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On the same day that Maryland regulators resolved to award licenses for online sports betting on a rolling basis, counterparts in Massachusetts were urged by numerous operators to instead establish a universal launch date for legal sports wagering.
During its meeting on Thursday (September 22), Maryland’s Sports Wagering Application Review Commission (SWARC) voted unanimously in favor of a rolling approval of the state’s retail and mobile sports-betting license applications due to be submitted next month, rather than making a determination on all applicants simultaneously.
The issue had presented a conundrum for SWARC, the special licensing panel established by Maryland’s 2021 sports wagering law, because a rolling approval process might advantage established multistate sportsbook operators, whereas a key goal of the state’s legislation was to create opportunities for local minority- and women-owned businesses.
On the other hand, SWARC has come under increasing pressure from Governor Larry Hogan, among others, to expedite the launch of mobile sports-betting products that are already available in all of Maryland’s bordering states.
Ultimately, waiting for all companies to complete a background investigation and be deemed qualified by the Maryland Lottery and Gaming Control Agency (MLGCA) before awarding any of the licenses would mean that “one applicant could hold up the entire industry from starting,” Jim Nielsen, MLGCA’s deputy director and chief operating officer, told SWARC members.
“We think this aligns with the public demand to get mobile sports betting operational quickly as well as SWARC’s fiduciary duty to raise money for the Blueprint fund,” Nielsen said, referring to a state education fund that will be the chief beneficiary of state tax revenues from sports wagering.
The rolling approvals mean Maryland could conceivably launch online sports betting before the end of the year, although successful applicants will still have to complete several steps before they reach that point.
After applications are submitted to SWARC on or before an October 21 deadline, prospective operators would then have 14 days to upload information to the MLGCA’s e-licensing portal to undergo a suitability investigation.
SWARC would only be able to award the license once the applicant is found to be qualified, but the operator would then have to undergo further review of its internal controls and systems by the MLGCA before an operating license could be approved.
The rolling-approval process is also predicated on supply exceeding demand for the dozens of licenses available under the 2021 law.
“There’s 30 and 60 [retail and mobile licenses available] which none of us assumes is going to be exceeded, but certainly we couldn’t approve them if the law doesn’t allow us to go over those numbers,” said Thomas Brandt, SWARC’s chairman.
Massachusetts Mulls Staggered Launch, Temporary Licenses
The SWARC hearing began at the exact same time as a Massachusetts Gaming Commission (MGC) public meeting to take input from leading sportsbook operators on the same issue of a universal versus staggered market launch, as well as the potential for a temporary licensing regime for sports betting in the Commonwealth.
A clear consensus among the representatives of some 20 companies who spoke at the MGC meeting was in favor of the commission following the approach of Arizona, Colorado, Michigan, Ohio and others in setting a specific launch date that all operators could work towards.
Executives offered contrasting opinions, however, on whether there should be more than one launch date for the different license categories established under the Massachusetts sports betting law signed in August.
Representatives of Wynn Resorts, Penn Entertainment and the Suffolk Downs and Raynham Park simulcast facilities all endorsed a three-tiered launch approach with retail sportsbooks going live first, followed by mobile sportsbook platforms tethered to incumbent land-based casinos and racing facilities, and then finally the seven standalone mobile betting licensees.
In contrast, representatives of various other operators, including DraftKings, FanDuel, BetMGM, Bally’s, Betfred and Hard Rock Digital, instead advocated for one universal launch date across the boar, if not for both retail and online sports betting, then at least to ensure both tethered and standalone mobile sportsbooks can go live at the same time.
It would be “completely inequitable” to allow mobile platforms partnered with a Massachusetts casino to launch before those with standalone licenses, said Chris Cipolla, senior director of legal and government affairs for Boston-based DraftKings.
Cory Fox, vice president for product and new market compliance for FanDuel, noted how his company and chief rival DraftKings have gained a long-term market-share advantage in states such as Pennsylvania and Indiana where they have been able to launch ahead of each other.
A universal start date ensures a level competitive playing field, removes undue pressure on regulators to issue approvals and has already been used successfully in various other states, Fox said.
In addition to a staggered versus universal launch, the MGC took input on the thornier issue of temporary licensing as permitted by the Massachusetts statute.
The state’s law allows the commission to award one-year temporary licenses to all qualified operators in return for a $1m fee, but does not factor in the prospect that no more than seven mobile operators would be able to obtain a permanent license.
Although several operators expressed interest in temporary licenses and suggested such a framework could be possible subject to appropriate limitations around account balances and futures bets, the overriding message was it would be highly problematic because those temporary licensees would have to make major technological and marketing investments while at risk of shutting down within just a few months.
FanDuel’s Fox said the Flutter-owned operator would interpret the intent of the temporary licensing structure to expedite the launch of the seven mobile operators once they have already been chosen through a selection process, but not before.
Temporary licenses have been used successfully in various other states, said Alex Smith, vice president of regulatory affairs for Fanatics Betting and Gaming.
“However, I would caution that allowing more operators to launch than the market can bear on a full license basis does introduce consumer protection concerns that are difficult to address,” Smith said, citing settlement of pending bets and issues related to player bonuses.
Commissioners did not indicate during Thursday’s meeting which direction they were leaning on a universal versus staggered launch date.
However, the Massachusetts regulators did appear to be uncomfortable with temporary licensing for mobile betting, with commissioner Brad Hill stating he was “not surprised” at pushback from operators and chair Cathy Judd-Stein repeating concerns about the integrity of such a process.
