- The Washington Times - Thursday, January 26, 2012

The D.C. inspector general testified Thursday that the city’s lottery contract should have been rebid because the D.C. Council could not have known that first-in-the-nation Internet gambling was in the cards when it approved the deal with Greek company Intralot in 2009.

Inspector General Charles Willoughby said contract officials at the city’s Office of the Chief Financial Officer “materially changed” the contract after its approval to include an online gambling program. Bidders should have competed for the contract with explicit proposals on wagered games over the Internet, so the process would be fair and the council would know what it was voting on, he said.

Mr. Willoughby made the assertions during a contentious hearing before the council’s Committee on Finance and Revenue on whether the wagered games, or iGaming, should proceed or be repealed.

Committee Chairman Jack Evans, Ward 2 Democrat, called the hearing to explore the legality of the contracting process that allowed iGaming, the technical challenges of rolling out wagered games within the District and the public’s appetite for the program after a series of community meetings on the subject.

Mr. Willoughby said the council approved the contract with Intralot in December 2009 but did not execute it in March 2010 “because it was negotiating with Intralot for the addition of Intralot’s gaming system.”

The council “should see the entire contract, it should see the finished project,” he said. “It shouldn’t be a piecemeal operation, and I stand by that.”

Before a packed room of public witnesses and interested parties, council member David A. Catania threatened to sue the office of Chief Financial Officer Natwar M. Gandhi if the contract is not returned to the council for an up-down vote on its iGaming portion. He accused the office of “going rogue” by modifying the contract.

“Essentially this is the most extra-legal action that I have ever seen. This calls for the resignation of those responsible, right up to the top,” said Mr. Catania, at-large independent and frequent critic of Mr. Gandhi. “You have essentially robbed this body of its legislative authority.”

Mr. Gandhi has strongly objected to Mr. Willoughby’s findings. He said all bidders for the Internet contract had the chance to suggest additional games, even if the request for proposal did not specifically mention online gambling.

Officials from Mr. Gandhi’s office testified that the council approved a provision known as “non-traditional games” - although not specifically “iGaming” - and it provided legal authority for Internet games as part of a supplemental budget bill in December 2010.

Council member Tommy Wells, Ward 6 Democrat, said it was impossible for council members to know they were voting on Internet games when they approved the lottery contract. He said he does not think contracting officials broke any laws but that there was not enough transparency in the process.

“The bar should be higher than, ‘C’mon, no laws were broken,’ ” Mr. Wells said.

Plans to establish online gambling through the D.C. Lottery have generated controversy since the council approved the program as a line-item that council member Michael A. Brown, at-large independent, tucked into the budget bill. It put lottery officials in the awkward position of forging ahead with the council’s mandate, even as members of the public questioned the social consequences of online gambling and the lack of public input before its passage.

The lottery plans to offer four games when, or if, iGaming is implemented. Players must register ahead of time and can play on their home computers or in pre-arranged public areas equipped with a WiFi signal that allows play.

D.C. Lottery Director Buddy Roogow testified that churches, libraries and other community centers can block the iGaming site, and the lottery can track suspicious play or trends that indicate reckless gambling on their sites.

Supporters of the program tout its potential impact on the District’s economy and say the lottery should attract a demographic with disposable income. Proponents also say the weekly betting limit of $250 is a sufficient safeguard against serious losses.

The U.S. Department of Justice opened the door to online gaming via state lottery systems, a reversal of its position, in a recent opinion that addressed whether Illinois and New York can use out-of-state transaction processors to sell lottery tickets to adults within their borders.

Mr. Brown, who openly pushed the program at Mr. Evans‘ hearing, said the District is ruining its chance to grab the market share of Internet gambling while regulating a habit that D.C. residents indulged in anyway through offshore websites.

While other states toyed with the revenue generator, he said, “we in the District of Columbia did not wait.”

Opponents of the program say online gambling is risky business and the District should not be the first in the nation to try it. It places senior citizens at risk, they say, government and gambling should not mix, and they do not support the 50 percent split of profit between the lottery system and its vendor.

The program’s most vocal critic, Marie Drissel, was one of more than 100 witnesses who signed up to testify on the program at Thursday’s hearing.

“The law’s passage represented a reckless disregard for the public,” she said, citing problems with the lottery contract and a lack of transparency about the program’s implementation.

While some of his colleagues pushed back on the program, council member Marion Barry criticized lottery officials and the chief financial officer for not moving fast enough.

“I don’t think we ought to back up on this,” said Mr. Barry, Ward 8 Democrat, who noted that the council approved it as law. “It’s not my fault, it’s not Mr. Brown’s fault, that some members of the council didn’t read this.”