The private firm that operates the D.C. instant-winner lottery game yesterday denied allegations of mismanagement and financial irregularities and contended that the "unfounded aspersions" came from a disgruntled partner company that hopes to compete against the firm for future contracts.
The war of words between the two firms--Games Production Inc. (GPI), which runs the instant game, and Scientific Games, an Atlanta-based company that provides the scratch-off tickets for the game--came in an exchange of letters amid several other developments in the months-long controversy over legal gambling in the District:
* D.C. Lottery Board officials confirmed yesterday that the city's Office of the Inspector General has begun an investigation into the handling of $2.2 million paid to La Mancha, an advertising arm of GPI.
* The House Appropriations subcommittee on the District, which controls the city's purse strings, sent a sharply worded inquiry to the lottery board about what it called "high-pressure tactics used by Mayor Marion Barry and his aides to intimidate the lottery board and interfere with its selection of a company" to run a planned new daily numbers game similar to Maryland's.
* Lottery board Chairman Brant Coopersmith said the board plans to go ahead with a scheduled meeting today at which it is expected to select a firm to operate the new daily numbers game.
Most of the activity yesterday centered on the allegations of mismanagement on the part of GPI, a Washington-based, minority-owned firm, that were contained in a letter sent on June 13 to GPI's chief officer by John R. Koza, chairman of Scientific Games. The letter was sent to end Scientific's joint-venture relationship with GPI, a company official said.
Council member Nadine P. Winter (D-Ward 6), who oversees the lottery board, on Wednesday cited Scientific's letter in asking the lottery board to delay any action on new contracts until the board can meet with her on Monday. Winter also asked Barry to hold off on any appointments of new board members "until we can get this matter straightened out."
Through his press spokeswoman, Barry yesterday declined to comment on the congressional inquiry or Winter's request.
Coopersmith attempted to downplay the fight between the two firms. "These are two business partners who are falling out and will be in competition with one another," Coopersmith said.
"Why was this thing Scientific's letter put together and surfaced at this moment? Some people might conclude that it makes sense that they were out to damage Games Production and the competition, but I don't like to think like that . . . ," Coopersmith said.
Koza complained in the letter that GPI had obtained a $450,000 loan in April to cover a cash shortage from a still-undisclosed financial backer and that the firm had improperly handled its advertising accounts.
Koza's five-page letter also complained that William N. Suter, chief executive officer of Games Production, had received stock in that company. Koza said the transaction jeopardized Scientific Games' other business relationships with the gambling firm Bally Manufacturing, which operates gambling casinos in Nevada and New Jersey, because Suter had been convicted of two illegal gambling charges in 1970.
In a six-page response yesterday, Suter charged that Scientific Games had made no effort to substantiate any of its allegations and criticized the Atlanta firm for failing to fulfill its own contractual obligations.
" . . . You persist in promoting the notion that there has been financial mismanagement . . . ," Suter wrote. "These allegations to our knowledge have not arisen as a result of any audits of GPI books . . . ."
La Mancha, the advertising arm of Suter's firm, sent a separate letter to the lottery board promising full cooperation "with any proper financial review of our records" and saying that the firm had already "begun to work with the Office of the Inspector General on this matter."
La Mancha, which is run by Suter's wife, Teresa M. Suter, has the rights to all advertising for the instant lottery as part of an agreement with her husband's company.
In addition, an official of La Mancha said the firm has arranged to provide advertising for Lottery Technology Enterprises, the joint venture firm which is considered the leading bidder for the new daily numbers game.
Neither William nor Teresa Suter returned a reporter's telephone calls yesterday.
In addition to naming a firm to operate the daily numbers game, the lottery board is also scheduled today to license 300 businesses that will receive computer terminals to sell daily number tickets.
The terminals, which are expected to go to many of the same vendors now selling instant-winner tickets, have been eagerly sought by many hoping to attract more customers to their businesses.
The board also is expected to recommend that a respected accounting firm, such as Arthur Anderson, conduct a study to determine whether District government employes should run the instant-winner game rather than private firms under contract.