Monday, October 31, 2011

Here's the story on DC Lottery's gaming contractor

The company that has 51 percent equity in D.C. Lottery’s operation is a little known firm called Veterans Services Corp. (VSC)

What role does VSC play?

Intralot, a Greece-based gaming company, won the city’s $38 million lottery contract in 2008. Council members wanted Intralot to have a local partner. That partner became Veterans Services Corp. in 2009. According to the Washington Post VSC holds 51 percent of the equity in the joint venture running day-to-day lottery operations.

VSC was formed in 2009. It was just starting out when inspectors from the District of Columbia Department of Small and Local Business Development conducted a site visit as part of the District's business certification process.

The document below was the result of inspection in August 2009.

VSC was approved as part of the lottery contract by the District Council in Dec. 2009, less than four months later.

VSC describes itself, in documents to the District, as “a professional services consulting and professional staff augmentation company.”  It says it can deploy staff with security clearances, and people with skills such as “certified information systems auditors.”

VSC, along with Intralot and D.C. Lottery, will be running gambling system that delivers poker, bingo, blackjack, and slots to District residents, and in bars, restaurant and hotels in neighborhoods.

Among its skills, the company said on government documents that "VSC has an extremely strong IT practice providing a wide range of services, including; Network Security, Systems Migration and Deployment, Network Operations, and Data Base Management. VSC technical programming expertise, includes, but is not limited to: VBA, UNIX, SAS, SQL, etc.". 

What the District inspectors found, was an operation being run out of home that lacked records. And despite that technical expertise cited by VSC, the site visit report by the District's inspectors found that of the company’s had two Dell computers and “one was not working properly.”

The city’s site visit report also includes some check-off sections, Y/N and N/A (non applicable.)

It found:

Bookkeeping and other record keeping – N

Payroll Maintenance – N

Receipt of business telephone calls and phone – N

Receipts evidencing payment of telephone service by the firm - N

According to city records, VSC was certified Aug. 28, 2009 for two years.

Here is the document

Click to enlarge

There's more: for the full document PDF click here

Saturday, October 29, 2011

D.C. Lottery's high limit slots

The new Internet gambling law approved by the District Council, a law adopted without public hearing, committee review or real public notice, will give the D.C. Lottery enormous ability to expand its predatory gambling practices.

This law gives D.C. Lottery the power to determine the types of games it wants to deliver to the public. This is why it is putting in slots and bingo, along with poker.

Remember, the argument proponents raise in support of Internet gambling is that the District loses gambling tax revenue to offshore venues.  Proponents of gambling in D.C. describe the typical offshore gambler as a poker player with middle to above incomes. By offering poker, supporters of the law said D.C. will recover lost tax revenue and extend consumer protections to people now betting offshore.

So what happens next?

D.C. Lottery officials outlined a plan intended to draw in a broader demographic by offering bingo and slot-type games. They want new types of gamblers to play their games, people who have never played offshore games, people who probably don't even know they exist.

D.C. Lottery wants to expand Internet-based gambling to fixed income seniors and lower income populations by offering bingo and slots and who knows what other magical online games. D.C.'s large college-age population will be a target as well.

In the new Internet gambling law, D.C. Lottery also has the power to determine where neighborhood mini-casinos are located and how many of them can be established. The law, itself, sets no limits, no safeguards, no oversight. The regulator is the D.C. Lottery.

When it comes to consumer protection for neighborhoods, there is none.

In Las Vegas they have separate areas where people can play "high limit slots." Typically, those machines are at least $5 and above.  The higher the bet, the higher the payoff. But that brings a higher margin to the casino, and that's what D.C. Lottery is interested in.

The Council's new Internet gambling law puts D.C. Lottery on the path to becoming a corporate sociopath.

District Council members have been willing enablers of this mess, approving a law under the public radar and then giving lottery officials the ability to do just about whatever they want.

Thursday, October 27, 2011

Ward One Internet gambling meeting Nov. 1

Here's a note posted about it on the Adams Morgan list: 

D.C. Lottery will be holding a community meeting on the new Internet gambling law on Tuesday, Nov. 1 at the Marie Reed Learning Center, 2200 Champlain St. NW, 6:30 p.m. to 8:30 p.m

These meetings are being held in each Ward to inform people about some of the implications of a new law that allows Internet-based gambling in homes, restaurants, bars and hotels.

Here are the major points to consider:

-- Last December, the District Council approved as a budget rider. There were no public hearings or committee reviews. Public notice was minimal.

