ON Monday, June 10, Kenyan McDuffie, the DC Council Chair Tempore, had his chief of staff, Derron Parks, convene a meeting outside of the John A. Wilson Building with representatives from MGM, Caesars Sportsbook DC and Fanatics. The gathering also included several African American small business owners who are actively opposing legislation being pushed by McDuffie and Council Chair Phil Mendelson that, if approved, could result in those minority groups losing thousands of dollars in sports-betting revenue—money critical to their survival in this grueling post-pandemic economy.
“We are facilitating a meeting with a group of current kiosk locations and perspective sports wagering operators so that we and the operators can hear your concerns and hopefully arrive at solutions to alleviate those concerns,” Parks wrote in an invitation to select small businesses, a copy of which was shared with TBR.
Interestingly, hours before that closed-door meeting at the Martin Luther King Memorial Library, Mendelson made clear during his legislative press briefing that he was not sympathetic to the concerns that have been raised by small business owners and other council members.
“[It] is integrally tied to the budget, and I don’t support pulling it,” said Mendelson.
While the proposal was never voted on by McDuffie’s Committee on Business and Economic Development, it has been added to the FY 2025 Budget and to the Budget Support Act (BSA), which essentially authorizes the spending in the financial plan. The BSA subtitle would approve a new sports wagering model that could flood the city with more mobile operators, competing against DC’s recently redesigned app while greatly increasing the cost of a Class A license, adding a new license category and raising taxes on earnings.
MGM, Caesars, Fanatics and others—all large companies based outside of the District-- have said that should the bill be approved, they would likely discontinue the current use of retailers who have kiosks that permit betting inside their businesses and who receive 5% of revenues from bets made there. Some of those businesses with kiosks include Ivy City Smokehouse and Ben’s Next Door, a popular establishment owned by the famed Ali family, founders of Ben’s Chili Bowl.
McDuffie and Mendelson’s law would effectively kick those businesses to the curb unless they acquire one of the more expensive licenses.
Equally disturbing, the bill could also lead to a loss of more than $15 million revenues for the District, according to estimates provided by the DC Office of the Chief Financial Officer (CFO). That fact appeared in a letter dated May 31 sent by FanDuel’s president to Mendelson. First reported by TBR, the correspondence lays out in detail the disadvantages.
Responding to a series of questions asked by TBR about the sports wagering title of the BSA during his Monday press briefing, Mendelson acknowledged that he had received the letter. However, he said he has not responded.
Several councilmembers, including Zachary Parker, have complained about the legislation and McDuffie and Mendelson’s maneuver around the normal process where such legislation would be voted out of the Committee on Business and Economic Development.
For years, there has been controversy surrounding the sport wagering program, including initial revenue estimates made by former CFO Jeffrey DeWitt and the contract with the Greek company Intralot. Earlier this year, however, the CFO and lottery officials, intent on repairing the damage of the overestimates and the apparent flaws in the mobile app itself, entered into a subcontract with FanDuel. That agreement included a redesign of the city’s app and guaranteed revenue transfers from gambling bets of at least $10 million during the first year of the contract. Within the first few months, FanDuel has delivered more than $3 million, according to published reports.
In a recent newsletter, Parker argued that the council should allow the lottery to go forward with its plan to extend the current contract with FanDuel while also preparing to issue a request for proposal that could potentially lead to an agreement with a new company.
On Tuesday, June 11, during an administrative meeting of the council, Parker once again raised his concern. He told his colleagues including Mendelson that he did not object to providing funds for “baby bonds” but that the sports wagering legislation had “never been marked up” by McDuffie’s committee. It had never been voted on by that group. It also had never been voted on by the Committee of the Whole as is the normal practice. Parker asserted that including the bill in the BSA basically forced councilmembers to endorse the proposal although some of them actually objected to it.
Truth be told, McDuffie had a tough time earlier this year finding co-sponsors of the original legislation and may have engaged in some vote-trading to receive that initial support. Moreover, one reason the requisite committee process may not have occurred is because McDuffie lacked the needed votes for its passage.
In the Tuesday administrative meeting, Parker announced that he planned to introduce an amendment the next day to the FY 2025 budget bill that would allocate $1.83 million for baby bonds. He said he would offer a similar change to the BSA. If that is approved, it would essentially remove the subtitle from consideration, forcing the bill back into McDuffie’s committee for further action, if any.
It’s odd that Mendelson and McDuffie would push legislation that would unquestionably disadvantage the Black community. After all, in their most recent elections each relied on African American voters to secure a political edge.
In 2018 and 2022, Mendelson stood against Ed Lazere and Erin Palmer respectively—both were white candidates. Black voters helped Mendelson score wins in each contest. When McDuffie was disqualified from running as attorney general and pivoted to run as an at-large candidate in the 2022 general election, Black voters rallied around him, allowing him to defeat the incumbent, Elissa Silverman.
Ironically, McDuffie fancies himself a “Race Man;” he has pushed through several so-called equity programs and policies like reparations as a vehicle for compensating Black people for the adverse impact of slavery including the wealth gap between whites and African Americans. He frequently talks about the importance of small businesses to the local economy. Still, he has ignored the pleas from those companies, favoring the large, predominantly white out-of-state companies.
“This is a drive-by,” said one businessperson. “Whose water is Kenyan carrying?”
TBR has heard that question or a version of it from multiple individuals. “I don’t know what this is all about,” said Barbara Lang, CEO of Lang Strategies LLC who also served for 12 years as president of the DC Chamber of Commerce.
“When I talk to Mendelson, he tells me it’s all Kenyan,” Lang told TBR during a phone interview earlier this week. “Kenyan is telling people it’s all the chairman.”
In her testimony last month before McDuffie’s committee, Lang argued the legislation would “deprioritize the interest of small businesses” while privileging “large sports betting operators many of which already have the privilege of having a sportsbook at one of our professional sports stadiums.”
Now, Mendelson and McDuffie have decided that people already making a bunch of money will continue making a bunch a money. Black businesses won’t even be able to get a few crumbs.
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