DC sports betting firm falling short of requirement to hire local businesses, audit shows

The company tasked with establishing sports betting in Washington, D.C., is falling short of a legal requirement to hire locally owned businesses, according to an audit obtained by The Washington Post.

The D.C. Council in July 2019 approved a five-year, no-bid $215 million contract for the Greek gaming company Intralot to oversee an online sports betting and lottery program in the nation’s capital, the Post reported at the time.

In accordance with D.C. laws, recipients of large city contracts are required to spend at least 35 percent of what they are paid on hiring local companies, as part of the district’s effort to increase local job opportunities and the city’s tax base.

Intralot, according to the audit, has fallen short of that requirement, allocating less than 1 percent of the $215 million contract to small local businesses in its first year.

The company will not be fined unless it has fallen short when the contract period ends, according to the newspaper.

D.C.’s auditor also found that agencies in the district have been unsuccessful in monitoring the firm’s spending.

Kathleen Patterson, the city’s auditor, told the Post in an interview that 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,” she added.

When the firm was granted the no-bid contract it vowed to spend more than $119 million on local subcontractors over five years, the Post reported.

In its first year, however, D.C. only paid the company slightly less than $5 million from the contract, bringing the firm’s local spending rate to approximately 20 percent, which is far lower than the 35 percent requirement and the 55 percent pledge it had made.

D.C. councilmember Elissa Silverman (I) called for an audit after an investigation by the Post revealed issues with Intralot’s subcontracting plan, including how one of the local companies listed as a subcontractor did not have any employees.

Intralot blasted the auditor’s draft report, arguing it “unfortunately injected inaccurate information and mischaracterizations into the public domain.”

“In more than 10 years of partnership with the DC 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,” the firm added.

The company said it has paid more than $7 million to local businesses since the contract was created.

The push for sports betting in the nation’s capital and elsewhere comes after the Supreme Court in 2018 struck down a federal law that banned sports betting in almost every state.

New Jersey for years had been pushing for sports betting to be legal at racetracks and casinos in the state, but it was repeatedly blocked by the Professional and Amateur Sports Protection Act of 1992.

The court in 2018 ruled 6-3 that the provision barring states from authorizing and licensing a sports gambling scheme violated the anti-commandeering rule. Since the court’s decision, 22 states have legalized some form of sports gambling, including Michigan, New Jersey and New York, according to ESPN.

Updated on Thursday at 2:58 p.m.