“We don’t discuss ongoing investigations,” D.C. Inspector General Charles J. Willoughby told me this week. “We don’t confirm or deny that an investigation is underway,” he said.
But I concluded from reading between the lines of our conversation that Willoughby is pursuing the July 2010 request by the city’s then-attorney general, Peter Nickles, for an investigation of the D.C. Council’s involvement in the award of the city’s $38 million lottery contract.
If that is true and if Willoughby turns loose his investigators (that’s a big if), the inspector general may penetrate the veil of secrecy cloaking the council’s online gambling shenanigans as well as determine the extent to which — if at all — political connections and cronyism have led to waste and abuse in the lottery procurement process. We might also learn the truth about how iGaming became a part of our civic life.
One thing’s for sure: It’s all about the money.
The DC Lottery is perhaps the last get-rich-quick scheme in the District. I’m not talking about those folks who play daily numbers games.
There’s an even more sure-fire way to make a killing: run the lottery. As with real estate, getting in the D.C. lottery business is a matter of location, location, location.
That’s because city procurement laws give preferential treatment to “certified local, small and disadvantaged businesses.” In reality, companies qualified to equip lottery systems aren’t found in the District.
The city, however, is a lucrative gambling market. To operate here, companies with lottery expertise have to hook up with a local partner, preferably one that knows its way around the John A. Wilson Building.
The big companies sometimes are guided to a potential local partner by politically connected fixers. The skilled outsider and the local partner then form a joint venture. And the local partner gets a hefty equity stake, just for being . . . well, local, small and disadvantaged.
I do not lie.
Case in point: Intralot, the Greek gambling company that was awarded the lottery contract in December 2009. Ward 8 council member Marion Barry told Jeffrey Anderson of the Washington Times in July 2010 that he let Intralot know it needed to take on a local partner if it wanted the council to approve the pact. Barry, according to the Times, said: “I sent word that the contract was DOA without a local partner.”
Continuing, Barry said, “I saw an opportunity for a reputable, substantial black businessman to get into the lottery business.” Barry was speaking of Emmanuel S. Bailey, whose local firm, Veterans Services Corp., got a majority stake in the $38 million contract. “I commend Mr. Bailey on his maneuverability to get himself 51 percent of the deal,” Barry told the Times. (Former council member Kevin P. Chavous, who represents Intralot in D.C., assured me in a phone call that everything was done aboveboard. Bailey also has stated that he didn’t get any inappropriate help with the contract.)
Once in the venture, the local partner sets the lever on cruise control. The big company has the savvy to put together a contract proposal with all the fancy language and technical know-how. The local partner merely has to be in compliance with local laws and be able, if required, to run day-to-day lottery operations with, of course, the big company at its side or looking over its shoulder, or doing a bit of both.
It’s easy to see why strings are pulled and deals cut to get in the lottery business. It means lots of ka-ching.
Such days are numbered, however. A fast-melting Chocolate City, and all that, y’know.
Anyhow, the instant issue is whether Willoughby, who at times appears to be a reluctant warrior, will aggressively pursue the former attorney general’s charge that the city’s contract was awarded to a “complete unknown,” inexperienced local firm with questionable credentials. Willoughby also needs to establish how an option to include online gambling was included in the lottery contract when, as civic activist Marie Drissel notes in the InTowner, there was no D.C. law allowing online gambling when the contract was signed.
Drissel also asserts that the online gambling option was “unknown to the public, almost all of the Council Members, and even the losing bidder, GTech.” That needs sorting out.
So, too, the contributions to election campaigns and constituent service funds of council members who supported the contract — you remember it was for $38 million, right? — and the lucrative online contracting business, both of which went to Bailey’s companies and Intralot.
Much to do.
Question: Will Willoughby wield a big stick or will he wimp out?
I reported on Aug. 6 that D.C. Council member Michael A. Brown (I-At Large) attended the Global iGaming Summit and Expo in San Francisco in May, at D.C. taxpayer expense, to tell nationwide gambling interests about his success in sponsoring online gambling in the District.
The column quoted an e-mail from Brown that said: “The travel, approved by the Council, was standard governmental business to market the innovative legislation.”
In response to my inquiry Karen M. Sibert, deputy chief of staff in the Office of the Chairman of the D.C. Council, advised me via an e-mail on Aug. 19 that, “The Council does not approve members’ travel. Each member has a discretionary budget for such expenses.” Sibert provided documentation of Brown’s reimbursement request for travel expenses to San Francisco.