Which companies are actually running the District’s decidedly lackluster sports betting program? In the upside-down world of D.C. contracting, answering even that simple question requires playing a maddeningly complex shell game.

The problems with the main company that is (theoretically) managing the operation on behalf of Greek gaming firm Intralot have been well documented: Intralot partnered with a tiny local firm run by political insider Emmanuel Bailey to gain favor from city officials and win the $215 million deal. But Bailey’s company appears to exist only on paper and Intralot is doing most of the actual work. The closer Loose Lips looks at this sketchy, monopolistic sports betting regime, the more it becomes clear that another well-connected company was taking a page from Bailey’s playbook.

The D.C.-based marketing firm Octane Public Relations earned nearly $2.1 million as a subcontractor for Intralot between July 2019 and March 2022, according to documents recently submitted to the D.C. Council by the city’s Office of Lottery and Gaming. But for that entire time period, the “services provided by Octane did not meet the scope of work in the contracting plan,” OLG officials wrote, meaning that the company did not perform all the duties it promised it would, but it got paid anyway.

The documents, submitted to At-Large Councilmember Kenyan McDuffie’s business and economic development committee ahead of annual oversight hearings, suggest that Octane is no longer working on the contract, and an OLG spokesperson confirms to Loose Lips that the company “no longer provides marketing services to OLG as a subcontractor for Intralot.”

The company already has a documented history of not complying with its contract, after D.C. Auditor Kathy Patterson found in a July 2021 report that Octane subcontracted out work to other companies that weren’t small or local (those that are registered as “certified business enterprises” with the city, or CBEs). The auditor found that Octane received more than $179,000 through the third quarter of fiscal year 2020 for work it “did not perform with its own resources,” billing non-CBE companies and effectively circumventing D.C.’s contracting rules. It’s entirely possible this pattern continued for years until the company was booted from the lottery deal. The OLG spokesperson says the audit’s findings were “not related” to its disclosure to the Council, but did not elaborate.

Everett Hamilton, Octane’s CEO, did not respond to a request for comment. If Hamilton’s name sounds familiar, it’s because he ran communications for Mayor Muriel Bowser’s first mayoral bid and former Ward 4 Councilmember Brandon Todd’s 2016 campaign. Octane also boasts one of Todd’s former Council staffers among its account executives, and has won several contracts with other city agencies, making it one of many companies with Wilson Building connections to benefit from the sports betting deal while helping Intralot meet its local contracting obligations.

Byron Boothe, the head of Intralot’s American division, also did not respond to a request for comment. And the OLG spokesperson would not answer additional questions beyond reiterating the agency’s submissions to the Council.

What the agency did say in those documents is that Octane’s “key services provided to OLG are different from the scope of work provided in Intralot’s subcontracting plan.”

“For the most recent portion of the relationship with Octane (2021-2022), their services were almost exclusively social media marketing services (i.e., social media posting, social media listening, social media influencer engagement media mentoring, etc.) and event support,” agency officials wrote.

Octane’s subcontracting agreement with Intralot, recently obtained by LL, makes it clear that the company was responsible for considerably more than just some social media work. The firm was set to be the “lead marketing, communications and advertising agency of record” for the city’s sports betting program to build the brand of the newly christened “GambetDC” betting app. That included “end to end” services such as “digital marketing,” “advertising services for sports betting and online products,” “native advertising,” “behavioral retargeting,” and more, according to the document. And the agreement specifies that if Octane hopes to subcontract any of this work to other firms, it must secure Intralot’s express permission in advance.

When Patterson raised some of these issues in her July 2021 report, OLG challenged her that some of Octane’s expenses, like media placement fees, “should not be considered subcontracting, but rather seen as suppliers and supplies required by marketing agencies to create campaigns.”

“In addition, marketing industry standard practice includes items such as stock photography and still photography costs, animation fees, talent, and production (tv, radio and digital), and are common reimbursable expenses,” OLG officials wrote in response. “This model of operation is common for most advertising agencies.”

These same explanations from OLG did not appear in their recent responses to the Council. And OLG noted that Taoti Creative, which recently won a $70 million contract to provide advertising services for the lottery, is also now handling sports betting marketing efforts. (In that deal, Taoti faced similar accusations from a losing bidder that it was acting as a local front for a Massachusetts-based company; the Council briefly paused the contract’s award to consider those claims, which Taoti strongly denied, before letting the deal go through.)

Losing a local partner such as Octane is much more consequential for Intralot, which needs to meet CBE spending goals to avoid fines (or win more city business). The company has only spent just over $10.5 million with local vendors as of February 2023, according to figures OLG provided to the Council; it’s pledged to spend a total of $119.5 million by the end of the contract’s initial five-year term in 2024.

Plainly, this sort of arrangement is hardly uncommon in the murky world of D.C. contracting, and has dogged the CBE program from its earliest days under Mayor-for-Life Marion Barry. It’s a noble idea to try and force big, out-of-town firms to work with locally owned companies, but those firms have persistently found ways around those requirements despite efforts at crackdowns.

Partnering with a flimsy CBE run by a political operator to give the appearance of local roots is an especially popular method. In fact, D.C. government watchdogs have suspected Intralot of using this arrangement since it won its first contract to run the city’s lottery more than a decade ago. Intralot cocreated the CBE “Veterans Service Corporation” with Bailey as it pursued that deal, but VSC appears to have never employed anyone other than Bailey and his mother. VSC is also the main subcontractor on the current sports betting contract.

D.C. officials with the Department of Small and Local Business Development, which monitors CBE compliance, have raised concerns in the past over the amount of work Octane and VSC are (or are not) doing on the contract, according to their responses to Patterson’s audit. In both cases, DSLBD told the auditor that it reduced how much credit those companies received toward hitting their goals for CBE spending on the contract. But Patterson dinged both DSLBD and OLG for failing to exercise proper oversight, noting that the agencies regularly accepted the company’s claims about their work without seeing any supporting documentation.

Officials pushed back against some of Patterson’s claims and pledged improvements. But Patterson noted in a February report following up on past audit recommendations that the problems persist: “We were not provided evidence that OLG is receiving and reviewing monthly invoices” for all CBEs, Patterson reported.

Yet Intralot isn’t in much danger of facing consequences even if the agencies did conduct more rigorous oversight; the firm isn’t eligible for any fines until the end of the contract next year. The deal even gives the city the option to extend the contract for up to five more years, if it chooses.

That’s why, Patterson tells LL, it ultimately falls on the Council to press for details and raise a stink before it comes time to decide on Intralot’s future. Former At-Large Councilmember Elissa Silverman proposed a bill just before McDuffie bested her last fall that would have barred Intralot from winning an extension of the contract and opened D.C.’s market to private competitors. Despite their personal enmity, McDuffie showed at least some openness to Silverman’s proposal at the time.

Maybe these pointed questions to OLG, poised by one of his observant committee staffers, suggest there’s reason for hope yet for the idea.