In her TV heyday, Oprah Winfrey was known to hand out new cars to audience members as if they were so much Halloween candy.
Brendan D. Bussmann, director of government affairs for Global Market Advisors, says “the Oprah effect” is playing out in Maryland as it enters the sports betting marketplace.
“YOU get a license, and YOU get a license, and YOU get a license…”
He’s exaggerating, but it has the ring of truth. If Maryland issues all the licenses allowed by law, it will have 107 sports betting providers.
Here’s a breakdown:
- A1 licenses have been issued to three casinos, each with more than 1,000 video lottery terminals (VLTs): Horseshoe Baltimore, MGM National Harbor and Live! Casino near BWI Airport. Camden Yards, M&T Bank Stadium and FedEx Field are also eligible for A1 licenses. Application fees are $2 million each.
- All three A1 casinos have been fully licensed. Two of the three A2 casinos have been fully licensed as well.
- A2 licenses are available to three casinos, each with fewer than than 1,000 VLTs: Hollywood Casino, Ocean Downs, Rocky Gap Casino and Resort, along with Laurel/Pimlico racetracks. The fee is $1 million. To date, all casinos but Rocky Gap have opened their sportsbooks.
- Class B designated licensees include the Maryland State Fairgrounds, Bingo World and Rod ‘N Reel, two bingo parlors with at least 200 machines and four off-track betting locations: Greenmount Station, the Jockey Bar and Grille, Long Shots, and Riverboat on the Potomac. The OTB locations may debut in the first quarter.
- Class B competitive licensees include 30 retail locations to be approved by the Sports Wagering Application Review Commission (SWARC). The commission will conduct a competitive bidding process for “businesses in the entertainment and hospitality industry for which the addition of sports wagering would provide an ancillary option” with the goal of providing additional revenue to the core business. We’re talking bars, taverns, restaurants, bowling alleys and golf clubs.
- B1 licenses could go to establishments with 25 or more staff and at least $3 million in gross receipts. The application fee is $250,000. A B2 license will be awarded to businesses with fewer than 25 employees and less than $3 million in receipts with an application fee of $50,000.
Sharing the Wealth
Will big casinos have a problem if bars and taverns can offer sports betting? It’s unlikely, said Joseph W. Grad, co-founder and partner of gaming consultancy Hensel Grad P.C.
“Maryland’s introduction of sports wagering in smaller venues like bars and taverns will likely serve a somewhat different—and younger—audience than the sports bettors who go to land-based casinos,” he said. “I would expect it will create niche convenience gambling for those who frequent the smaller establishments.”
The Cordish Companies, owner of the Live! Casino brand, emphasize onsite experiences, said Rob Norton, president of Cordish Gaming Group. “The FanDuel Sportsbook at Live! Casino & Hotel Maryland is already establishing itself as a must-visit destination for sports bettors. Situated in Sports & Social within the property, guests are offered an unparalleled sports viewing experience with a massive 100-foot media wall, first-class dining and classic social games like bowling and foosball.
“While sports bettors will have options on where to place their sports bets, we remain focused on ensuring our FanDuel Sportsbook provides the best sports betting experience in the state.”
The potential problem is not how a sportsbook in a tavern will impact a place like Live! Casino, but its own lack of operational savvy.
“You may not have operators that have the experience to do what they need to do to make their model work,” Bussmann said. “While some of these locations could end up being a hindrance to a market, finding suitable operators is the key to deliver a solid product for consumers and the industry.”
SWARC is working to establish the license application process for Class B competitive licenses as well as the 60 mobile license that round out the 107, the latter charging $500,000 an application, said Seth Elkin, assistant director of communications for Maryland Lottery and Gaming.
“The SWARC is tasked with assuring that the goals of the sports legislation are met—namely, to encourage minority- and women-owned businesses in the state’s sports wagering industry,” he said.
The launch of mobile sports betting in the state is not imminent, Bussmann said. “I think you could see something anywhere from Q3 to this time next year.”
Opening Up the Opportunity
Despite the potential pitfalls, Maryland has taken a creative approach to sports betting, according to Grad. “It’s opening the door to not only more potential sports wagering venues, but a larger and more diverse group of operators as well. So it wouldn’t surprise me to see state lawmakers and the gaming industry look to different social settings such as bars and taverns in which gaming products could be offered. This should make it possible to provide a secure gaming platform in a more intimate social environment.”
It would also send a message to other states and make it possible for tavern and restaurant associations to grab a slice of the sports betting pie, Grad said.
At this point, Pennsylvania isn’t among those states. According to state Senator John T. Yudichak, there’s been no serious conversation about moving product into taverns, clubs or bars. “But there’s been talk of modernizing games of chance for police, fire and other non-profits” as a fundraising tool, he said. Whether gaming devices in partnership with casinos could be placed in taverns or clubs remains unknown.
There is always a potential downside to the addition of new betting venues, wherever they are, said Mary Drexler, program director of the Maryland Center of Excellence on Problem Gambling.
“There’s a concern we may see an increase in individuals potentially developing a gambling problem or at the least putting themselves at risk for developing a problem. Other states that have rolled out sports betting, especially with online/mobile access, have seen an increase in individuals and families reaching out for help, especially through their designated helplines.
“As the rollout here in Maryland has just begun recently, we’ll watch to see what trends lie ahead,” she said.