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The last time that Robert B. Washington Jr. got himself involved in a D.C. lottery procurement, it was 1983.
A powerful lawyer close to recently re-elected Mayor Marion Barry, Washington was hired by a group called Columbia Gaming Services to press its bid to run the District’s first daily numbers game. Alas for Columbia, a young upstart named P. Leonard Manning took on the entrenched political insiders and won the lucrative contract.
Twenty-six years later, the young upstart is now the entrenched political insider. And Bob Washington has gotten another chance at the lottery contract.
The return of Washington, once as high-powered a lawyer as could be found in this town, is yet another twist in the vicissitudinous lottery saga. These days Washington is chairman and CEO of Caribbean CAGE LLC, a U.S. Virgin Islands–based outfit that holds licenses to operate “video lottery terminals” (essentially slot machines) in a number of Central American and Caribbean countries. CAGE’s primary investor is none other than Robert L. Johnson, the Black Entertainment Television founder and business mogul, who told the Washington Post in February that he intended to pursue the D.C. lottery contract.
CAGE’s path to the lottery contract, and Washington’s prodigal-son-like return, has been cleared by the decision of Lottery Technology Enterprises—the longstanding partnership between dominant lottery firm GTECH and Manning—to split up. According to three sources with knowledge of the situation, LTE will not pursue the latest lottery procurement, bids on which are due June 26, ending a relationship that stretches back to the 1983 contract.
Bob Vincent, a GTECH spokesperson, confirms that his company is no longer committed to partnering with Manning et al. “We like and respect those folks,” he says, “but we are in fact looking at various options in respect to the upcoming bid.” Manning did not respond to requests for comment.
The split follows a yearlong drama surrounding the award of a new contract to replace the arrangement that is set to end this fall. The contracting process at first looked poised to hand the District lottery operation over to a new generation of politically connected businesspersons, but the old-timers have shown they still know how to play the game in Mayor Adrian M. Fenty’s Washington.
To recap: LTE last year submitted a bid to extend its hold on the contract, but the Office of the Chief Financial Officer deemed the bid both more expensive and technically inferior to that of W2I, a partnership between multinational Intralot and local partner W2Tech—run by Alaka Williams, wife of businessman and Fenty friend Warren C. Williams Jr. In 1983, upstart Manning was able to fend off the political establishment’s opposition, but in 2008, upstart Williams couldn’t manage it: For various reasons, the award became a political hot potato in the D.C. Council, resulting in the contract being essentially rejected by the council last December.
In the middle of all of that, LTE was fined $1.4 million by the D.C. government for a massive security breach in 2006 that led to tens of thousands of dollars in ticket fraud. LTE called the unprecedented fines politically motivated; they have yet to be paid.
A new request for bids was issued last month, and changes in the weighting of various city requirements were considered to be generally favorable to LTE. But the toxic political environment remained.
Where does that leave the future of the D.C. Lottery?
There is some good news for LTE: Because the process has dragged on for so long and because it shows no sign of ending soon, the District will likely have no choice but to extend LTE’s contract for at least a year, in what would essentially be millions worth of severance for Manning & Co.
But who takes over after that?
Due to the vagaries of the District’s contracting process, the major multinational corporations that actually design and produce lottery equipment have to partner with locals in order to take advantage of provisions that favor local ownership. There’s but three big players: GTECH, Intralot, and Atlanta-based Scientific Games Inc. GTECH—the king of American lottery vendors, running the majority of government-sponsored games in the country—threw its lot in with Manning for the original bid last year and is now uncommitted. Intralot is currently attempting to have the original award enforced through various avenues; it is reportedly wavering on whether or not to participate in the rebid. That leaves Scientific Games, which currently does the D.C. Lottery’s scratch-off tickets. That outfit was once said to be hesitant about entering a politically fraught process but has been receiving preliminary bidding information from the CFO’s office. One other vendor, smallish Canadian Bank Note, has also received bidding information.
As for the aspiring locals, Charles Hopkins, a little-known businessman invested in airport retail and other real estate, has been making the rounds with councilmembers over the past year, promoting himself as a relatively clean option; he’s rumored to be pursuing an association with Scientific Games. Another rumored possibility is that LTE might resurrect itself in some fashion without Manning. But neither of those possibilities has the political sexiness as a CAGE bid, if for no other reason than the big names and big political connections that come with it.
That goes for both Washington—the rare creature with deep local connections and ties to the Hill and abroad—and for Johnson, who parlayed his D.C. roots into billonairedom. A spokesperson for Johnson said this week that his companies are “not engaged or involved” in a lottery bid. Truth is, they already have been.
Eric W. Payne, then contracting chief for the Office of the Chief Financial Officer, says Washington called him last May, well after the lottery issue had blown up politically. Washington wanted to know if the city would be willing to take an unsolicited bid. Says Payne, “My response was that we had gone through a competitive and open bidding process. It was unfortunate that they chose not to participate in that.”