--  D.C. Lottery is now implementing the law. It will grant licenses, without oversight, to bars and restaurants to allow gambling from 10 a.m. to 4 a.m. daily in neighborhood establishments. Patrons will be required to bring their own PC. But if gamblers become a larger share of a businesses revenue, it is possible that some of these establishments may cater to gamblers, creating what amounts to neighborhood gambling parlors. In time, it’s entirely possible that bars and restaurants will find the means to make terminals and tablets available for patron use.

-- This law will expand problem gambling. Originally, proponents said it was aimed at poker players who bet offshore.  But D.C. Lottery plans to offer bingo and slots, or an electronic version of its scratch games, as well as poker, via the Internet. Clearly, D.C. Lottery’s  intent is to expand gambling to new populations, and rake in as much revenue as possible.

-- Will gambling bring in new tax dollars? Not necessarily. Money lost to gambling is money not spent locally.

There are many other issues and implications. It is a first in the nation law and it represents a major expansion of gambling. It was a law adopted without any public input. It is a law operated without any public oversight.

The Adams Morgan ANC 1-C recently voted to ask the District Council to repeal this law.  The Kalorama Citizens Assn., voted similarly at its meeting this week.

Attend the meeting, hear the details, and decide whether this is what you want for our community.

Saturday, October 22, 2011

Adams Morgan ANC opposes DC gambling law

The Adams Morgan ANC (1C) voted this month to oppose the District’s Internet gambling law.

I attended the meeting and had been waiting for the official resolution before publishing something but don’t have it yet. The measure, which ask the District Council to repeal the law,  was approved by voice vote. One commissioner abstained for reasons that weren’t stated.

The repeal proposal was led by Martis "Marty" Davis (1C-02) who chairs the Public Service and Environment Committee.

At the meeting, Davis said the plan to have Internet gambling in the District hadn’t been vetted or thought out very well.

“This is a formula for foolishness,” said Davis of the law.

From the discussion, it appeared the leading motivation for opposing this law was around the process that led to its adoption, namely the lack of hearings and committee review. The Internet gambling law was included as a budget rider and approved last December without hearings.

Commission Chair Wilson Reynolds (1C-07) believes the law will not be repealed by the council. He argued for an alternative approach. “Control this,” said Reynolds, “and restrict this to hotels.”

Reynolds had previously raised the argument at public service committee meeting that the best approach would be approve a resolution to limit gambling to hotels of 100 rooms or more.

Davis believed the hotel restriction would break down over time.

The public service committee and the ANC offered me ample opportunity to make a case for opposing this law, and I’m grateful to them for it. But, honestly, it didn’t take much argument. It seemed apparent that the commissioners had many questions about the law and the changes it might bring to the neighborhood.

Friday, October 21, 2011

Information Fact Sheet Supporting Sample Repeal Resolution

A.  What Is Internet Gambling and How Did It Become DC Law?

  1. Internet Gambling or Igaming is gambling on a DC owned website to play games of skill and chance and to buy lottery tickets. 
  2. The District of Columbia Government with its full faith and credit is the first government in the US to support, own and operate Internet gambling.  Internet gambling has been through private companies usually operated offshore. 
  3. In 2008 the Chief Financial Officer issued a competitive bid for a new contractor for the regular lottery.  That process took over one year.  Unknown to the public, almost all of the Council Members and even the losing bidder, GTech, the winning team was awarded a contract with an option for a computer platform to include online gambling in March 2010.  DC did not even have a law allowing online gambling when the contract was signed.   
  4. Nine months later, a City Council Member inserted legislative language which allows any type of gambling into the December 2010 Budget Supplement.  There were no hearings with any public comment. The budget supplement was signed by the Mayor in January 2011.  It then went to Congress as the entire budget supplement and since there were no Congressional objections Internet gambling became DC law in April 2011. 
  5. All decisions about what games are offered are being made by two DC Government officials—Dr. Natwar Gandhi and Mr. Buddy Roogow.  There is no longer a board of directors or member appointees to the DC Lottery Board.  It is run by the executive director, Mr. Roogow who makes $157,000 per year.  Mr. Buddy Roogow lives in Maryland and told the media that he has no intentions of moving into DC.  The DC Lottery is an independent agency and the executive director does not have to live in DC.
  6. The contract was won by DC09, a DC LSDBE company which was formerly Veterans Service Corporation of Virginia.  The CEO of DC09, the majority contractor is Emmanuel Bailey who also lives in Maryland.  The winning subcontractor providing the trademarked platform is Intralot, a foreign company headquartered in Greece

