Maryland has officially joined the race for online casino legalization.
For constitutional reasons, however, we won’t know if it has succeeded until November 2024. That puts any possible launch into the middle of 2025 at the earliest. There are many hurdles the effort will have to clear between now and then.
SB 267 is the work of two Democrat Senators, Ronald Watson and Nancy King. It got its first reading in the Senate on Jan 25. The next step will be to refer it to a committee for preliminary review.
Gambling Expansion in Maryland Requires Voter Approval
In many ways, Maryland is a prime candidate for online casinos. It shares a border with four of the six other states which have them – New Jersey, Pennsylvania, West Virginia and Delaware – and has an established retail casino industry. Furthermore, it’s a solidly blue state, and progressive voters tend to be more welcoming of gambling expansion than conservatives.
What has been holding it back is the state constitution. Maryland is among the many states whose constitutions require a referendum on any new forms of gambling.
The 2020 ballot question on sports betting in Maryland passed by an overwhelming margin. However, voter fatigue is a real issue when it comes to such topics. Pushing for online casinos in 2022 would have been too much, too soon.
The next opportunity will be the 2024 general election. Watson and King’s bill would put the question to Maryland voters at that time. Their proposed phrasing:
Do you favor the expansion of commercial gaming in the State of Maryland to 30 authorize Internet gaming for the primary purpose of raising revenue for education?
Who Would Operate MD Online Casinos?
Retail casino gaming in Maryland falls under the jurisdiction of the state lottery.
SB 267 specifies that any “video lottery operator” would be eligible to obtain an internet gaming license. That’s the language Maryland law uses to refer to its retail casino operators. There are currently six such casinos in the state:
- Horseshoe Casino Baltimore
- Ocean Downs Casino
- Live! Hotel & Casino Baltimore
- Hollywood Casino Perryville
- Rocky Gap Casino Resort
- MGM National Harbor
Each of these could obtain a license and potentially subcontract to other operators to offer games on its behalf. That’s more or less the retail-online partnership model pioneered by New Jersey and followed by the likes of Pennsylvania and Michigan. However, the state lottery being the gaming regulator may mean the closest comparison is to the West Virginia market.
Four Maryland casinos already have online brands: BetMGM, PlayLive!, Barstool (Hollywood) and Caesars (Horseshoe). However, other major brands like FanDuel and DraftKings are already active in the sports betting market and could obtain online casino access through partnerships.
Where Would Money from MD Online Casinos Go?
Because they would be part of the lottery’s operations, Maryland online casinos wouldn’t be “taxed” per se. Instead, any revenue not explicitly retained by the operator would go to the Lottery Fund.
This first draft of SB267 stipulates that operators can retain 85% of their revenue. In other words, 15% would go to the Lottery Fund, and we can consider this to be the effective “tax” rate.
The Maryland government’s website states that money in the Lottery Fund gets divided among the following:
- Maryland Stadium Facilities Fund
- Maryland Veterans Trust Fund
- Baltimore City Public School Construction Financing Fund
- State General Fund
In addition to this revenue-sharing, there is also the matter of licensing fees. Each retail casino would pay a one-time $500,000 fee for its internet gaming license.
There would then be a renewal fee every five years. That would equal 1% of the operator’s after-tax revenue over the preceding three-year period. So, it works out to something like an additional 0.55% we can tack onto the effective tax rate.
SB267 states that this money would go into the Education Trust Fund.
Most of the rest of the language in SB267 is pretty standard. There is, however, one exciting provision when it comes to responsible gambling.
Like other states, Maryland would require operators to offer players the ability to self-exclude. Many bills specify a range of options for this, such as a one-month cooldown or permanent self-exclusion.
What’s different about the Maryland bill is the requirement that operators allow this for “any number of hours or days.”
That is, a player who wants to self-exclude for 40 days can do so. Another might only want to lock themselves out for 12 hours.
This sort of flexible self-exclusion could prove to be a good idea. The international operator Tipico has experimented with a 24-hour “panic button” tool and claims to have seen great results. Empowering players to use responsible gambling tools the way they want may mean that more users take advantage of those options.