After an explosive start to mobile sports betting, Maryland regulators have approved the diversity plans of newly-licensed sportsbook operators to implement a key tenet of the state’s policy framework.
Maryland’s Sports Wagering Application Review Commission (SWARC) met on Wednesday (January 18) to sign off on a first tranche of diversity plans that all operators are required to submit for approval within 30 days of receiving one of the state’s sports-betting licenses.
Maryland’s 2021 sports-betting law mandated the seven-member licensing commission “to seek to achieve racial, ethnic and gender diversity” through its awarding of up to 60 mobile and 30 retail sports wagering licenses.
A specific requirement was added as an addendum to the state’s license application last year, obliging all licensees to submit a formal plan outlining their strategies to promote meaningful diversity among employees, contractors and investors.
“I think we’ve got some real substance in these plans and it will be on us to monitor that the execution matches those plans,” SWARC chairman Thomas Brandt said Wednesday after commissioners voted to approve the diversity strategies of Maryland’s ten initial mobile sportsbook licensees.
Maryland’s licensing rules require operators to make good faith efforts to meet the objectives outlined in their plans and report on diversity metrics within their businesses to the Maryland Lottery and Gaming Control Commission (MLGCC).
During Wednesday’s meeting, Brandt said the MLGCC had decided to require that diversity reporting on an annual basis and would soon advise licensees of the specific process for doing so.
The ten plans briefly summarized by regulators on Wednesday indicate that various operators have sought investment from minority partners or partnered with historically black colleges and universities, among other diversity efforts.
Caesars’ Maryland sportsbook operation and its affiliated casino partner in Baltimore have also set a target of having 50 percent female and 50 percent minority representation among company leadership by 2025.
Maryland’s emphasis on ensuring racial, gender and ethnic diversity in its sports-betting industry is perhaps the most pronounced of any U.S. state to date, although there are past precedents from the land-based casino sector and several indications of a wider policy trend taking hold.
Massachusetts regulators similarly are requiring prospective sportsbook operators to submit descriptions of their commitments to diversity as part of an ongoing licensing process. In Virginia, meanwhile, operators owned by or partnering with minority individuals or minority-owned businesses are given preferential treatment in the awarding of a dozen available mobile betting licenses.
Maryland’s SWARC last year examined whether it could include specific gender- or race-based selection criteria in its licensing rules, before instead adopting a regulation to require all sports-betting operators to be at least 5 percent owned by individuals with a personal net worth of less than $1.847m, as an alternative way of ensuring diverse participation.
Licensed operators have all had to attest that they comply with the unique ownership requirement and specific steps taken on this front also seem to be central to their diversity plans, according to summaries provided by regulators during Wednesday’s meeting.
Before applying for a Maryland license, Caesars, DraftKings, BetMGM, Bally’s Interactive and Penn Entertainment all offered 5 percent equity in their local subsidiaries to minority investors or partners based in the state.
WynnBET created a bonus plan to provide 5 percent of its Maryland net profits to qualifying employees, while Live! Casino owner Cordish Gaming established a similar scheme enabling casino managers to own up to 10 percent of its mobile sportsbook subsidiary partnered with FanDuel.
Also in Wednesday’s meeting, SWARC chairman Brandt said the MLGCC continues to review the remaining seven mobile sports betting and five retail applications as additional operators seek to join a market that is off to a fast start since the launch of online wagering in late November.
In the first full month of operation, Maryland’s seven operational mobile sportsbooks reported $82.3m in gross revenue from more than $478m in handle.
The revenue total was inflated by some $70.9m in bonuses and promotions, with operators booking net revenue after permitted deductions of just $11.4m. Operators also benefited from an inflated monthly hold percentage of 17.2 percent.
Still, the performance is likely to see Maryland enter the top five largest U.S. sports-betting markets in December, with reported gross revenue higher than both Pennsylvania and Tennessee and only a few million dollars shy of the $86m monthly total in New Jersey.