Sunday, February 12, 2012

Postscript: The 2:17 a.m. bill

Prior to taking the full council vote on repeal of the District's Internet gambling law, the Finance Committee produced a report on the matter.

The report points out that the bill authorizing Internet gambling, approved by the District Council in December, 2010, "was not circulated until 2:17 am the day of the initial vote."

The report goes on to say: "Even if members were aware of the last minute change, it is unlikely that they were able to take the time to fully educate themselves on the issue prior to being asked to cast an initial vote on the measure.  Further, questions were raised as to the advisability of enacting a potentially controversial measure in this manner, which did not allow for residents and other stakeholders to express their views through a formal hearing process."

The legislation allowing Internet gambling was subsequently approved with no debate.

The council last week reversed that decision, voting 10-2 to repeal the law.

(For a PDF version Google Docs, click here)

District of Columbia Finance Committee Report

Friday, February 10, 2012

About the repeal

The District’s Council deserves thanks for repealing the Internet gambling law.

This law should have never been adopted without public hearings, committee reviews and careful consideration by the community.  Clearly, for a law as important as this one, the process didn’t work the way it should have.

Councilman Jack Evans and the Finance Committee, in particular, deserve credit for taking steps to correct this. The committee held a roundtable last year to begin discussion on this matter. It asked D.C. Lottery to hold ward-by-ward community meetings and it followed this with the recent public hearing on the measure.

This law was expansive. It would have brought casino-type gambling into homes and bars, restaurants and hotels. It would have created new risks for families and neighborhoods. It would have hurt people
.
The District would have been hurt as well. There were many unanswered questions about how the law would work.

There was no discussion, for instance, on whether the gambling age should be raised from 19 to 21. It’s 21 in Nevada.

There was nothing in the law limiting the number of neighborhood sites that could be created for gambling.

There were no limits on the types of the games. Some argue, for instance, that Internet gambling should be limited to so-called games of skill, such as poker.

There was no contingency made for addressing problem gambling, other than to limit losses to $250 a week.

There was no oversight body, no gaming commission or lottery board, created by this law to monitor and regulate the operation. There were no regulations.

By repealing, the Council, in the end, showed that the process can work.


Saturday, January 21, 2012

Here's what they didn't share about D.C.'s plan

“You're all late for tea!” --  Says The March Hare, as he throws his teacup in the movie version of Alice in Wonderland.

The Washington Post headline today about the D.C. inspector general report on Internet gambling reads as if the District was exonerated for its handling of this issue.

“No legal, ethical wrongdoing in D.C. Council lottery, inspector general concludes,” writes The Post.

This headline is discouraging and there are worries that it might settle the thinking on this issue.
 
“It needs to be purified by someone with evaporating skills, or it will fester and putrefy,” said the Mad Hatter.

Indeed. There are things that have happened that people don’t know about, and here’s the biggest one of all: On March 30, 2010, the District signed a contract with its gaming contractor, Intralot that outlines, in great detail, Internet gambling in D.C.

It was kept quiet. Had people known about this contract, the entire history would have been different.

Consequently, we were all late for the tea party that came ten months later.  This was in December, 2010, when D.C. Council approved Internet and neighborhood gambling in DC, without so much a word from the public.

The council members supporting this contract decided that the best thing, from an ethical point of view, was to not bring this to the public’s attention.

This contract was a platform for debate, a debate this community was not allowed to have.

But the public was denied its voice ethically, the IG points out.

What was not seen or heard

The “scope” of the contract included development of a “game management system incorporating internet lottery and scratch games as well as poker, bingo and backgammon interactive game engines.”

Let’s look at some of the most wondrous issues.

College students, the young, it’s all money

Since D.C. will have one of the lowest legal casino betting ages in the country, 19, young people will be a lucrative target market.

To accommodate this age group fantasy leagues will be offered, and games like “Super Goal,” which is a virtual shoot out of a soccer featuring realistic representations of two teams. The betting aspect involves around such things as picking the final score of the game, and picking the total number of goals achieved by both teams, according to the contract.

Another youth oriented game is “Naval Attack,” which sounds lot like Battleship. Players win by picking various outcomes, such as the exact number of ships hit by bombs.

Not just homes, bars and restaurants but mobile, too.

The contract authorized “Internet player membership” that “authorizes a customer to play interactive games over internet and optionally mobile channels.”

When did the District government decide that gambling should be available on “optionally mobile channels?”

Hopeful thinking credit card provision


The contract allows payment through “bank accounts, debit cards, and/or credit card.”

Everybody wins!


