- Associated Press - Thursday, March 13, 2014

WASHINGTON (AP) - The District of Columbia’s chief financial officer has proposed combining the city’s two long-troubled lottery contracts, saying it would save the city money and ensure sufficient participation by local businesses in the lucrative deal.

CFO Jeffrey DeWitt said in a letter to the D.C. Council on Wednesday that he’d like to solicit comprehensive bids for the city’s numbers-game and instant-ticket business when the numbers-game contract expires next year. The letter was obtained Thursday by The Associated Press.

The city’s $38 million numbers-game contract is held by a joint venture between Greek gaming giant Intralot and local businessman Emmanuel Bailey. A federal grand jury has been investigating the circumstances surrounding that contract since 2012.

Meanwhile, the city’s instant-ticket contract has expired, and its supply of tickets is dwindling. The D.C. Council rejected an instant-ticket proposal last year because it didn’t comply with a district law that requires 35 percent of major contracts to go to local businesses.

No one has been charged in the long-running investigation of the numbers-game contract, which was awarded to the Intralot-Bailey partnership in 2009. Authorities were looking at irregularities in the contracting process and the conduct of several high-ranking district officials, according to people familiar with the probe. Those individuals spoke to the AP on condition of anonymity because they were instructed not to interfere with the investigation.

The CFO’s office has not reported any problems with the partnership’s performance on the contract. Combining the numbers-game and the instant-ticket proposals would appear to put Intralot at a disadvantage to retain the city’s business because the company does not print instant tickets.

“It’s anti-competitive language, at least the way it was listed in the letter, and we’re extremely surprised and disappointed,” said Byron Boothe, Intralot’s vice president of government relations. “The expectation in the lottery business … is that if the lottery company does the right thing, then the extensions are expected. Certainly I think we’ve risen to that level.”

DeWitt said he expected that gaming companies would form joint ventures with local businesses to bid for the combined contract, which he said would bring stability to the city’s lottery system.

“We want to do that through a very open, fair, transparent procurement process where everybody has the opportunity to compete fairly,” he said. “I want a process that’s better than what we’ve had.”

After the council rejected the instant-ticket proposal, the CFO’s office requested new bids, but it rejected the only bid it received because it was 70 percent more expensive than the prior proposal.

Lottery director Buddy Roogow said last month that the city would probably run out of its warehoused tickets by the end of March. The city has ordered small numbers of new tickets through one-time contracts. DeWitt’s letter proposes soliciting short-term contracts from all three North American companies that print instant tickets as a stopgap measure until the numbers-game contract expires.

There has been no apparent progress in the federal probe of the numbers-game contract. However, former D.C. councilmember Michael A. Brown pleaded guilty last year in a bribery case and is cooperating with federal authorities investigating corruption in district politics. Brown led a push for the city to legalize Internet gambling, a potential windfall for the lottery vendors, and his actions were scrutinized by investigators, according to the people familiar with the probe.


Follow Ben Nuckols on Twitter at https://twitter.com/APBenNuckols .

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