D.C. Council Must Put Politics Aside in Choosing a Lottery Company

By Marc Fisher
Sunday, July 27, 2008

Just for fun, I asked a bunch of D.C. Council members why it has been so hard to decide between the company that has run the D.C. Lottery for the past 25 years and an upstart challenger that, according to independent consultants, is offering to do a better job at a lower cost.

Could it be that the incumbent contractor, Lottery Technology Enterprises (LTE), is a generous donor to council members' campaigns and backed the wrong horse in the last mayoral race, providing big bucks to loser Linda Cropp and only a perfunctory gift to Adrian Fenty?

Oh, no, says council member Jim Graham, the Ward 1 Democrat: "If we were to make political donations a problem in getting a contract with government, we wouldn't have any contractors doing business with government."

Why might council members be reluctant to get rid of LTE even though the company uses decades-old technology and suffered the worst security breach in U.S. lottery history?

"Politics," Graham says.

Council member Marion Barry of Ward 8, not exactly the abstemious kind, abstained the last time the lottery contract came up for a vote. "How are you going to leave politics aside on this?" he asks. "All the people involved in this are politically connected. This thing is as red hot as a baked potato." Then Barry uncharacteristically clammed up: "I don't want to discuss this anymore."

The lottery deal is a multilevel mess. It's a face-off between two of the world's biggest lottery companies, GTech (LTE's partner) and Intralot. It's a battle between two powerful Washington families that are the big companies' local partners: Leonard Manning, who's with LTE, and Warren Williams, a longtime landlord and nightclub operator whose relations created W2I, the challenger for the contract.

And it's a standoff between the council, which doesn't want to anger Manning, and Mayor Fenty, who is eager to push out companies that have long-standing sweet deals with the city.

LTE argues that W2I, run by Williams's daughter-in-law, Alaka Williams, is inexperienced and that the family has a checkered background, including housing code violations at an apartment building owned by her husband, Warren Williams Jr., and a fatal stabbing at a U Street club the family owned.

W2I, in turn, contends that LTE has a long and unimpressive record, failing to adopt new games that are big draws in other states and using what Intralot official Byron Boothe calls "primitive radio-operated communications" to connect with ticket retailers. Alaka Williams points to Manning's 1973 arrest on a charge of operating an illegal lottery. That charge was dismissed, and Manning, who did not return my calls, has always denied involvement in illegal gambling. Manning's father, Peyton Manning Sr., known as "Killer," was described in D.C. police reports as one of the city's top illegal numbers operators. Police estimated in the late 1970s that his numbers business took in $12 million a year.

Buried beneath the politics are the merits of the situation, which weigh in favor of the challenger. The District's chief financial officer concluded that switching lottery contractors would save about $5 million a year. The office says LTE uses the oldest lottery technology in North America and proposes to charge the District much higher fees than W2I would -- taking 3.2 percent of sales receipts, as opposed to W2I's 2.3 percent.

LTE spokeswoman Ann Walker Marchant says the lottery operator was denied a chance to meet W2I's offer and would have installed new equipment but didn't because the city preferred to spend that money to add a keno game.

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