A bill that would introduce online casinos in Maryland has passed in the House of Representatives, opening the door for a referendum on the controversial issue in November. But a General Assembly member recently told the Baltimore Sun it’s unlikely the legislation will pass in 2024, and Senate President Bill Ferguson says senators are “a hard no.”
Any gambling expansion in the state requires a constitutional amendment, meaning legislation must be approved by a three-fifths majority in each chamber followed by voter approval. Before the question goes to the ballot, the Senate must approve a companion bill, and that bill’s sponsor says his colleagues are in no hurry to vote on the measure before they adjourn on April 8.
“The general consensus of the Senate is that a balanced budget has been developed and submitted,” Senator Ron Watson told the Sun. “As such, no new taxes are required, nor are they ready to entertain this new revenue stream.”
Del. Vanessa Atterbeary, sponsor of the House bill, said the state is missing out on much-needed revenues if it doesn’t approve online casinos. “Currently in the state of Maryland, there is illegal iGaming going on to the tune of about $200 million a year,” she said, and participants are “playing where there are no safeguards.”
According to PlayMaryland.com, the recently amended bill includes a “complicated three-prong licensing structure” that could allow as many as 30 Maryland online casino apps in three categories. It ensures participation by “social equity applicants,” defined as individuals or people who have lived in economically disadvantaged areas for at least five of the past 10 years.
The license categories include:
- Casino licenses: For a first license, casinos operators must share 5 percent of iGaming revenue with a social equity applicant partner. For a second license, operators would share 33 percent of revenue, and a “bonus” third license would revert to the 5 percent share.
- Class B licenses: Four off-track betting parlors and two bingo halls in the state are eligible for sports betting licenses, as is Urban One, a media company that once held a minority stake in MGM National Harbor.
- Competitive bid licenses: A minimum of five licenses would be up for grabs, along with any licenses remaining from the 18 offered to casinos. The first round of bidding would be limited to social equity applicants. The second round would be open to all others.
The bill sets a minimum tax rate for electronic games at 55 percent and a rate for live dealer games of no less than 20 percent. Licensees would pay a startup fee of $1 million for a five-year license, with renewal fees equal to 1 percent of the licensee’s average annual revenue over the previous three years.
Overall revenues for the state are projected to reach more than $200 million the first year, and up to $300 million a year at maturity, which Atterbeary would earmark for the Blueprint for Maryland’s Future Fund. Approved in 2020, the fund underwrites expanded early childhood education, increases teachers’ salaries and provides aid to struggling schools. At present, the educational initiative is funded only through 2027.
In other details, the bill would allow multi-jurisdictional agreements with other states to share player pools and prohibit the use of credit cards to fund online casino accounts.
Anticipating a stall in the Senate, Watson told Forbes he wants to cut to the chase, with a plan to introduce the referendum even if the Senate declines to vote. “Because if we don’t do a referendum this year, we have to wait until 2026,” he said, which means iGaming could not launch at all until 2027 at the earliest.
Watson attributed Senate inaction to “concerns about problem gaming and cannibalization.” Many union casino workers and two of Maryland’s six casinos oppose iGaming, saying it would hurt land-based casino businesses and lead to job losses. Watson rebuts that view.
“I’ve told colleagues, as did Delegate Atterbeary in the House, that there haven’t been any proven cases of cannibalization in any state that has iGaming,” Watson told Forbes. “Unfortunately, Maryland Live! is saying there’s cannibalization and job loss, when the fact is that they offer online casino in Pennsylvania and are looking to hire more workers at Philadelphia Live!
“I think the Senate is missing the boat in terms of not considering the time frame to implement this,” he continued. “You can’t pass iGaming and the next day collect $300 million. The reason I want to do it this year is to establish the market, allow the market to mature, and by 2028 we should be able to see that full $300 million revenue stream.”
Meanwhile, a new study contends that iGaming could actually have a multiplying effect on gaming revenues in Maryland and four other states contemplating the new industry, New York, Illinois, Louisiana and Virginia.
According to MarylandMatters.com, the analysis estimates that, while land-based casino revenue in Maryland is projected to continue to grow by 2.5 percent over the next few years without iGaming, it could exceed that, at 4.4 percent, with the addition of iGaming.
“The fact that Maryland’s gaming revenues have increased substantially in the presence of sports betting revenues indicates that the two sources of revenues may be complements rather than substitutes,” the authors wrote.
The study was conducted by the Analysis Group on behalf of the Sports Gaming Alliance, a consortium of gaming companies that includes DraftKings, BetMGM, FanDuel and Fanatic Sports Book.
