottery’s sole-source lottery and sports-betting technology contract in 2019.

DC law requires 35 percent of large contracts to be subcontracted to small businesses based in the District of Columbia known as “certified business enterprises” (CBEs).

The attorney general's office alleged that the two companies pledged that VSC, a DC-based CBE, would perform 51 percent of the work in the contract, but in reality the two companies agreed secretly that VSC would return payments to Intralot and that DC09, a subsidiary controlled by Intralot, would perform most of the work.

“This is a warning to any company that tries to manipulate and exploit District contracting laws, especially laws intended to build the capacity of the local businesses vital to our economy,” Schwalb said in a statement. “Intralot and VSC’s sports betting deal was a sham from the start — an elaborate scheme to secure a lucrative, high-profile opportunity on a sole-source basis while circumventing the District’s small business contracting laws.”

An Intralot representative pushed back against the strong statements from the AG, saying the company “strongly disputes” the language used by the attorney general in describing the company’s actions, while pointed to the settlement itself which says that the companies do not admit any wrongdoing as part of the agreement.

“Intralot never engaged in fraud against the District and would never have entered a settlement with the DC AG that required the company to acknowledge such conduct,” the representative said.

“The settlement makes clear that Intralot sharply disputes the attorney general’s allegations. Intralot has chosen to settle with the District in order to avoid the cost, time, and uncertainty associated with protracted litigation, in line with its ongoing focus on corporate governance, risk management, and operational excellence.”

The two sides also disagree about the role of DC09, with Intralot saying that DC09 is a joint venture that has existed between the two companies, which the DC Lottery fully understood the role of when the contract was awarded. The company also maintains that it believed that structure was in full compliance with both the 2019 contract and district law.

The attorney general claims that even though the joint venture is 51 percent owned by VSC, Intralot controls the majority of the venture’s board seats and provided most of the venture’s funding.

Intralot still serves as the DC Lottery’s primary technology provider, but its partnership with the lottery for sports betting was ended in 2024 after several years of underwhelming returns for the DC Lottery’s GambetDC mobile sportsbook platform.

The company last year subcontracted its sports-betting operations to FanDuel, but in June the DC Council elected to overhaul the district’s sports-betting program, opening the district up to a competitive market served by multiple online sportsbook operators.

To date, five companies have launched mobile sports betting in Washington, DC through partnerships with either major sports arenas or local professional sports teams. A sixth operator, ESPN Bet, announced plans to launch in the district earlier this week through a market-access agreement with the owner of the Washington Capitals and Washington Wizards.