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D.C. Council member proposes reducing deficit with online gambling in city

By Paul Schwartzman
Washington Post Staff Writer
Wednesday, December 8, 2010; 9:52 PM

Raising taxes and parking fines are the traditionally irksome ways that local governments generate desperately needed revenue.

Not the District government, that hotbed of fiscal innovation.

Try blackjack, Texas hold 'em and five-card stud.

A D.C. council member is proposing that the city legalize and promote online poker and fantasy sports gambling as a way to slash the city's $200 million budget deficit.

The D.C. Lottery Commission would oversee the games, which would be legal as long as those anteing up play within the District's borders, according to Michael A. Brown (I-At-Large), the council member who offered online poker as budgetary salvation.

"We need every kind of revenue enhancement possible," Brown said, adding that the city is losing legions of local gamblers to racetracks and casinos in Maryland and West Virginia. "We have to be more competitive. Everyone around us is doing stuff that is attracting our residents outside the city."

Brown, whose move was first reported by the Washington Times, tucked the proposal inside a budget bill Tuesday, catching Democratic Mayor Adrian M. Fenty's administration by surprise.

Attorney General Peter J. Nickles said he's not certain that the city can legalize online poker since federal law bars credit-card companies from transmitting money from players to gambling Web sites.

"There are some very serious questions," said Nickles, adding that the council never consulted his office on the proposal. "I don't like that that there's no legal opinion certifying it."

Mayor-elect Vincent C. Gray (D), in his final days as council chairman, did not respond to a request for comment.

Terry Lynch, executive director of the Downtown Cluster of Congregations, said online gambling, like the lottery, is an unsavory way for the District to raise revenue, and would probably provoke criticism from religious residents.

"It doesn't generate real jobs and livelihoods that make a difference in the community," Lynch said. "It preys on peoples' weaknesses."

With the economic downturn, a number of states, including New Jersey and California, are reviewing proposals to legalize online gambling. Harry M. Reid (D-Nev.), the Senate majority leader, has introduced federal legislation to legalize Internet poker.

Offshore companies host Internet gambling, which has been around since 1995. More than 2,000 Web sites generate more than $5 billion in annual gaming revenue in the United States, or a fifth of the worldwide total, according to the American Gaming Association.

Holly Wetzel, an AGA spokesperson, said lawmakers across the nation are becoming interested in online gambling because the games could raise tremendous revenue.

"The government is looking at this because, if millions of people are gambling online, we should properly regulate it, we should tax it, and we should keep the money in our borders," she said.

Michael Paladino, a gaming analyst for Fitch Ratings service, said a clear market of online gamblers has emerged, although he's unsure how substantial it would be in a city of 600,000 residents.

"Within any market, there will be a decent subset looking to game online or to play online poker," Paladino said. "Is it enough to generate meaningful tax dollars? I don't know."

Under Brown's proposal, tourists staying in Washington hotels would be eligible to play the city's online games.

In a memo to the council, Brown, citing analyses from the city's chief financial officer, wrote that online gambling would produce $13 million by the end of 2014. Over the past five years, Brown said, revenue from the D.C. Lottery has declined by 10 percent, a decrease he attributed to the recession.

schwartzmanp@washpost.com

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