D.C.’s Internet gambling bid questioned

D.C. Council members sharply questioned top finance and lottery officials Thursday about whether the District’s first-in-the-nation Internet gambling proposal went though proper channels on its way to becoming law last year.

Chief Financial Officer Natwar M. Gandhi and his deputies were criticized by the District’s inspector general and two council members for including provisions in a 2009 lottery contract allowing online gambling without notifying lawmakers or allowing other companies to bid on that proposal.

Tommy Wells (D-Ward 6), who has introduced a bill to stop the Internet gambling program, criticized officials for “working backwards,” implementing the program through a contract provision that did not receive public scrutiny and legislation that did not get a stand-alone public hearing before passage.

“Why truncate the process? Why take a shortcut? Why not do this straight-up?” Wells asked. “We have to convince folks we’re not putting our thumbs on the scales just to make more money for the District.”

But Michael A. Brown (I-At Large) — the council’s lead proponent of Internet gambling, or “iGaming” — rejected suggestions that the program was not given proper scrutiny. He suggested that any delay would be caving in to a small but vocal group of critics and would put the city at a disadvantage against states that are pursuing similar proposals.

“What do they know that the world-renowned experts do not?” Brown said of the opponents, dozens of whom signed up to testify at Thursday’s hearing. “It is already happening in neighborhoods throughout our city and, frankly, throughout our country.”

Thursday’s hearing was a crucial test for the Internet gambling program, which first came to light in December 2010 when language authorizing it was included in a broader budget package passed by the council.

After observers inside and outside D.C. government raised questions about the un­or­tho­dox process, lottery officials agreed to hold a series of community meetings before proceeding. Council member Jack Evans (D-Ward 2) also ordered the inspector general, Charles J. Willoughby, to probe the gen­esis of the program.

More than 170 public witnesses signed up to offer testimony at the hearing, which was expected to stretch into Thursday night.

Willoughby issued a report last Friday saying that said Gandhi’s office had erred in adding the Internet option to the lottery contract after the council had approved it and without including it in a formal solicitation.

Gandhi strongly objected Thursday to Willoughby’s finding, arguing that each of the three bidders on the contract was allowed to offer options not specifically included in the solicitation. He said it made no sense to hold a separate solicitation for Internet gambling because the lottery system needed to be “complete, thoroughly integrated and have the ability to innovate.”

“The important point here is, was there a lottery process that was fair, open and transparent? The answer to that is yes,” he said.

But Willoughby said he stood by his report and suggested the contract must return to the council for further approval.