By Chris Kain
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DC Attorney General Brian Schwalb this morning announced a $6.5 million settlement with the contractor and subcontractor selected to receive the District’s lucrative lottery and sports betting contract in 2019 — a controversial decision that came under growing criticism amid disappointing revenues from the GambetDC app until last year’s decision to open up the market to additional firms.

Both firms — Intralot Inc. and its small business subcontractor, Veterans Services Corp. — denied any wrongdoing, saying that agreed to the settlement to avoid costly litigation. They received a contract extension last year to handle lottery operations through July, with FanDuel taking over the mobile sports betting app. The DC Council later voted to open the market, enabling additional companies to apply to operate citywide.

Schwalb described the settlement as a warning to any companies attempting to “manipulate and exploit” the District’s contracting laws. As a result of its investigation, the Office of the Attorney General accused Intralot and VSC of deceiving city officials to obtain the sole-source contract by misstating the amount of work performed by the subcontractor.

“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,” Schwalb said in a statement. “My office will continue to enforce the False Claims Act to root out contracting fraud, hold accountable anyone who tries to get over on the District and its taxpayers, and level the playing field for law-abiding companies seeking to do business with District government.”

— ‘D.C.’s sports betting flop ends in $6.5 million settlement, fraud accusations.’ WaPo’s Meagan Flynn: “The Greek company that oversaw the rollout of D.C.’s sports betting operation and its subcontractor are paying a $6.5 million settlement to the city after the D.C. attorney general’s office alleged that they deceived D.C. officials with a fraudulent ‘covert agreement,’ the office announced Tuesday.

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