What this contract describes is gambling ecosystems where people not only gamble online, but also connect with third party merchants through advertisements.

Since the District’s plan also calls for the creation of physical casinos in bars, restaurants, hotels, coffee shops and other establishments, these establishment can then, in turn, advertise gambling promotions on the player portal, such as free drinks for gambling.

The D.C. Office of Casino Boss


The competitive issues are staggering. Here we have a government agency, D.C. Lottery, going into the casino gaming business, accepting third party advertising, and then pitting neighborhood casino “hot spots” against bars and restaurants that don’t allow gambling.

Should Internet gambling have been a separate bid?


The Post reports that the IG criticized the CFO’s office for “adding Internet gambling provisions to the contract without issuing a written notice that the underlying contract requirements had changed an allowing another round of bids from interested companies.”

“Because of this,” The Post reports, the CFO “may not have received the best price for the District.”

“That is an excellent practice,” said The Mad Hatter.

It’s hard, from the contract, to tell exactly who makes what. But it does include this provision: Intralot will be compensated at 50% of the Net Gaming Revenue … (see page 18 on the PDF).

What is clear is that if the District had sought new bids for its plan to allow people to gamble from their homes and from neighborhood bars and restaurants, the public may have learned what’s up.

Instead, the gambling issue was pushed down a rabbit hole.

“Who's to say what is "proper"? What if it was agreed that "proper" was wearing a codfish on your head? Would you wear it?” said Alice.

A PDF of the contract

DC Lottery Contract March 30 2010

Friday, January 20, 2012

About the gambling hearing


COUNCIL MEMBER JACK EVANS, CHAIR, COMMITTEE ON FINANCE AND REVENUE’S
PUBLIC HEARING ON: The Matter of i-gaming and Bill 19-474, the “Lottery Amendment Repeal Act of 2011”

Thursday, January 26, 2012
10:00 a.m. until end or 1:00 p.m. recess, resuming at 6:00 p.m.
Room 412 - John A. Wilson Building, 1350 Pennsylvania Avenue, NW; Washington, D.C. 20004
Those who wish to testify should contact Sarina Loy, Committee Assistant at (202) 724-8058 or 

Please support the repeal of the DC internet Gambling bill not to be against gambling, but because the Lottery Modernization Amendment Act of 2010 is a bad bill that puts the District of Columbia government and its citizens at high financial exposure and security risk.  The legislative process was bad, and the bill produced by the process is bad, therefore it needs to be repealed now and rewritten as stand-alone legislation that can be thoroughly vetted in an open and fully transparent manner with proper public consideration, comments, hearings and recorded vote by the Council of the District of Columbia and approval/signature of the Mayor. 

·         The District’s potential financial exposure (including hacking and criminality, potential lawsuits, and non-compliance with federal laws, banking regulations and agencies) is greater than the $13 million average in revenue that officials are estimating.

·         The District’s security exposure includes software infiltration and manipulation, and potential mass identity thefts of DC citizens’ social security numbers that are required for player accounts.

·         A bad process: Online/Internet gambling/iGaming including computerized slots legislation was quietly  inserted into the December 2010 budget without public discussion or public hearings, contrary to the principles of open and transparent government.  

·         A bad bill: Internet Gambling in DC can be about whatever the Chief Financial Officer (CFO) says it will be, so it doesn't matter what the CFO or Lottery Director says today, because they can legally do whatever they want tomorrow. 

·         The types of games that can be played include poker, bingo, blackjack, roulette, backgammon, dice, fantasy sports leagues, and slots-like games.

·         Participating bars, hotels, restaurants and coffee shops can operate as neighborhood casinos, potentially until 4AM, within unlimited locations as determined by the CFO, and with no legal public notification requirements.

·         iGambling targets children, young people, and college students with fantasy sports games and easy access to the system through laptops, smart phones, play stations, and ipads. 

Thursday, January 19, 2012

Church group opposes D.C. gambling


Mayor Vincent Gray
The Wilson Building
1350 Pennsylvania Avenue, NW
Washington, DC  20004

Dear Mayor Gray,

        The Council of the Downtown Cluster of Congregations wants to express to you its unanimous opposition to any implementation of internet gambling in the city (as discussed and determined at its meeting of Dec. 15, 2011).

        The concerns are several. First, the expansion of gambling activities in the city is not considered to be productive for strengthening the lives of local residents and advancing their well-being and the public's overall safety. It is unclear what lasting and meaningful economic benefit will accrue to D.C. residents from this proposal, and indeed, may well result in the contrary. While new revenues and fees will likely be generated for the D.C. government, many congregations and their clergy and pastoral staff are aware of the deleterious, and  often tragic impacts gambling can have on the lives of those who become addicted to it. The city government should be putting its efforts and resources into more tangible initiatives to bring jobs to the city for local residents. The need for increased city revenues is understood but other means should be undertaken to achieve that goal.

