An earlier version of this article included an incorrect list of states where Intralot, an international provider of gambling services, has contracts. The company runs lotteries in Idaho, Montana, Nebraska, New Mexico and South Carolina.
Contract Controversy Reveals Lottery's Tangled Roots
Sunday, May 18, 2008
Jerry Cooper, the man who helped bring legalized gambling and the lottery to the District nearly 30 years ago, called local businessman Warren C. Williams Sr. with a suggestion last year.
The District's contract with Lottery Technology Enterprises, the firm that has run the city's online gaming for about 25 years, was going to expire by 2009. Would Williams be interested in bidding against LTE for the lucrative contract?
No, but maybe his son and daughter-in-law would.
So Alaka Williams, the daughter-in-law, decided to take on LTE. And therein are the roots of what has been a nasty and aggressive battle over a city contract, a contest complete with accusations of bias and incompetence.
Alaka Williams tells her story from a plush, white chair in the Eastern Market headquarters of W2I Ventures, the joint enterprise that her 10-month-old company, W2Tech, formed with Intralot, the world's second-largest gaming services provider. W2I Ventures has gone head-to-head against LTE, a joint venture between locally owned New Tech Games and the world's top lottery powerhouse, GTech.
The spoils: a contract, if extended over 10 years, worth more than $120 million. The lottery has more than $250 million in annual sales, city officials say, and generates $68 million to $72 million a year in revenue for the District. W2I won the bid -- or so it thought.
The coup has stirred up controversy, pitting Alaka Williams's company and her friends against LTE and its friends. There are fathers and their children, husbands and wives, fraternity brothers and former co-workers, and plain old good buddies mixed up in what has become an operatic scene of charges and countercharges. LTE has filed a complaint with the Contract Appeals Board, which is to review the grievance tomorrow.
The lottery, it turns out, is a messy, incestuous business.
Intralot, GTech and a third firm, Scientific Games, are the only competitors for contracts in 41 states and the District. They trade employees like the plastic pieces on a Monopoly board. "It's a very small industry. When somebody hires somebody or lets someone go, they give their résumé to the other company," said Tom Little, president and chief executive of Atlanta-based Intralot USA and a former employee of Scientific Games.
"Sometimes, it gets a little too focused on who knows who," said Robert K. Vincent, a senior vice president of Providence, R.I.-based GTech.
The industry might be small, but it has little on the District's intimate business and political circles, where everyone knows everyone and the degrees of separation can be razor thin.
Last week, the D.C. Council, with several members who thought the contract was radioactive, voted 11 to 1 to table it, a move that would have essentially killed the deal and left LTE in place by default. Except that Mayor Adrian M. Fenty (D) immediately resubmitted it, supporting the recommendation of Chief Financial Officer Natwar M. Gandhi.