Council vote throws D.C. Lottery’s instant ticket business in doubt


D.C. Lottery customers might not have tickets to scratch off later this month. (Jeffrey MacMillan/For Capital Business)

The drama that is the lottery business in the District continues, and it doesn’t appear to be close to ending anytime soon.

The D.C. Council on Wednesday evening, citing concerns about local subcontracting, declined to approve a new $9.7 million, four-year contract to produce, deliver and distribute instant scratch-off lottery tickets. The vote has city finance officials warning that a business worth $12 million a year in city government revenue could be in jeopardy, with a temporary contract set to expire in less than two weeks.

“We will be the first lottery ever to walk away from instant tickets,” said David Umansky, a spokesman for the Office of the Chief Financial Officer, which oversees the D.C. Lottery.

The council’s move is rooted in questions over whether the contractor, Scientific Games International, hired enough local subcontractors to meet the city’s standard 35 percent requirement. The company subcontracted 17 percent of the contract’s value and sought a waiver from the 35-percent requirement, saying it could not farm out any more business without giving away its proprietary functions. But the city department that grants the waivers was not convinced, writing in a Monday letter that information provided by the company did not “sufficiently justify” an exception.

All of this, it should be noted, is separate from the long-running controversy over the political machinations behind the lottery’s numbers games.

During a breakfast meeting before the council vote Wednesday, Jack Evans (D-Ward 2) did not appear especially concerned that the disapproval would interrupt the instant-ticket business. But with a temporary contract extension requiring council approval, and with the council ready to leave on its two-month recess, it is not clear how soon and under what circumstances it might be approved.

Council Chairman Phil Mendelson (D) said outright on the council dais that any threats that the lottery would put its instant-ticket business on hiatus amounted to bluffs. “If the CFO cares about the roughly $800,000 a month in revenue … you can be sure, you can be damn sure, he’s going to extend it,” he said.

Mendelson went on to criticize the CFO’s office for offering up “another mess … that smells” related to the lottery. “I told the CFO a month ago they have to have clean hands, and they don’t,” he said.

The contract, Umansky said, will now be rebid — a process that will take a minimum of six months. It remains unclear who will bid or whether they will be able to make the 35 percent requirement. A Scientific Games representative declined to comment.

Mike DeBonis covers local politics and government for The Washington Post. He also writes a blog and a political analysis column that runs on Fridays.
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Mike DeBonis | July 10, 2013