- The Washington Times - Sunday, January 29, 2012

Odds are slim that the District’s first-in-the-nation bid to launch online gambling through the D.C. Lottery will go forward without further review, D.C. Council members say.

Jack Evans, chairman of the D.C. Council’s Committee on Finance and Revenue, said he did not want to tip his hand but hinted that he would act swiftly on a bill introduced by council member Tommy Wells, Ward 6 Democrat, to repeal authority for online gambling. Mr. Evans’ committee on Friday heard hours of testimony on the proposal and Inspector General Charles J. Willoughby’s overdue report on it.

“To say we approved [online gambling] is a misnomer,” Mr. Evans, Ward 2 Democrat, said after the hearing. He was referring to a December 2009 vote to approve the city’s $38 million lottery award to Greek firm Intralot and partner Veterans Service Corp.

“We approved the chief financial officer’s ability to add options to the lottery contract, but we were talking about scratch-off lottery games, not an entirely new concept,” Mr. Evans said.

Veterans Service, headed by Maryland businessman Emmanuel S. Bailey, was appended to the deal only after council members insisted on a local presence.

The gambling concept, known as iGaming, has evolved in phases. After the council approved the lottery award, Chief Financial Officer Natwar M. Gandhi approved a March 2010 contract between Intralot and DC09, a subcontractor consisting of Intralot and VSC — then a new firm that had never worked with lotteries but which still received a 51 percent share of the joint venture’s profits.

“Even that contract was not forthcoming,” Mr. Evans said of technical language in the 2010 pact that he said failed to explicitly address iGaming.

Mr. Wells said an amendment to a contract for more than $1 million must come through the council and pointed out that council member David A. Catania, at-large independent, threatened to sue Mr. Gandhi’s office if the contract is not returned to the council for an up-or-down vote on iGaming. Mr. Wells also said he would join Mr. Catania in such a lawsuit.

Though lawmakers in December 2010 approved an iGaming provision that council member Michael A. Brown, at-large independent, added to a budget bill, Mr. Evans, Mr. Wells, Mr. Catania and others are not satisfied.

“Most of the council was not aware that [iGaming] was in the budget bill,” Mr. Evans said.

Even if Mr. Evans moves the Wells repeal bill out of his committee, iGaming would go before the council’s Committee of the Whole, where its limited support could evaporate.

Express concern

Phil Mendelson, at-large Democrat, co-sponsored Mr. Wells’ bill, and council Chairman Kwame R. Brown, a Democrat, has said he opposes all gambling on principle. Muriel Bowser, Ward 4 Democrat who also sits on the committee on finance and revenue but who did not attend last week’s hearing, has said she is uncomfortable with the entire venture, though she has expressed concern about making up the projected revenues if iGaming is dropped.

Jim Graham, Ward 1 Democrat who has been criticized over emails that suggest he offered to support a previous lottery vendor if the vendor dropped an unrelated development project near a Metro station, is not well-positioned to take a stand with Mr. Brown.

Supporters of online gambling include Marion Barry, Ward 8 Democrat, and most likely Yvette M. Alexander, Ward 7 Democrat who is facing re-election and has received campaign finance support from Mr. Bailey, his family and friends.

In addition to concluding that Mr. Gandhi’s office “materially changed” the lottery award after its approval to include iGaming, the inspector general in his report found that Mr. Bailey’s company misrepresented its business activities during its bid for the lottery contract, as reported by The Washington Times in 2010.

Mr. Wells and Mr. Evans reserved specific comment on Mr. Bailey and his 51 percent take in the lottery contract, though Mr. Evans expressed reservations about the award and the approval process.

“It really comes out in the inspector general’s report that decisions were not the wisest,” Mr. Evans said. “The report found no illegality, but the process could have been better. It’s the largest contract in the District, and it hasn’t come up for review in how many years? There’s a lot of money at stake, and politicians and people were jockeying for position. We ended up with something not squeaky clean and full of political machinations.

“It doesn’t give the public confidence. If a bill were introduced that brought further review of the lottery contract, I’d support that and further review of qualifications in light of issues the inspector general raised.”

The lottery contract attracted media attention when a firm whose founder had ties to former Mayor Adrian M. Fenty, a Democrat, partnered with Intralot and won the award in 2008. However, after then-council Chairman Vincent C. Gray and his colleagues — including Mr. Evans — scuttled the award, a second round of bidding went largely unexamined.

But after a contract officer fired by Mr. Gandhi sued the city claiming retaliation for resisting political pressure during the procurement process, The Times examined the process in a series of articles in 2010 that showed irregularities, along with Mr. Gray playing a key role in moving aside one local vendor in favor of another.

When Peter J. Nickles, then the city’s attorney general, and David P. Gragan, then the chief procurement officer, asked the inspector general to investigate the lottery contract, Mr. Willoughby said his office would act.

More than a year later, after news reports showed that Mr. Brown failed to disclose his ties to a firm that works in the gambling industry and after a small but vocal grass-roots movement objected to iGaming, The Times found that key witnesses still had not been interviewed, and it reported that the lottery investigation had never gotten off the ground, prompting Mr. Evans to contact Mr. Willoughby.

“It was only after I asked him to do it that he moved it forward, and by then iGaming became the focus,” Mr. Evans said, noting that the report is the product of a delayed investigation that went far enough to signal the need for further council review.

Mr. Gray’s office last week insisted the inspector general’s report exonerates him of misconduct. Yet Mr. Gray, a Democrat who is now mayor, also has said the inspector general never interviewed him.

“I’m disappointed the report was not more expansive,” Mr. Evans said. “I wish [the inspector general] had gone further in his investigation of the lottery contract, but there’s no reason he could not still do it.”

• Jeffrey Anderson can be reached at jmanderson@washingtontimes.com.

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