Mike DeBonis
Mike DeBonis
Reporter

D.C. lottery contract saga keeps rolling on

It’s the D.C. political controversy that just won’t end.

It was first reported in the pages of this newspaper 31 / 2 years ago, on April 7, 2008: “Chief Financial Officer Natwar M. Gandhi and Mayor Adrian M. Fenty want to award a contract worth more than $120 million to a nine-month-old company to run the District’s lottery games. But some D.C. Council members say they have questions about the proposal and the firm’s principals . . .

To close followers of city politics, the dimensions of the lottery contract saga are rather well-established. Gandhi’s office awarded the contract, among the city’s most lucrative, to a joint venture that included an ally of Fenty’s.

Why was that so? Despite the rarefied nature of the lottery business, where there are only a handful of global competitors qualified to install and run a system of requisite type, the District’s contracting laws — and more important, its political customs — are such that it helps the global giants to have a local partner involved. The contracting laws have another provision, too — that the council gets a chance to review all contracts of a certain size. And the lottery contract, in nine-figure territory, was definitely of a certain size.

Once it got to the council, politics kicked in, the steel-toed kind. The upshot was that some members were not too happy to see this particular mayoral ally in the local partner’s catbird seat. Some other members were not too happy to see anyone new in that seat, given their fond relations with the old local partner. Together, it was enough to hold things up for a year until Gandhi agreed to withdraw the contract award and open it for new bids.

A new winner was selected that happened to be the old winner, minus the controversial local partner. A last bout of controversy erupted after the last-minute addition of a new local partner to smooth the second attempt at council passage. It worked: The contract passed legislative muster, and in October, the new guys took over.

End of story. But not quite. The story lives on despite the desire of most of the city’s officials (and, sometimes, this reporter) to move on to other subjects.

For one, former contracting chief Eric W. Payne, who was a key figure in Gandhi’s office, is suing his old boss, alleging that he was fired after refusing to bow to political pressure and cancel the original contract award. He is seeking to question numerous city officials under oath, including Mayor Vincent C. Gray, and has a treasure-trove of documents, e-mails and recorded conversations that threatens to leak out in a drip, drip, drip of court filings in the coming months. Last week, he filed an affidavit that included excerpts from a recorded conversation with a Gandhi deputy who ascribed the contract drama to a particular council member’s “personal vendetta.”

And then there’s “iGaming,” the preferred industry euphemism for legalized Internet gambling, which is on the cusp of reality in the District after a D.C. Council member slipped it into budget legislation in December. There are some compelling arguments for the government pursuing a share of the lucrative online gambling market, but the initiative has proceeded under a cloud of suspicion — owing in no small part to the way the legislation was, in the words of one critic, “clearly engineered to minimize public notice.”

On Tuesday, two council members introduced legislation to roll back the online gambling authorization. But city officials are plowing ahead with the program, as the lottery contract holders protest that they could be on the hook for millions of dollars in losses if it is canceled.

So the lottery saga rolls on. With community meetings on iGaming set for the fall, a council hearing to follow, an inspector general’s probe underway and Payne’s lawsuit percolating, it’s nowhere near ending soon. And it’s worth reviewing how we got to this spot, because for all the talk of ethics reform at the John A. Wilson Building right now — there are at least five such bills in the council hopper — the lottery contract shows that improving the way the District government works defies superficial solutions.

Why, for instance, are bidders offered preference for having a local partner, regardless of whether the partner brings any expertise to the table besides political connections?

Why do council members have the opportunity to dismiss otherwise bulletproof contract awards because they don’t like the winning bidder?

Why are council members allowed to place legislation enabling something with such a potential impact as widespread Internet gambling in a bill impenetrable to a layman’s eyes?

Sometime this year or next, lawmakers will pass a bill and declare the work of ethics reform done. Until they get serious about answering tough questions like these, it won’t be.

 
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