Gray outmaneuvers Fenty on lottery

Political wrangling in backrooms plays a role in approval of contract

continued from page 4

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The disqualification cost GTech 12 points. It lost to Intralot by 11.

But the game was not over.

Soon after Intralot won the second round of bidding and was awarded the contract in October 2009, its representatives realized they could not get final council approval unless they had a local partner — and to get that approval, they needed to gain Mr. Gray’s support.

Mr. Bailey, who formed a company in June 2009 partly to get into the lottery business, at one time had been considered as Intralot’s local partner, but dropped out — only to reappear later.

“It was clear we needed to establish ourselves as a credible partnership,” Mr. Boothe said. “We recognized that it’s important for D.C. to have local partners associated with its lottery contract.”

Deal or no deal?

In December, the council approved the award before that partnership was formed. According to city records, Mr. Bailey’s firm was not certified as a company in Delaware until March 1, and was not registered in the District until March 29.

According to Mr. Boothe, Mr. Bailey — a longtime Maryland resident who owns a business in Virginia — owns 51 percent of the joint venture that will run the D.C. Lottery. Mr. Bailey’s company, Veterans Services Corp., until recently did business out of his mother’s house on Mississippi Avenue in Southeast D.C.

Mrs. Bailey is the company’s chairman and will handle local hiring for the lottery joint venture.

“Intralot has the contract with D.C. and bears all the responsibility,” said Mr. Boothe. “But Emmanuel will be and has become a key figure in our D.C. project.”

Asked whether Mr. Chavous and Mr. Bailey had secured Mr. Gray’s support for the 2008 lottery contract, Mr. Boothe said he was unaware of any such meetings. Mr. Booth also said he knew of no business relationship between Mr. Bailey and Mr. Chavous.

“I’d be startled if they had any sort of partnership or significant relationship,” he said. “That would be more than a small conflict.”

However, both Mr. Boothe and Mr. Chavous said Mr. Chavous provided unrelated legal services to Mr. Bailey with the consent of Intralot.

Mr. Chavous denied any business relationship with Mr. Bailey. The two friends will host a fundraiser at Mr. Chavous’ law firm this summer for council member Yvette M. Alexander, one of Mr. Gray’s staunchest allies.

“Having the D.C. Council review and approve contracts is a recipe for disaster,” said Mr. Payne. “They are awarded on the basis of relationships. That has an effect on vendors, which hurts competition, and eventually the city.”

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