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Potential sportsbook operators in Maryland have pushed back against draft regulations that would mandate the use of official league data for all types of wagers, as well as a potential cap on tax deductions for bonuses.
The Maryland Lottery and Gaming Control Commission on Thursday (September 30) published more than 350 pages of public comments on the proposed sports-wagering regulations that commissioners approved in July.
Among the most common concerns voiced by sportsbook operators was the commission’s inclusion of an official data mandate in its draft rules.
A state law passed earlier this year did not include any statutory requirements for official data, but the commission not only added a mandate in its regulations, it proposed the most sweeping data restrictions in the U.S. market to date.
The draft rules would require operators to use official league data to settle any wager upon request from a sports governing body, rather than only for so-called “Tier 2 wagers,” such as in-play and proposition bets.
“While a number of states have provided a requirement for the use of official league data in certain circumstances, it is critical to understand that the provisions contained within the Proposed Regulations go far beyond the provisions found in any other jurisdiction in the United States,” wrote Cory Fox, vice president of government affairs for Flutter-owned FanDuel.
“No other jurisdiction in the country has a blanket requirement that official league data be used to settle all wager types, and those regulators that do require official league data to settle wagers, have been charged to do so by their state’s legislature,” added rival DraftKings in its comments.
Although an official data mandate has become a more common feature of recent sports-betting legislation, its effects could be more noticeable in Maryland.
The state’s law offers more than 100 opportunities for sports-betting licenses in a bid to provide opportunities to more small and minority-owned businesses, whereas the likes of Illinois, Michigan generally restrict their markets to only larger operators with existing league partnerships.
Brandt Iden, head of U.S. government affairs for Sportradar, argued that in addition to being burdensome, the broader data restriction proposed in Maryland was unnecessary.
“The biggest difference between official and open-source [unofficial] data is latency, which could differ up to approximately six or seven seconds,” Iden wrote in the company’s comments. “But that latency benefit is trivial when posting pre-match odds for betting markets that are available for days or even weeks leading up to the start of a match.”
“The nature of grading in-play wagers is significantly different and more reliant on the speed of data feeds because the micro-events being wagered on may only be available for a matter of minutes throughout the course of a match,” Iden added.
“As such, the five U.S. jurisdictions that require a data sourcing mandate (Arizona, Illinois, Michigan, Tennessee and Virginia) all have narrowed the scope of this mandate to in-play wagers only.”
Pro sports leagues continue to back the provision as written, with Major League Baseball, the National Basketball Association, the PGA Tour and the National Football League submitting comments supporting the inclusion of the data mandate.
Capped Promotional Play, Pre-Approval
Another frequent concern from operators was a proposed cap on promotional play tax deductions included in the draft regulations.
The regulations include uncapped promotional play deductions for the first year of licensure, but then in subsequent years cap deductions at 20 percent of the prior year’s total sports-betting revenues, drawing the ire of operators as they continue to spend significant cash on marketing.
“A cap on the amount of promotional play deduction is not contemplated in the statute, and it is not the purview of the regulator to alter the statutorily-provided definition of 'proceeds' by imposing limits that are not contemplated in statute,” DraftKings wrote in its comments.
“Promotions are a paramount means of attracting bettors from the illegal market to the regulated market and should not be capped from a deduction standpoint, as signaled by the legislature.”
The 20 percent figure mirrors allowable promo deductions for casino gaming in the state.
“While the 20 percent limitation is familiar to casino operators in Maryland and may be appropriate for existing casino gaming verticals, the business model for sports wagering is different where profit margin is comparatively thin,” wrote Cathy Beeding, executive vice president and general counsel for Cordish Companies, operator of Live! Casino and Hotel near Baltimore.
Several operators including Penn National Gaming also argued against a provision that would require operators to submit promotional materials to the regulator for approval seven days in advance.
“Penn has observed that when jurisdictions have implemented a stringent promotional review process, a sports wagering licensee’s ability to efficiently offer players compelling promotions around sudden, high-interest events in sports is materially hindered,” the company wrote.
Operators also asked the commission to clarify whether credit cards would be permitted to fund wagering accounts, pointing out that the funding methods listed in the draft rules only include debit or prepaid cards, while other areas of the regulations refer to credit cards.
The commission said in a statement Thursday that it is reviewing the comments and that any amendments recommended by staff will be presented at the commission’s next meeting on October 21.