        Further, there is significant concern over how this initiative has reached this point and as to whether there has been adequate public input into the proposal. It is quite appropriate that the City Council will be holding a public hearing on this matter on January 26th in order to hear from the public, and hopefully provide a better explanation of all of its ramifications, who are the stakeholders, and how the proposed venture will impact the city.

        Your goal to increase city revenues is understood and appreciated, as are your efforts to expand economic opportunities for District residents and businesses. Expansion of gambling  - specifically internet gambling - is not the way to build safer and better neighborhoods.

Respectfully,
Terrance Lynch
Executive Director

Wednesday, January 18, 2012

An unanswered question about the gambling bill


The District’s gambling bill was approved as a budget rider in Dec. 2010. By taking that path, its proponents avoided public hearings.

Why did proponents decide to avoid hearings?

There is no good answer. But it is clear that the gambling bill could have been introduced as free standing legislation many months prior.

The emails, below, from May 2010 between members of CM Brown and CM Evan’s staff make it clear that there was discussion about possible legislation. A free-standing bill was also suggested.

At the end of the memo chain is what appears to be the text of draft legislation. The complete document isn’t available. The proposal seeks to give D.C. Lottery the ability “to update its games and maintain competitiveness.”

That bill was never introduced in May, 2010 and the gambling issue never surfaced until Dec. 2010, when a bill was introduced and then quickly adopted.

Many months following these events, gambling bill sponsor CM Michael Brown discussed the legislative history in a letter to the ANCs. For him, this legislative history begins in December, 2010 – nine months after these memos.

In this letter, written earlier this year, Brown wrote in part:

“I briefed my colleagues at the Council breakfast meeting prior to first reading, where members of the press were present. In early December, several media outlets reported on the provision.” (See this post and this one for background)

What Brown is describing is the first public appearance of the gambling bill. The time between the initial press reports and law’s passage was less than a month.

There was no reason for this speed.

The District approved a contract on March 30, 2010 with Intralot that allowed new types of gambling in the District.

This contract helped to put into motion a plan to bring online gambling and neighborhood casinos to the District. Had the media seen this contract, District residents may have had time to consider this proposal.

Reporters might have asked: Why is the District approving a contract that allows for creation of things like an “e-Wallet,” and development of “IP blocking policies.”

Reporters would have asked about the planned “Player Portal.”  (This portal is described in the March 30, 2010 contract this way: The proposed solution provides a web portal framework and web page templates that can be used to quickly deploy an interactive gaming Web site.)

Nobody asked about the contract. But the plan to bring online gambling to the District was very much in the works.

What the District’s gambling proponents needed was enabling legislation. And that’s what these emails are discussing, nine months before legislation sneaked in.

Please click to enlarge: 






Tuesday, January 17, 2012

About D.C.'s $250 gambling limit


D.C. Lottery plans to limit gambling losses to $250 a week or $13,000 a year. That limit will likely hurt the amount of money that the District can make off online and neighborhood casino gambling.

According to Marvin Steinberg, the executive director of the Connecticut Council on Problem Gambling, problem gamblers are responsible for a major share of gambling revenue.

In a recent op-ed he wrote for the Hartford Courant, Steinberg pointed this out:
…  problem and pathological gamblers account for approximately 30 percent of gambling revenue despite being only about 5 percent of all gamblers.

Problem gamblers lose far more than $13,000 annually, according to the Wisconsin Council of Problem Gambling's annual report.

The Post Crescent, a newspaper which wrote about the council's annual report, said the council helped 13,528 people last year. The average reported debt for the people it helped was $157,074, the newspaper reported.

The Wisconsin council estimates that approximately 333,000 Wisconsin residents have a gambling problem, or 5.8% of Wisconsin's population of 5.65 million.  Nevada cites a 6% rate.

The $13,000 yearly limit that D.C. Lottery and the CFO have proposed is intended to reduce the impact of problem gambling on the community.

But since the D.C. government, via its lottery, will be promoting gambling and making it available just about everywhere, it's probably safe to say that problem gambling will be an issue of emerging importance to the community.

For most people, $250 is a lot of money. The fact that D.C. Lottery feels it needs to set a limit tells us that they expect a problem. But everyone still comes up a loser under this plan, which is yet another reason for repeal.