A Washington D.C. court has temporarily suspended Greek lottery operator Intralot’s contract to operate lottery services and sports betting in the district, indicating that there is “substantial likelihood” that a lawsuit alleging the deal violates federal law succeeds.
The ruling comes as part of mobile app developer Dylan Carragher’s lawsuit against the District, arguing the deal violates the Home Rule Act that established the powers of Washington D.C.
Carragher — who has created a sports betting app of his own — argues that the no-bid nature of the Intralot deal “ultimately violates DC citizens’ rights to receive fair and competitive prices for the contractual services provided to the government.” The lawsuit is taking place in the Superior Civil Court of the District of Columbia.
The temporary restraining order (TRO) lasts for two weeks forces the District to “refrain from performing under the sports betting and lottery contract it has in place with Intralot,” according to Judge Joan Zeldon’s ruling.
However, the ruling suggested that the contract may be in greater danger, as Zeldon ruled that it was more likely than not that “there is a substantial likelihood that the plaintiff will succeed” and that the TRO was necessary in order to prevent a situation where Intralot had already performed services related to a deal that was void.
While Carragher’s lawsuit only started on 17 September, controversy around the Intralot deal has been brewing for much longer. When the D.C. Council announced Intralot’s contract with the district would be extended without a bidding process in February, Councilmember David Grosso attacked the decision to bypass a procurement process as “a giveaway”. The deal was signed in July.
The deal became more controversial as details of the subcontracting process came to light. According to the subcontracting plan Intralot provided to the District’s chief financial officer’s office, $109.7m worth of work as “operations manager” was to be subcontracted out to a company named Veteran Services Corp (listed as Vital Services Corp. in the subcontracting plan). VSC is led by chief executive Emmanuel Bailey, a major political donor in the District who had sat on the Washington D.C. chamber of contract.
The connections with VSC came into further question when it was revealed by the Washington Post that District records showed the company — which fit the District’s requirement as a locally-based subcontractor — appeared to have no employees and that Bailey was employed by DC09, an Intralot subsidiary, suggesting Intralot was skirting the local subcontractor laws.
In a statement to iGaming Business in August, an Intralot spokesperson said VSC “has met all of the requirements” that were set.
“Intralot has been operating the D.C. Lottery under the existing partnership with great success for the past nine years,” the spokesperson said. “Having generated more than $500 million in net profit for the District of Columbia, it is one of INTRALOT’s most successful operations. The recently awarded contract was scrutinized and debated at great length before getting legislative approval on July 9, 2019. Regarding our local partner, VSC has met all of the requirements that the DC government has set forth, and is a contributor to the successes in this jurisdiction.”
The parties involved in the lawsuit will meet again on 1 October for a status hearing on the preliminary injunction