B.  What Games Does the DC Internet/Intranet Platform Provide?

1.       The contract signed with DC09/Intralot includes an Intralot owned B-ON™ platform capable of:   1. On-line Lottery games 2. Interactive Lottery games 3. Numerical games 4. Instant ticket games 5. On-line interactive fixed-odds betting 6.  Fixed-odds betting 7. Live betting 8. On-line interactive casino games 9. Table casino games 10. Video Lottery games 11. On-line skill games 12. Betting exchange on skill-based entertainment games 13. Instant tickets with skill-based entertainment games. 
2.       On April 21, 2011 Mr. Roogow testified at the Lottery budget hearings before the Council that the online gambling would start with Texas Hold Em Poker, Victory at Sea and bingo.  Within two months in the June 17 DC Register and at the June 29 Roundtable, Mr. Roogow announced that the online gambling supported and operated by the DC Government includes the additional games of random number generated games (slots), blackjack and electronic instant tickets.
3.       Mr. Roogow states that DC will not go into the business of casino gambling.  But there are no laws or legislative history which prevents Gandhi/Roogow from doing this according to legal opinions provided by their lobbyist in January 2010 as long as it is INTRASTATE.

C. How Will It Work?

1.       In order to comply with federal law all players will have to play inside the city limits. This is the key to whether or not this type of gambling is legal according to testimony given by DC Attorney General Irvin Nathan.  DC Attorney General Irvin Nathan also stated that he is keeping the Department of Justice informed of the implementation planning.
2.       When a player logs into the DC website the IP address will indicate the location of the laptop or computer within one or two blocks according to Mr. Roogow.  The DC Lottery states that they will create a buffer around the District lines to prevent anyone using a wi-fi router at home to play whose laptop is in Maryland or Virginia. They may black out one to two blocks at the District line to prevent out of state users. 
3.       All players will have to be over 19.  According to several interviews given by Mr. Roogow and the DC Lottery web page they will use several filters to determine the age of the gambler.
4.       The person playing will purchase a debit card for $250 or less and start playing on a weekly basis.  It is not clear if the money escrowed will be controlled by DC09, Intralot or directly by the DC Government.  It is assumed that it will be controlled by the DC CFO’s office.  This amount is arbitrary and can be changed by Mr. Roogow any time. 
5.       The first roll out includes computerized slots.  The difference between a computerized slot and video computerized slots which were stopped by Dorothy Brizill, of DC Watch and others twice in the past is difficult to describe.  The video slot is a computerized specialized piece of equipment which was to be purchased by the owner of a casino.  At this point it is not anticipated that this will happen but it is allowed by the December 2010 law as long as it complies with the federal law known as the Johnson Act.  Video slots have only one purpose and are not manufactured within the City limits.  On the other hand someone’s laptop has many purposes and is usually purchased by the owner.  It is the laptop which will be registered along with its owner with the DC Lottery. 

D.  What Are the Expenses And Economic Issues?

1.       DC09 and Interlot are paid a fee just to implement the regular lottery system which was budgeted at $33 to $38 million over 5 years.  DC09/Intralot will also share in the profits of online gambling. “Profits” for the DC Government to share are made when many people lose money.   There are also public documents which indicate that DC Lottery may be paying additional costs once the online portion of this contract goes live. 
2.       All of the financial indirect impacts have not been considered and planned for and affected agencies have not signed off.  The hours of operation are until 4 AM every day.  DC agencies such as the Alcohol Beverage Control Administration, the MPD, or addiction treatment centers have not estimated their financial costs.   
4.       The CFO could not provide reliable information and used only foreign government historical financial information to project the revenue because this is the first time a US government is running this type of business. Therefore, there could be no reliance on the projected income of about $3 million per year.
5.       As stated the additional direct expenses are also unknown.  One clue might be picked up on the DC Lottery web site which states they have retained the services of IBM Managed Security Systems to prevent national and international hacking of the DC Government site.  The DC CFO, Lottery Director, Chief Technology Officer, City Administrator and DC Attorney have been asked for the policy and procedures which will be followed should there be any successful compromises to the system.  No response has been given. 
6.       The impact on the retail regular lottery stores is unknown.  It is unclear at this point but the DC Register seems to indicate that this new system is offering the ability to buy online lottery tickets.  Further, there may be problems with retail stores becoming “hotspots” such as a mini market which currently sells liquor and will be setting up tables/chairs to allow clients to sit down with their laptops and gamble.  There may be issues requiring liquor license amendments, zoning and fire safety inspections and parking enforcement. 

