The District was supposed to launch a Web site this month allowing people to play poker for money, the first jurisdiction in the country to try to grab some of the millions of dollars that pour out of American living rooms and into online casinos overseas.
Proponents of the District’s Internet gambling venture envisioned a fresh draw for tourists, crucial new revenue and a pioneering role in the history of American betting.
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What the city got instead was a lesson in the risks of trying to play casino boss in a place where even the traditional lottery has proved to be a messy enterprise.
Tucked into a budget amendment late last year, the District’s authorization for online incarnations of blackjack and Texas hold ’em was passed at the urging of council member Michael A. Brown (I-At Large), without the normal debate or scrutiny.
Now, as the District tries to finalize plans for putting government-sanctioned online gambling into households and hotels, a host of issues has clouded the venture’s prospects, and the underlying lottery contract has drawn the attention of the city’s inspector general, according to interviews and government documents.
Some council members have expressed concerns, and Tommy Wells (D-Ward 6) and Phil Mendelson (D-At Large) were planning to introduce a bill Tuesday to repeal the gambling effort.
One issue is that District officials did not put the city’s online gambling business out for competitive bid, unlike similar government-approved efforts in places such as Canada and Finland. Intralot, a Greek-owned lottery contractor, was granted the multimillion-dollar opportunity to run the online casino when it won a fierce competition to run the city’s traditional lottery system.
David Umansky, a spokesman for the Office of the Chief Financial Officer, which oversees the lottery, said it made sense not to run a competition to find a separate online gambling vendor. Major contractors with competing interests are often “at each other’s throats” and would heap blame on each other if the gambling system crashed, Umansky said. “With one platform, we don’t have to worry,” he said.
City’s approach questioned
A former top federal procurement official questioned the city’s approach.
“The online gambling thing is outside of the scope here. That should have been done separately,” said Steven L. Schooner, who worked in the White House’s Office of Federal Procurement Policy. “It seems disingenuous to embark upon that kind of enterprise without at least testing the competitive marketplace.”
Another potential problem is that provisions in the written agreement between the District and Intralot contain possible ambiguities on how the city and company will split millions of dollars in gambling proceeds. Those provisions could come into play if the relationship sours between the contractor and the District.
Although Intralot said it has already spent millions of dollars developing the District’s online gambling system, it is still considered an option in the contract that the city has not formally exercised, and the language can be changed, city officials said. “I’m not worried about it,” said Buddy Roogow, the executive director of the lottery.
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