Slots Emporium Proposed for Northeast

D.C. Businessman Seeks Referendum, Promising Jobs and Profits to Fund City Services, Schools

A District businessman wants to build a gambling parlor with 3,500 slot machines in Northeast Washington, less than 21/2 miles from the U.S. Capitol, and has filed a request with the D.C. Board of Elections and Ethics to put the matter before voters in November.

The proposal is spearheaded by Pedro Alfonso, chief executive of the telecommunications firm Dynamic Concepts, and his attorney, John Ray, a former mayoral candidate and D.C. Council member who once led the charge against riverboat gambling on the Potomac.

The proposal calls for the construction of a slots emporium on a 14-acre parcel along a shabby stretch of New York Avenue NE near Bladensburg Road that would contain as many slot machines as the MGM Grand Hotel Casino, one of the biggest gambling houses on the Las Vegas strip. The city would be prohibited from granting a slots license at any other location for at least 10 years.

In addition to creating jobs, Alfonso said, the slots operation would generate as much as $400 million a year in profits, though gambling analysts said the sum could approach twice that amount.

A quarter of the cash would be paid as a tax to the District and earmarked for public schools, prescription drugs and other city services. Alfonso and his investors, whom he declined to identify, would keep the remaining money, making it one of the most lucrative deals for a private slots operator in the nation, gambling analysts said.

Past efforts to expand gambling in the District have failed to garner much support, and Mayor Anthony A. Williams (D) opposes most forms of gambling. Williams's spokesman, Tony Bullock, said the mayor has agreed not to block Alfonso's push to get slots on the ballot. But Williams reserves the right to campaign against the initiative "if there's a level of concern or controversy," Bullock said.

Council member Jack Evans (D-Ward 2), who chairs the committee that oversees the D.C. Lottery, said the council "would never pass" legislation to legalize slot machine gambling. And if the voters were to approve it, Evans said, "Congress would strike them down."

Alfonso said the proposal, dubbed the "Jobs, Education and Health Care Lottery Expansion Initiative of 2004," would create a financial windfall for the city, generating up to $100 million a year in badly needed revenue while asking for nothing in return.

"What we're looking at is the city comes up with zero dollars. We're not looking for any city help," Alfonso said yesterday in a telephone interview. "We'd be creating over 2,000 jobs. And the city's only requirement is to receive the money."

Gambling opponents, including some veterans of the slot machine battles in the Maryland General Assembly, said the plan would be extremely beneficial to Alfonso and his partners. The gambling plan rejected last month by Maryland lawmakers, for example, would have granted the state nearly 50 percent of slots proceeds. Other states collect up to 80 percent of slots profits, said Jeff Hooke, a Virginia investment banker who has studied gambling initiatives across the country.

"There is a national phenomenon . . . of wealthy guys or racetrack owners trying to pull the wool over the eyes of legislators and get these licenses for free. This is par for the course," Hooke said. An exclusive 10-year license to operate a slots parlor in the nation's capital "would be extremely lucrative," he said. "If the District were to sell this license on the open market, it might hit $1 billion."

Alfonso said he is optimistic that he can win support for his plan, which was filed with the city's election board April 22. The board rejected a request by Ray to expedite the initiative and has scheduled a public hearing for June 2.

That will likely be too late for a petition to be approved and signatures collected in time to meet a July deadline for the November ballot, said election board spokesman Bill O'Field. But Alfonso said he will "absolutely" seek to submit the slots initiative to voters in the next citywide election, now scheduled for 2006.

"It's a good proposal," he said. " If you walk out on the street and ask 10 people who are District residents, 'What do you think?' they would say if it's something done tastefully, they would support it."