D.C. plans to launch online casino

June 28, 2011

The bright glass-and-copper library on Benning Road NE just beyond the Anacostia River opened last year as an anchor for redevelopment and a refuge for the mind.

Now, District officials are deciding whether they should use the gleaming outpost in a depressed section of the city for another pioneering purpose: as a gateway to online gambling and the promise of millions of dollars in government revenue.

The scramble is on to launch an online casino in the District, which is the first jurisdiction in the United States to sanction online gambling. Cash betting on Texas hold ’em, blackjack and bingo is to begin in September.

But officials have not settled several questions that have been raised about online gambling, starting with whether their plans are legal. The chairman of the D.C. Council’s finance committee said that he and some of his colleagues didn’t know anything about the gambling legislation when it was passed last year and still have much to learn.

The committee will look at the issue Wednesday at a hearing on the implications of the gaming initiative, which was was tucked into a budget bill six months ago and passed into law with little public vetting.

“We didn’t even know it was in there,” said the finance committee chairman, Jack Evans (D-Ward 2), who is convening the hearing. “This was requested to be put into a supplemental budget back in December, without any hearing, without any notice, without any anything.”

To plant a gambling toehold, the District would be sidestepping federal restrictions on Internet gambling that have led to an FBI crackdown on online poker sites.

The U.S. attorney’s office in New York charged 11 executives from three leading Internet poker companies with criminal violations in April, essentially closing down the U.S. operations of PokerStars, Full Tilt Poker and Absolute Poker.

D.C. officials hope to fill that void and are confident they can without Justice Department scrutiny by keeping the business inside the city. The office of the chief financial officer, Natwar M. Gandhi, has said there is “no consensus” on the legality of the plan.

Despite the city’s timetable, officials have not resolved disagreements over which public spaces are suitable for online gambling, an ambivalence reflected in city policies. In many instances, government computers block the type of gambling sites the District is trying to set up.

The system is being designed by experts from the District’s Greece-based lottery contractor, Intralot. The D.C. Lottery and Charitable Games Control Board would get half of the revenue. Finance officials, extrapolating from national trends, said the city could take in perhaps $13 million in three years.

Council member Michael A. Brown (I-At Large), who sponsored the legislation, acknowledged that the bill moved quickly. He said the expedited public process reflected his urgency to find revenue to help the less fortunate during the budget crisis. He also expressed concern that the rising use of illegal gambling sites leaves increasing numbers of residents “with no protection at all.”

Brown rejected the suggestion that colleagues were left in the dark. “Maybe some people didn’t read the budget,” he said.

The city’s gambling project raises questions beyond day-to-day council oversight, notably whether the District can run an online casino — and whether it should.

“We know we’re the first in the country to do this,” said Buddy Roogow, executive director of the lottery agency, which is spearheading the effort. “We’re going to do it right.”

The city will put in place cutting-edge “responsible gaming” measures, Roogow said. People will have to set up an account to play. There will be a weekly deposit limit of $250. Gaming will be shut down between 4 and 10 a.m. The lottery agency plans to monitor players electronically and cut them off if necessary, Roogow said, and those with concerns about their self-control can ban themselves.

“We’re in it to make money. We’re in it to create revenue for the city. We’re trying to do it in a way that’s most responsible,” Roogow said. “We will not seek to create games in which a livelihood could be won or lost in one hand.”

The District’s actions come as online gambling proponents are making a play for the lucrative U.S. market. Although the terrestrial excesses of Las Vegas are tough to beat internationally, governments from Italy to British Columbia have embraced virtual casinos.

Alluring as the prospect of new revenue may be, some European officials say it’s a mistake to think online gambling will be a cash cow. Regulators in Italy say that trying to extract too much from regulated operations — which can depress the size of payouts — might push players to offshore sites.

“If the Italian product is attractive enough, then the people will move toward it. Otherwise they will stick with the illegal one,” said Francesco Rodano, head of remote gaming for Italy’s gambling and tobacco regulator.

An Intralot official said that payouts in the District would be competitive but that the target market is recreational players, not high-stakes professionals who play many hands at once.

Last week, a dozen congressmen, led by Rep. Joe Barton (R-Tex.), introduced a bill to regulate online poker, saying they want to protect players who are forced to put their skills and money on the line in uncertain overseas operations. U.S. rules against processing gambling payouts are an affront to personal freedom, Barton said.

In the District, bettors would have to be 19 or older and be physically located in the city. City officials think they can avoid federal restrictions on interstate financial transactions related to gambling by ensuring that all bets are handled within the District’s 61 square miles.

D.C. officials are planning to use the government-owned DC-Net as the backbone of the system.

The computer network was built to ensure official communications in the District after the terrorist attacks of Sept. 11, 2001, overwhelmed the commercial network. It connects hundreds of government buildings with miles of fiber optic cable. A public part of the network also provides free WiFi access inside and sometimes around government facilities across the city, including recreation centers, health offices and the Dorothy I. Height library on Benning Road NE.

Librarian Robert Garrison said the city, like Maryland with its slot machines, is hungry for revenue. But he’s concerned about the effects on low-income neighborhoods near the library in Ward 7. “It’s going to be interesting to see how the local population is affected and which populations will have problems,” Garrison said. “This opens up a bag of worms.”

D.C. libraries block gambling Web sites, along with pornography, on their desktop computers, but not on patrons’ laptops that are using WiFi.

Library officials are considering how to approach the gambling venture. Library spokesman George Williams said the libraries “are looking at everything. We haven’t made a decision yes or no at this moment.”

Michael Brown, the council member who played a central role in advancing gambling in the District, said that it’s not appropriate everywhere. “I would not like to see folks being able to play at a library or a rec center,” he said.

Roogow, the lottery chief, said a “large portion” of the city would have access using DC-Net locations. Hotels, bars and restaurants will be added to the list. Officials said permission for Internet connections at private homes will roll out when they are confident there will be no technological mix-ups.

Mike Laris came to Post by way of Los Angeles and Beijing. He’s written about the world’s greatest holstein bull, earth’s biggest pork producer, home builders, the homeless, steel workers and Italian tumors.
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