Maryland Senator Presents iGaming Bill at Hearing
There has been some excitement about the bill that two Maryland State Senators introduced to their legislature at the end of January. The bill was comprehensive and complete with a fiscal summary. They set a hearing date to discuss the bill further on February 15.
While the introduction was enthusiastic and thorough, Senator Ronald Watson admitted that his proposal had little chance of passage this year.
That wasn’t exactly what igaming advocates wanted to hear. It was probably the most realistic take, but it was disappointing nonetheless.
iGaming Bill Details
Maryland State Senators Ronald Watson and Nancy King cosponsored SB0267 and introduced it on January 25. Days later, they set it for its first hearing in the Budget and Taxation Committee in mid-February.
The “Internet Gaming – Authorization and Implementation” bill was comprehensive. Broadly, it would authorize the State Lottery and Gaming Control Commission to issue licenses to video lottery operations so they could partner with igaming companies to offer internet gaming to people within the state of Maryland. The governor would also have the authorization to enter into multijurisdictional agreements with other states, for the primary purpose of connecting online poker sites for increased liquidity.
Some of the important details proposed for the new gambling industry included:
-Video lottery operators would pay $500K for the initial licensing fee to offer igaming.
-The initial license would be valid for five years.
-Any person operating igaming on behalf of the licensee would pay a fee of at least $5K.
-Licensees would have to maintain all igaming data for at least five years.
-Licensees would retain 85% of their proceeds, with the remainder paid to the state.
-Proceeds paid to the state would be distributed monthly to the Education Trust Fund.
Ultimately, this bill would need to become a part of the Maryland Constitution. Expanded commercial gaming would need the approval of the state’s voters, so the question would go to the voters in the November 2024 election. The question, to be specific, would be:
“Do you favor the expansion of commercial gaming in the State of Maryland to authorize internet gaming for the primary purpose of raising revenue for education?”
If the bill is approved by the Maryland legislature, here is the question that would appear on the 2024 ballot:
"Do you favor the expansion of commercial gaming in the State of Maryland to authorize Internet gaming for the primary purpose of raising revenue for education?"
— RLinnehanXL (@RLinnehanXl) January 25, 2023
Fiscal Notes for SB267
The nine-page fiscal and policy summary attached to the bill went into more detail about the bill.
First, it explained that there are currently six video lottery operators in Maryland that would be eligible to apply for igaming licenses. One that obtains a license and begins offering internet gaming in 2025 would agree to the following: “Internet gaming license fees assessed to video lottery operators increase by $3M as early as fiscal 2025. Assuming $25K per facility in fees assessed per persons who operate internet gaming on behalf of the internet gaming licensee, another $150K is realized as early as fiscal 2025.”
The Maryland State Lottery and Gaming Control Commission examined igaming revenue numbers from Delaware, Connecticut, Michigan, New Jersey, Pennsylvania, and West Virginia – all offer igaming, only four of the six currently offer online poker – and made adjustments for population and other demographics. They determined that:
-Maryland igaming could generate as much as $72M in ETF revenues.
-The state could generate as much as $97M by fiscal 2028 from igaming.
-The Commission will need to add three new positions to oversee igaming, costing about $350K annually, though licensing fees will more than cover those costs.
In addition, the appendix of this document listed the potential licensees:
-Hollywood Casino in Cecil, which currently offers 699 VLTs and 19 table games
-Ocean Downs in Worcester, which currently operates 842 VLTs and 19 table games
-Maryland Live in Anne Arundel, which boasts of 3,855 VLTs and 179 table games
-Rocky Gap Casino in Allegany, which has 614 VLTs and 16 table games
-Horseshoe Casino in Baltimore City, which offers 1,466 VLTs and 130 table games
-MGM National Harbor in Prince George’s, which operates 2,130 VLTs and 209 table games
This shows that there will be obvious connections with online poker and online casino operators in other states. For example, Horseshoe is affiliated with the WSOP, and MGM National Harbor would partner with its BetMGM arm.
February 15 Hearing
SB0267 was on the docket for the February 15 hearing int eh Budget and Taxation Committee. At about 1.5 hours into the hearing, Senator Watson had the opportunity to talk about his bill.
“Do I have an exciting bill for you!” Watson started. “Colleagues, I’m pleased to sponsor Senate Bill 267 for internet gaming.”
He noted that the state has embraced other forms of gambling, from casino games to sports betting, but they are missing out on igaming. The new revenue stream would support education in the state. He emphasized that the bill outlines some responsible gambling measures to combat problem gambling and addiction. Watson explained geolocation technology and the ability for igaming to offer micro stakes games, not feasible in land-based casinos.
“In closing, this bill seeks to generate a new and missing revenue stream for education, specifically our blueprint; allow our seniors and other members of our community who are uncomfortable entering a casino to play; and allow us to legalize online gaming and capture profits from those who use PayPal, Venmo, CashApp, and other forms of payment who are currently engaging in private online gaming. Colleagues, the passage of this bill will complete the journey that our state started with casinos back in 2008.”
Then, Watson admitted that he spoke to the Maryland Attorney General about the expansion of gambling via igaming. He doesn’t expect anything to happen this year except to start the conversation in the committee and talk through details and potential changes to the bill.
Additional Hearing Comments
Antonio Jones, license holder for Riverboat of the Potomac Games and Sports Betting, started by noting that his company is the first 100% minority-owned sports betting licensee – retail and mobile – in the country. He said that SB0267 presents another opportunity to expand the revenue-generating ability of his riverboat, and he wants to see an amendment on the bill to allow riverboat operators to apply for igaming licenses.
Tim Perry of the Sportsbetting Alliance, consisting of members like BetMGM and DraftKings, supports the bill. His colleague Jon Mandel spoke in more detail of the opportunity to offer igaming to Maryland residents. He explained geotechnology in more detail and customer safety measures, including responsible gaming protections. In addition, he mentioned research that shows igaming only compliments other forms of gaming in a state and does not reduce their revenue streams.
List of top 10 U.S. states in sports betting $$ wagered in Dec. 2022 (of states reporting so far):
1. New York: $1.63 BILLION
2. NJ: $1.06B
3. Illinois: $1.03B
4. Nevada: $880.5M
5. PA: $754.8M
6. CO: $518M
7. Maryland: $497M
8. Michigan: $495M
9. TN: $440M
10. Indiana: $431M— Ben Fawkes (@BFawkes22) February 9, 2023
Frank Boston III with DraftKings spoke of the company’s existing igaming operations in several other states and membership in the Sportsbetting Alliance. He suggested an amendment to address market access, as broadening licensing opportunities for Maryland’s non-casino gambling entities would provide better industry competition.
Kerry Watson of MGM Resorts emphasized his company’s participation in the Maryland gambling industry. In its short time in the state, it has already contributed more than $1B to the education fund and hired more than 3,000 employees. He noted that igaming would provide the chance to dramatically increase the revenue and rebuffed any idea of cannibalization of land-based casino revenue.
