Maryland House Subcommittee Passes Amended Online Gaming Bill

March 13, 2024
An amended bill to legalize online gaming via up to 30 licensees has been passed out of a Maryland House subcommittee.

An amended bill to legalize online gaming via up to 30 licensees has been passed out of a Maryland House subcommittee.

Delegate Vanessa Atterbeary, a Democrat and sponsor of House Bill 1319, testified before the House Racing and Gaming Subcommittee on Tuesday (March 12) to explain the amendments to her bill. The subcommittee took about 14 minutes to hear from Atterbeary and then discuss and pass the amended measure.

“This bill has been amended since its original introduction taking in concerns that we heard during the hearing (last month) and concerns from individuals on the committee,” Atterbeary said.

Among the proposed changes, Atterbeary wants to increase the total number of licenses from 12 to 30 available to the state's six land-based casinos and so-called Class B sports wagering facility licenses, including off-track betting outlets and charitable bingo halls. The state’s six brick-and-mortar casinos would be entitled to one and three licenses.

Atterbeary explained that land-based operators would need to demonstrate a 5 percent ownership from an individual that qualifies as a social equity applicant. They could apply for a second or third license if their social-equity ownership percentage rises to 33 percent.

The second category is for entities that have received their Class B sports-betting licenses. Finally, a competitively awarded licensing category would first feature social equity applicants only, and then after that other applicants for an iGaming license would be considered.

“If a casino doesn’t choose to get a second or third license, those will fall into the competitive awarded category,” Atterbeary explained.

The amended bill does not change the tax rates originally proposed. Revenue from live dealer games would be taxed at up to 20 percent, while all other iGaming offerings would be taxed at a maximum rate of 55 percent.

Each five-year license would cost $1m, with a renewal fee equal to 1 percent of revenue for the preceding three years.

Atterbeary, who is chair of the House Ways and Means Committee, defined a social equity applicant as a person or group of people that meet several criteria, including someone living in an economically disadvantaged area for at least five of the last ten years.

During a Ways and Means Committee hearing last month, several lawmakers and responsible gambling advocates expressed concerns over issues of compulsive gambling.

Atterbeary said she has made several player protection changes, such as banning the use of credit cards to fund iGaming accounts.

Maryland’s legislative session concludes on April 8, giving lawmakers less than a month to discuss and pass HB 1319, as well as a separate iGaming bill introduced by Senator Ron Watson, a Democrat. Senate Bill 603 remains in the Senate Budget and Taxation Committee.

If legislation is passed in Maryland, it would also need to be approved by voters in a state-wide referendum in November. Rather than passing a comprehensive bill, another option available to lawmakers is to set up a referendum on iGaming in general, and then return next year to consider more specific legislation if voters approve. That was how the state ultimately proceeded with the legalization of sports betting in 2020 and 2021.

Confidence among industry advocates is in limited supply, however.

Howard Glaser, head of government affairs and legislative counsel for Light & Wonder, told delegates at the recent Gaming Law, Compliance and Integrity Bootcamp at Seton Hall Law School in New Jersey that he was not expecting any iGaming bills to pass during this year’s state legislative sessions.

He added that he expects to see progress next year in Maryland, but the issue is complicated by opposition from some casino operators and union workers.

Maryland Budget Deficit

While committees in both chambers of the Maryland General Assembly consider iGaming legislation, lawmakers are also dealing with approving a budget introduced by Democratic Governor Wes Moore in January that needs about $500m to balance it.

Still, it is far from certain that the budget deficit will be the catalyst for lawmakers to put iGaming on the November ballot, even if budgetary needs are likely to improve the prospects for iGaming legislation in general.

“The reason we are going to [eventually] pass iGaming in all these states is, show me the money. You have to feed that beast that is state government,” said Glaser.

“When the cost of not doing something is higher than the cost of doing it, that’s when a politician acts,” Glaser said. “They need to pay a bigger [price] for failure to act than to act because there is always a reason not to act and iGaming is a good example of that.”

Currently, seven states offer legal online casino games. They are New Jersey, Michigan, Connecticut and Rhode Island plus Maryland's neighbors Pennsylvania, Delaware and West Virginia. Rhode Island launched its market last week, while Nevada only offers online poker.

Glaser attributed the slow expansion of iGaming to legislators being nervous about putting casino gaming on a phone where it is available 24 hours a day, seven days a week. He said there also is a lack of unity in the industry on iGaming where “the players within the industry are primarily involved over who gets a piece of the pie, not about growing the pie.”

Glaser added that being supportive of iGaming also has a lot to do with where a company operates. Some smaller regional casinos in a state such as Iowa are concerned that FanDuel and DraftKings will take 80 percent of the iGaming market like they have done with online sports betting.

In terms of sports betting, Glaser said, operators have been able to use a land-based casino operator’s license and the local casino gets a cut.

“But now we are talking about the crown jewels, casino games,” Glazer said. “If 80 percent of the online market is going to be two companies who aren’t actually in the casino business, you are going to think two or three times about whether it is useful for you.”

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