Maryland Mobile Sports-Betting Mandate Seeks Minority Participation

May 9, 2022
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Nearly a year and a half after voters approved sports betting, Maryland is finalizing licensing rules to govern how mobile wagering will operate in the state as commercial gaming interests as well as small, minority- and women-owned businesses wait to be licensed.

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Nearly a year and a half after voters approved sports betting, Maryland is finalizing licensing rules to govern how mobile wagering will operate in the state as commercial gaming interests as well as small, minority- and women-owned businesses wait to be licensed.

To encourage widespread participation, Maryland politicians, regulators, business owners and gaming executives gathered Friday (May 6) for an educational summit at the headquarters of the Maryland Lottery and Gaming Control Agency in Baltimore.

Darryl Barnes, a Democratic representative and chairman of the Maryland Black Legislative Caucus, welcomed some 200 attendees but continued to make his position clear that there must be minority participation in mobile sports betting as part of the equation.

“If you take advantage of [it] then I do believe we will create more millionaires in the state of Maryland than any other state,” Barnes said. “I do believe we will do it better than any other state … because we are being as deliberate as we can to ensure … true diversity is what we are putting together.”

Barnes recognized the owners of The Riverboat on the Potomac in Charles County that offers lottery games and off-track-betting as the only minority-owned business currently licensed to offer retail sports betting in Maryland. The business has partnered with PointsBet.

“I would say those who are participating in that industry with the Riverboat … let’s use them as the model to duplicate that throughout the state of Maryland,” Barnes said.

The half-day summit included panel discussions on a regulatory overview of Maryland sports betting, as well as the costs of running a betting operation.

Jimmy Rhee, special secretary of small, minority and women business affairs for the state of Maryland, assured attendees that as mobile wagering emerges, there will be new opportunities for small and minority-owned businesses to be licensees.

“And while it is so new, there will also be risk factors to consider,” Rhee said. “Entrepreneurs that choose to seek the sports-betting licenses that will be awarded in Maryland have to remember that small business success is built on three pillars.”

Rhee said one of those pillars is core competency, warning that businesses better be “darn good at what you do,” and be prepared to demonstrate how they can leverage past experiences in this new arena.

“You’ve got to know the industry. You’ve also got to know Maryland’s laws. Know how to maintain impeccable recordkeeping and accounting controls because audited financials are part of the game,” he cautioned.

Rhee said the second pillar was understanding access to capital, urging attendees to have a “rock solid” financial plan before moving forward to submitting their license application.

He also reminded attendees to understand licensing costs, background checks and security costs and the requirement to have a minimum cash reserve of $500,000 before they will be able to start accepting bets.

Lastly, prospective licensees also need to understand the competitive arena, Rhee said.

“The competitors already have the following, and when I say competitors, I’m talking the big guys … DraftKings, FanDuel and BetMGM. They have a national presence and name recognition.

“If you are a small or minority-owned business going after this license you may need a substantial database of customers,” Rhee said. “They have them; you don’t. So small businesses that are new to this industry, you have to be creative, differentiate yourself from the competition.”

Rhee added that “entrepreneurs are entrepreneurs, they rarely shy away from challenges.”

Maryland launched sports betting late last year after Republican Governor Larry Hogan signed a bill in May, but so far only retail sports betting has been launched in established casinos.

The delay is due to the law's creation of a new Sports Wagering Application Review Commission (SWARC) to oversee the licensing process.

SWARC will award up to 30 additional retail licenses and up to 60 mobile licenses but has been tasked with seeking to “achieve racial, ethnic and gender diversity when awarding licenses.”

Barnes said he participated in an gaming conference in New Jersey, and he asked the same question on Friday that he asked attendees in New Jersey.

“Can anyone in the room tell me, what is the common theme you see in the room?” he asked.

“The common theme in the room is that the room is full of white folks,” Barnes said. “That there are no Black people here that are trying to get into this multi-billion-dollar industry … in the state of Maryland.

“That’s the problem,” he told attendees Friday. “The reason why you are all here is to have a conversation centered around equity, inclusion and diversity. How do we put more people of color into the equation when we start talking about sports betting?”

Barnes said it was crucial that there are more conversations about minorities having more seats at the table.

“I’m going to tell you, if those conversations are not being had and those deals are not being had, then those deals are not going to happen here in the state of Maryland,” Barnes said.

“So I would suggest, advise, gently nudge that you should really think about how you diversify what you are doing and put together your offering that includes minority participation.”

Barnes added that it was his hope that the SWARC and Maryland Lottery ensure minorities have equal footing when it comes to retail and mobile sports wagering licenses.

“Because if we don’t have equal footing,” he warned, “then I don’t want to monopolize the industry where one group is having an advantage or a couple of steps ahead of everyone else.”

Barnes said with the launch of retail sports betting, the state has seen there is a market for it and people are taking advantage of it.

“My goal, as the chairman of the Black Caucus, once again, is to ensure that there is minority participation in this industry. If we don’t take advantage of the things I just outlined then I think you are all here for the wrong reasons,” Barnes said.

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