After that, Payne says, the Johnson group had pressed its case elsewhere in the CFO’s office and to various councilmembers. “It was made clear to me,” Payne says, “that they were viewed as a viable alternative.” Payne says his boss, CFO Natwar M. Gandhi, and certain councilmembers asked him to reopen bidding.
Payne says he refused to short-circuit the original process. He was fired by Gandhi in January.
David Umansky, Gandhi’s spokesperson, says that Payne’s claims are “absolutely not true,” and that the current contracting director, Joseph Giddis, reports no contact from Washington or any other CAGE representative.
In his heyday, Washington parlayed his post as head of the local Democratic party into a spot in Barry’s mayoral inner circle—even though he was a top adviser to Barry’s 1978 opponent Sterling Tucker. At one point in the early ’80s, Washington’s car sported a No. 2 license plate—the low tags don’t get much lower than that. In Dream City, their 1994 tome on Barry’s Washington, reporters Harry Jaffe and Tom Sherwood describe Washington as being part of a tennis-playing clique, “something of a kitchen cabinet” to Barry, that included former top aides Elijah B. Rogers and David E. Rivers, and lawyer and lobbyist David W. Wilmot.
Wilmot, of course, is still very much active in lawyering and lobbying in this town. He is said by several sources consulted by LL to have some role in a Johnson/Washington group, whether in a equity or lobbying capacity, and he turned up earlier this month to collect a $79.6 million check from the D.C. Lottery on behalf of an anonymous Powerball winner. Wilmot failed to return several phone calls.
While Wilmot has largely maintained his influence since his Barry-era heyday, Washington and Johnson have been out of the local scene for some time.
Johnson has largely stayed out of local political doings since being outmaneuvered by Abe Pollin in the battle to build a downtown arena in the mid-’90s. He’s also smarted from his last high-profile venture into government contracting in this town, as head of District Cablevision Inc., the company handed the District’s first cable-TV franchise. For years, DCI was criticized for being widely pirated and offering lousy customer service.
Washington essentially disappeared from the local scene after the twin implosions of his high-powered law firm and the National Bank of Washington, on whose board he had served. The bank was seized by the federal government in 1990, and Washington, Perito & Dubuc fell apart a year later, leaving behind some $20 million in debt and bankruptcy proceedings that persisted for years. But in the years leading up to the firm’s demise, Washington had built a lucrative practice representing small foreign governments in various business and regulatory matters—countries including Nigeria, Angola, and Antigua, and Barbuda.
To read Washington’s biography on the CAGE Web site, his foreign legal dealings gave him his entree into the lottery business: “In 1994, Mr. Washington was offered an exclusive gaming license by the government of Antigua and Barbuda to manage and operate the government owned electronic lottery. This initial opportunity catapulted the growth of this operation into 6 other Caribbean countries during the next 5 years.” That operation, Leeward Island Lottery Holding Co., was sold to GTECH in 2004. If you think that points to a potential CAGE-GTECH deal, also note this: CAGE has also recently entered into partnerships with Scientific Games to install video lottery terminals in various overseas locales.
Scientific Games, through a spokesperson, declined to comment on any pending bid, and GTECH’s Vincent declined to speak of any other potential local partners. “Because it’s a competitive procurement,” he says, “we’re going to obviously play our cards pretty close to the vest.”
Political Potpourri
• Local politicos earlier this week made their way to Las Vegas for the yearly International Council of Shopping Centers trade show, where it was suddenly 2002 all over again.
In attendance, LL is told, were such erstwhile notables as Mayor Anthony A. Williams; his onetime top economic aide, Eric Price; former Ward 5 Councilmember Vincent B. Orange Sr.; and former Democratic State Committee chair A. Scott Bolden.
What, Linda Cropp couldn’t make it?
On Monday evening, Williams held court at a reception in honor of his successor, held by his new employer, the law firm Arent Fox, in the Alsace Room at the Wynn Las Vegas; later, Williams followed the crowd to Wing Lei restaurant in the Wynn for a Pepco dinner hosted by CEO Thomas Graham and Orange, now a top exec for the utility.
The Sin City reunion is a homecoming of sorts for Williams, who started the yearly tradition of attending the Vegas confab during his years as mayor.
Those who arrived in town early were feted by Bolden, managing partner of Reed Smith’s D.C. office, at the Paris casino. On Tuesday night, after LL’s deadline, law firm Holland & Knight was scheduled to host the D.C. crowd poolside at Caesar’s Palace, with a developer’s reception to follow.
Those expecting legislative-executive friction far from home, LL is told, were sorely disappointed. One typically contentious relationship—that between Kwame R. Brown and Neil O. Albert—didn’t have the chance to degenerate any further.
For one thing, Brown won’t have Albert to kick around as deputy mayor for planning and economic development now
that he’s been promoted to city administrator. For another, Brown opted not to make the trip—a surprising move for the chair of the council’s economic development committee.
Brown did not return several calls from LL for comment.
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