DC agency: Gambling contract is fine despite legal concerns

The District of Columbia's attorney general is looking into the legality of a $215 million sports gambling contract that was awarded without competitive bidding and approved by the city council.

A Washington Post investigation last month found that a subcontractor for the Greek company Intralot is really a subsidiary that was set up to look like an independent small business, apparently to comply with the letter if not the spirit of a district law meant to support the local economy.

The Post reported Wednesday that the district's Small and Local Business Director, Kristi Whitfield, said the companies appear compliant based on their paperwork.

Council member Elissa Silverman, who wants a full investigation of Intralot and its subcontractor Veterans Services Corp., called that "absurd."

The newspaper reported that Veterans Services doesn't have employees, yet is getting the largest payout from the contract. The Post says it lists fake executives online, and is led by Emmanuel Bailey, who works for an Intralot subsidiary.

Silverman and council member Robert C. White Jr. asked Attorney General Karl A. Racine and District Chief Financial Officer Jeffrey DeWitt to revisit Intralot's contract and investigate Veterans Services' legal compliance. Silverman has asked Racine if the gambling contract can be nullified. Council member Mary M. Cheh also reached out to Racine, asking whether Intralot and Veterans Services have engaged in fraud.

A spokeswoman for Racine said Tuesday that the office has been "looking into the matter."

Meanwhile, Whitfield informed Silverman that the companies appear complaint based on filed paperwork including vendor verification forms and quarterly reports.

The newspaper says vendor verification forms are intended to confirm that subcontractors are being paid by the prime contractor. However, contractors can skirt subcontracting law by creating arrangements where subcontractors buy goods or service as a way to pass payment back to the primary contractor.

The newspaper says Veterans Services included a footnote explaining that portions of payments received from Intralot included credit toward reducing a loan obligation. The footnote doesn't say the loan was provided by Intralot. Whitfield says the department didn't understand the footnote and aren't in a position to speculate its meaning.

Intralot said it formed its joint venture with Veterans Services to meet the district's goals of supporting small, local minority businesses. "Mindful of the District's support for minority vendors and Intralot's commitment to diversity, Intralot searched for (an approved) minority firm as a subcontractor," said an Intralot statement provided by the company's communications consultant, Sandy Theis.

Bailey, for his part, called Veterans Services "a case study" for the success of the District's small-business program.

Silverman told the Post that Whitfield's response brushes away the concern of whether Veterans Services is a real company, and whether District residents and businesses benefit from the overall contract.

Intralot was awarded the sole source contract to manage online sports betting in July despite concerns about the subcontractors hired by Intralot, some of whom had connections to D.C. elected officials or previous contracts with the city government. Intralot already manages the lottery, and the new contract confirms its monopoly on mobile and computer-based betting in the District.