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Last week, for the third time, Mayor Adrian M. Fenty submitted the city lottery contract to the D.C. Council for approval. They have so far refused to take a vote on the matter.
Fenty is showing no signs of backing down.
The latest feint: On Wednesday morning, at a breakfast meeting between Fenty and councilmembers, Attorney-General-in-Waiting Peter Nickles took another stab at trying to convince city legislators to bring the matter to a vote. For one thing, there’s the fact that last week the city levied a $1.4 million fine on current vendor Lottery Technology Enterprises for security breaches. And then Nickles provided these facts to the council: In fiscal 2001, the lottery deposited $84 million into the District treasury. By fiscal 2007, that number had dropped to about $65 million, even though the lottery’s revenues had risen.
Nickles, LL is told, encountered a “wall of silence” from the council.
Nickles, in a conversation Wednesday, confirmed that account. Councilmembers, he says, had several questions on other matters he had presented at the meeting, but “on this one, nothing.”
Ann Walker Marchant, spokesperson for LTE, calls Nickles’ analysis of the lottery numbers “mind-boggling.”
She provided LL with a city-produced chart of lottery revenues and general-fund deposits. Under LL’s analysis, 2001 was an unusually good year for the lottery, with about 38 percent of lottery revenues ending up in city coffers; that percentage usually hovers around 32 percent. Marchant attributes the 2001 haul to record Powerball jackpots, which attracted an unusually high number of players. Projections for fiscal 2007 and 2008 show 26 and 28 percent yields, respectively.
Furthermore, she says, how much lottery revenue gets passed on to the District is under control of the city lottery board—-which controls expenses for advertising, vendor costs, salaries, et al.—-not LTE. “We don’t have anything to do with what gets deposited in the general fund,” she says.
Nickles says the purpose of his presentation was that the “bottom line issue is, now we’ve submitted it for the third time, we think you ought to put it on the agenda and vote on it.”
Part of that, Nickles explains, is to maintain the integrity of the city procurement process, where the best bidder gets the contract. And then there’s the numbers Nickles is alleging to be fishy: “There’s only two explanations,” he says. “Either something’s wrong in Denmark, or everyone’s getting lucky.”
The AG-designate did not hesitate to draw comparisons between LTE and the largest embezzlement scandal in District history, Harriette Walters & Co.’s fleecing of the Office of Tax and Revenue. “If any one had ever stepped back and said, ‘Hey, there’s all these repayments!'” he says, the scam could have been avoided. “Well, now we have a lot of winners….That caused me some concern.”
Such comparisons, says Marchant, are “just disingenuous and irresponsible.”
Are there more winners recently? Since the lottery began in 1982, about 51 percent of lottery sales have been paid back as prizes. Nickles’ baseline year, 2001, saw less than the normal amount of prizes paid, with only 47 percent of revenue going back to winners. The last year with hard numbers, 2006, saw 55 percent of sales going to winners—-indicating that local numbers players indeed had a better year. Projections for 2007 and 2008, respectively, were about 54 percent and 52 percent in paybacks.