Maryland’s Pro-Business Approach to Sports Betting

Although it’s become the template used most frequently, should sports betting be limited to casino entities? In Maryland, a class of licensing permits local bars and restaurants to utilize sports betting kiosks potentially bringing the benefits of sports betting to the masses, according to Bruce Merati (l.) and Ira Rainess.

Maryland’s Pro-Business Approach to Sports Betting

Right after the repeal of PASPA by the Supreme Court, several states on the East Coast followed Nevada’s long-standing sports betting model. Nevada was the only state that had legalized gambling when it first began. On the Las Vegas strip, resorts focused on taking wagers on sporting events as amenities for their out-of-town guests. At the same time, smaller casinos were focused on Nevada residents, quickly becoming a marketing tool to attract the locals to their properties to play table games and slot machines.

In contrast with the Nevada model, race and sports betting in other countries were offered through betting parlors operated in populated areas such as city centers and working-class neighborhoods. Even though casinos had been operating in several European cities for centuries, they decided to stay away from the sports gaming business. Historically, European casinos have been elegant boutique properties built to attract the more affluent clientele. Alternatively, betting shops were set up as dedicated places for the working and middle class to place bets on sporting and racing events.

As soccer matches became increasingly televised live in the 1970s, the sports betting business boomed in Europe. The popularity of sports betting increased to the point that betting shops became more ubiquitous than banks or supermarkets in cities across the United Kingdom. Sports fans would walk into local betting shops and place small bets on the upcoming matches, giving them a stake in the game and extra excitement while watching live at home.

For several years before the 2018 Supreme Court ruling, New Jersey lawmakers took the issue of sports wagering to various courts to give Atlantic City casinos an equal footing with Nevada casinos in attracting customers to visit their resorts, especially during major competitions such as the Super Bowl and March Madness. As soon as the Supreme Court ruling was announced, each state could legalize sports betting. New Jersey’s lawmakers and regulators followed Nevada’s model and awarded licenses to its casinos and racetracks.

Shortly after New Jersey went live with the business, neighboring states followed the same process. Unfortunately, they merely adopted similar roadmaps without doing adequate feasibility studies. Instead of building the optimum model that would best fit into the fabrics of their states and maximize their potential revenues, states frequently overlooked how small businesses within the state could benefit from the business.

It was not until recently that Washington D.C. produced a new class of licenses that allowed local bars and restaurants to offer their own sports betting operations to attract customers to their properties. Maryland has recently adopted this pro-small-business approach by creating Class B Licenses so that small businesses within the state may generate additional revenues and more taxes for the state through sports wagering. Maryland is finalizing its Class B Licensing regulations and selection process to award a set number of local bars and restaurants licenses for running their sports betting kiosks on their premises.

Maryland has also focused on getting women and minorities involved in sports betting by placing an extraordinary emphasis on approving minority-owned businesses for retail sports betting licenses. The goal is that small businesses, such as restaurants and bars in designated localities, operate their small-scale sportsbooks to help them attract more customers to their proprieties.

Allowing bars and restaurants to offer their own sports betting operations has several benefits and a few downsides. Regulators can control the number, size, and location of such businesses so that they do not adversely affect the business of existing gaming establishments within the state. In most cases, casinos are on a city’s outskirts and require a reasonable amount of time and effort for patrons to drive to these locations. Also, with rising fuel costs, people will think twice about making a trip to a casino to bet on an upcoming game.

If a state has legalized mobile wagering, most of the time, people stay home rather than walk or drive a short distance to a neighborhood bar to socialize with their friends and neighbors to watch a game. Although people can use their phones to place a wager in a bar, chances are they will be more attracted to a bar’s exclusive offer to bet, eat, and drink at the location during a game. Also, in the case of sports betting kiosks, restaurants and bars will have more flexibility in offering customized special promotions to cross-market their food and drinks to locals.

It makes economic sense for states to extend limited sports betting licenses to local bars and restaurants to allow them to generate additional revenues by cross-marketing this amenity with their existing businesses. This approach creates economic and wagering opportunities at the local level, helping a state’s small businesses generate additional revenues and taxes for the state.

Articles by Author: Bruce Merati and Ira Rainess

Bruce Merati is cofounder of BC Technologies, a sportsbook system provider, and CEO of Uplay1, a gaming IP company. Ira Rainess serves as the head of the sports and entertainment law practice at Silverman Thompson, a Maryland-based law firm. Currently, he is working with small businesses in Maryland through the licensing process.