A Maryland online casino study that found the state will lose 10% of its tax revenue from retail casinos if it legalizes iGaming is wrong, gaming attorney Jeff Ifrah told Bonus. On Feb. 15, the organization he founded, iDEA Growth, released research showing the “positive impact of iGaming on land-based casino revenue” in the US.
The research released on Feb. 15 showed retail casinos would see retail casino revenue “in a hypothetical state” grow by 1.7% due to adding iGaming.
Bonus asked Ifrah — the founder and general counsel for iDEA Growth (iDevelopment and Economic Association) — about Maryland, even though iDEA’s research refuting cannibalization beliefs is more universal.
The study’s primary findings are:
In addition to adding a revenue stream for land-based casino operators, iGaming helps boost revenue from operators’ brick-and-mortar properties.
Cannibalization is such a common argument against legalizing online casino and poker gambling that it’s been present at every bill hearing I’ve ever covered. Surprisingly, it came up in Rhode Island before lawmakers legalized iGaming in 2023. That state’s only casino operator is Bally’s Corporation (Bally’s Corporation 17,77 -0,22%), which will be launching Bally Casino on March 1, 2024.
In other words, bill opponents were concerned that Bally’s would be cannibalizing itself.
Why Single Out Maryland?
Bonus concentrated on Maryland because it’s perhaps the most likely state to legalize online casino gambling in 2024. That’s if the Maryland General Assembly approves iGaming bills proposed by state Sen. Ron L. Watson and state Del. Vanessa E. Atterbeary. If that happens, Maryland voters would be asked in a November ballot question if they want to change their state constitution to authorize online casino and poker gambling.
Meanwhile, Maryland lawmakers are considering the findings of a study commissioned by the state gaming regulator. The Innovation Group (TIG) came back with results in November, which lawmakers heard in a Jan. 18 briefing presided over by Atterbeary, D-Howard County.
The study showed Maryland may gain $900 million in revenue from legalizing iGaming, but it will lose 10% in tax revenue from existing retail casino operations. Most comments from lawmakers during Atterbeary’s committee meeting were about their concerns over possible lost land-based casino revenue and jobs.
During the committee briefing, Watson, D-Prince George’s County, spoke about how the study didn’t include possible revenue and job loss from Maryland retail casinos due to Virginia’s new commercial casinos. He said that’s happening regardless of whether Maryland legalizes iGaming.
However, if it adds legal online casinos and poker gambling, Maryland will gain revenue and jobs.
Ifrah said iDEA’s research conducted by Eilers and Krejcik Gaming shows that legal iGaming will also augment Maryland’s land-based casino revenue, counter to TIG’s findings.
Ifrah told Bonus:
We’ve already received positive feedback. Policymakers want data, and this study points to facts that can be applied to a future iGaming market in Maryland. This study proves that iGaming and land-based casinos can coexist and even thrive.
Bonus reached out to Watson but didn’t receive a response by press time.
Maryland Online Casino, Poker Bills
On Feb. 26, members of the Maryland House of Delegates will hear about Atterbeary’s bill. HB1319 proposes a 55% tax rate on online casino and poker operators. It suggests a 20% tax on live dealer services online casino operators use.
On Feb. 28, Senators will discuss Watson’s SB603. He suggests a 47% tax rate for operators.
Ifrah told Bonus on Feb. 15:
It is critical that the appropriate tax rate is set for iGaming so it can reach its potential and maximize the economic impact for Maryland. We are already engaging in substantive discussions with Maryland lawmakers, and they are eager to set a rate that works for industry and also delivers meaningful tax revenue. These bills and proposed tax rates are just starting points in the discussion.
Maryland Online Casino Study vs. iDEA
In June 2023, the Maryland Lottery announced it would commission a Maryland online casino study to determine the feasibility of legalizing iGaming in the state. The regulator didn’t ask iDEA Growth for research. Likewise, TIG didn’t ask iDEA Growth for its input.
However, the iDEA Growth study devotes a page of its 32-page report to criticizing TIG’s work.
The iDEA Growth research says, in part:
To estimate the impact of online casino on land-based casino performance, The Innovation Group ‘compared brick-and-mortar casino performance in 2019 and 2022 between states with and without iGaming.’ In our view, the selection of these years is at odds with the goal of their study due to the launch dates of the six states with online casino availability.
For instance, Delaware and New Jersey’s marketplaces launched in 2013. Whereas, Connecticut’s went live on Oct. 19, 2021.
Ifrah: iGaming Won’t ‘Harm Land-Based Jobs’
Ifrah concluded for Bonus:
This study goes a long way to settle the debate around cannibalization, but it should also [allay] fears that online gaming will harm land-based jobs. Ultimately, casinos that are involved in iGaming are finding new channels to meet customers and increase their overall revenues. Modernizing the gaming experience benefits their entire operation and will create resources to invest in their land-based infrastructure.
It is also important to note that online gaming is a job creator. Our research that looked at the first 5 years of New Jersey online gaming revealed more the 6,000 new state jobs directly created because of iGaming. …
Today, the advent of live dealer games makes iGaming job creation even more of a reality. Based on estimates from prominent companies in the space, up to 1,000 jobs can be created in Maryland related to establishing live dealer studios.
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