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Rule Changes May Help Lottery Technology Enterprises Hold On to D.C. Contract

By Tim Craig and Nikita Stewart
Washington Post Staff Writers
Monday, April 20, 2009

The D.C. government has rewritten its requirements for a new lottery provider, putting more emphasis on quality and less on cost in a continuing tussle over the $120 million contract.

The changes, finalized this month, could benefit Lottery Technology Enterprises in its struggle to hold on to the lucrative contract it has held for 25 years.

Last year, the city awarded the contract to a start-up company that has no experience running a lottery but promised to save the city at least $5 million annually.

Mayor Adrian M. Fenty (D) supported handing over the lottery to W2I, which is run by the daughter-in-law of an influential businessman. The D.C. Council blocked the contract, setting off a struggle between two politically connected families.

The revised proposal, instead of putting a heavy emphasis on which company can operate the lottery at the lowest cost, places a priority on modernizing the system.

David Umansky, spokesman for the chief financial officer's office, said the city is looking for proposals that "make the best uses of technology at an economical price."

But Eric Payne, the former director of contracts in the office of the chief financial officer, said the council and city officials are improperly meddling.

"I frankly think this sort of backroom dealing has a chilling effect and will scare away companies from doing business with the city," he said.

The District had one of the first lotteries in the country, but the system has been criticized in recent years.

The current provider, LTE, is a joint venture involving international lottery firm GTech and New Tech Games, which is owned by P. Leonard Manning, a politically connected businessman.

City officials have criticized LTE for antiquated equipment, glitches and a 2006 security breach that led to $70,000 in fake tickets. Last year, the city fined it about $1.5 million.

Amid the controversy, the contract was awarded to W2I, which is owned by Alaka Williams and her husband, Warren C. Williams Jr. They said they would team up with Intralot, the world's second-largest gaming services provider.

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