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.   
3.       THE REVENUE ESTIMATES PER YEAR ARE NOT INCLUDED IN THE DC BUDGET BY THE CFO FOR FOUR YEARS. 
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 Stopdcgambling.com has just been established.
3.       For any comments please email marie.drissel@verizon.net
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 Avenuehttp://www.dclottery.com/AboutUs/igaminginfo.aspx

 



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