E.  Where Will Players Be Allowed to Play and Where Will “Hotspots” Be Located?

1.       The home part of the system is on track and will be operational in October 2011 according to the Lottery website.
2.       After complaints at the June 29 roundtable the Lottery issued rules giving ANC’s 60 days notice to comment on proposed “hotspots.” 
3.       “Hotspots” are secured sites where it seems that terminals will be supplied.  It might be a secured site in a business which already has a wi-fi website such as certain well known coffee shops.  A player will go into this “hotspot” with a laptop or iPhone and be able to connect to the Igaming site owned by the DC Government and start gambling.  No one knows where these sites will be but this is totally controlled by Dr. Gandhi and Mr. Roogow.
4.       Federal government employees will not be allowed to play on this website. The law requires that no lottery activities including advertising can take place in the federal enclave.  Some interpret the governing law to mean any federal building.  For example, US Homeland Security is on Massachusetts Avenue near American University in Northwest surrounded by residential zoning.  Mr. Roogow told an editorial board member of the Washington Post that they will build buffers around federal government buildings.  It is envisioned that a one or two block dead zone will be created around such buildings. 
5.       At the roundtable on June 29, Mr. Roogow confirmed that it was possible to have gambling in a room in the Wilson building and an article appeared in the Washington Post that this could be true of DC libraries.  The DC Intranet website or DC H-Net which DC taxpayers have paid millions to build will be used by the Lottery to run the gambling site.  There is no legislation or legislative history since there has been no hearing that requires the DC Lottery to exclude libraries, recreation centers and schools which are hooked up to this Intranet system.  It stands to reason that these entities will be excluded but this is all up to Mr. Roogow and Dr. Natwar Gandhi

F.  Is Home and “Hotspots” Online Gambling A Good Idea To Be Implemented by 2011?

  1. A number of our District elected officials are now under investigation for ethics violations, corruption, and possible criminal activities.  The process by which Online/Intranet gambling/Igaming with computerized slots was adopted in the middle of December without any public sunshine contributes to the negative perception among DC residents that our government is increasingly controlled by outside interest groups.  Further, should anything go wrong especially within the federal enclave it will damage our quest for DC voting rights.
  2. Mr. Roogow is promising many things like checking to see if there are particular gamblers who are addicted and blocking them.  This office has not received budget authority to hire anyone new and Mr. Roogow stated in an interview that he needs to hire an expert cyber auditor.  There is no money for this.  So this office must run the paper lottery and this new huge business line without any increased staff.
  3. D.C. Government will be the first Government in the US to operate online gambling with no rules and regulations and case law history. 

How To Get Further Information?

1.       Marie Drissel, Ward 2 prepared the Q&A and worked with several people to refine the sample repeal resolution.  Angela Christophe, Ward 4, Mike Ivey, Ward 4, Andy Litsky, Ward 6 and   Patrick Thibodeau, Ward 1 are helping to distribute the resolution and informational fact sheet. 
2.       A website/blog at has just been established.
3.       For any comments please email
4.       Public outreach meetings have been scheduled from August 16 until September 15, 2011 by the DC Lottery. 
5.       The first meeting is for all ANC Commissioners on August 16 from 7 to 9 PM at the DC Lottery on MLK Avenue


Thursday, October 20, 2011

DC Lottery Cancels Ward 6 Home/Hotspot Gambling Listening Tour with One Day Notice

Dear Councilmembers,  

I received a call moments ago from Charles Allen in Tommy Wells' office.  He was just told that the Ward Six i-Gambling community meeting that was scheduled for this Thursday -- tomorrow -- has been moved by Buddy Roogow to next Thursday.  No messages regarding this change ever went out from the Lottery Board to any Ward Six organization -- none of the Ward Six ANC commissioners -- none of the Ward Six community listservs -- and none of the customary Ward Six websites.  

After being called on the carpet by the media for scheduling their community meetings in the middle of August and over Labor Day, once again the Lottery Board is tampering with the process that they themselves established.  If Buddy Roogow and his Lottery Board crew can't be trusted to maintain a simple schedule of community meetings, how can they be trusted to run a citywide gambling operation? Flying way under the ethics radar screen, they are either wildly incompetent or too cute by half and  boldly believe that can get away with no supervision. 

The Council needs to step up to the plate and exercise some oversight.  And while it may be fine to some that Buddy Roogow, as a Maryland resident, pays no DC taxes -- someone needs to remind him that his salary is being paid by the residents of the District of Columbia and that he still reports to the Council's Committee on Finance and Revenue.   


Andy Litsky
Commissioner, ANC 6D-04