Maryland casino industry doesn’t know what it wants

Last month’s Maryland state senate hearing echoed sentiments resurfaced in the House hearing on Monday, February 10th, revealing a fragmented gambling industry grappling with the implications of potential online gaming expansion.

The House Ways and Means Committee convened for an extensive four-hour session to discuss Representative Vanessa Atterbeary’s HB 17. This proposed legislation aims to establish a framework for statewide online casino licensing, tethered to existing casinos and current digital sports betting licensees. Atterbeary emphasized that, in light of concerns expressed by her colleagues, the bill includes a ban on credit card-funded gaming accounts.

Furthermore, Atterbeary posited that a constitutional amendment may not be necessary for the inclusion of online gaming within Maryland’s gambling landscape. Historically, expansions to gaming frameworks in Maryland have been decided by public referendum. However, she cited three previous referendums that legalized video lottery terminals in 2008, table games in 2012, and both in-person and online sports betting in 2020, arguing that the electorate has already indicated their support for digital casino options.

Another significant topic raised during the hearing focused on the issue of sweepstakes. These unregulated digital gaming platforms operate in a legal grey area, attracting users with free-to-play games, while enabling participants to purchase and win “coins” or “tokens.” Atterbeary, alongside supporters of her bill, asserted that a regulated market could offer a framework to mitigate the growing presence of the black market. Disturbingly, the state has contacted 12 sweepstakes operators regarding their operations; notably, six responded, claiming their business practices are legal in Maryland despite a lack of enforceable state laws.

Division Among Stakeholders

As was the case during the January Senate hearing, the House committee opted not to take definitive action on the legalization of online gaming. With the General Assembly in session until April 7th and a critical crossover deadline of March 17th nearing, the window for advancing this legislation is narrowing.

The push for online gambling legalization in Maryland has exposed deep divisions among industry stakeholders. Advocates from both the anti-gambling and responsible gambling factions voiced concerns that introducing online casinos could lead to an increase in gambling addiction among Maryland residents. Mary Drexler from the Maryland Center of Excellence on Problem Gambling referenced research from Morgan State University, highlighting that 75% of individuals exposed to internet gaming report issues related to gambling, compared to only 22% of those who are not.

Compounding the discord, representatives from the legal gambling industry are themselves at odds. Advocates from BetMGM, the Sports Betting Alliance (SBA), and the iDevelopment and Economic Association (iDEA) contend that online casinos will catalyze industry growth and generate additional tax revenue. The SBA is comprised of major players, including BetMGM, DraftKings, Fanatics Betting & Gaming, and FanDuel.

In contrast, mid-sized operators like the Cordish Companies and Penn Entertainment argue that online casinos would undermine their physical gambling establishments. Sean McDonough, representing Penn, emphasized the company’s conditional support for the bill, contingent on licensing being restricted to the six existing casinos. This stark contrast among industry players could hinder the advancement of legal online gambling in the coming sessions.

Call for Fair Competition Among Smaller Operators

Smaller gaming operators in Maryland are also divided on the issue. The state’s current sports betting law permits two bingo halls and four off-track betting (OTB) facilities to obtain digital sports betting licenses. Companies owned by minorities or women, as mandated by the state, stand on both sides of the online gaming expansion debate.

“Introducing igaming is a departure for the state, and established casinos have already reaped significant benefits from their physical locations,” stated Sidh Sushant, representing Delta Bingo. He argued that the state should initiate a new framework, cautioning that tethering online casino operations solely to existing establishments would be misguided.

Alyse Cohen, owner of Long Shots OTB and Sportsbook, urged the committee to prioritize small businesses as they deliberate on igaming regulations. “These smaller retail outfits are crucial components of Maryland’s gambling ecosystem and all deserve equitable access to igaming licenses. Without the opportunity to offer igaming, many of these sportsbooks are at risk of failure, jeopardizing their ability to compete on equal footing,” she asserted.

Learning from Pennsylvania’s Experience

Conversely, Bobby Jones, representing Ocean Downs, a combined OTB and casino, expressed strong opposition to the legalization of online gaming based on observations from Pennsylvania. With Maryland closely monitoring the shifts in its neighbor’s gambling landscape—one of only seven states permitting legal online casinos—Jones warned about significant repercussions. In Pennsylvania, brick-and-mortar casinos experienced a 15% revenue drop, accompanied by the loss of 45% of jobs, a fate she cautions Maryland could share.

“When jobs disappear, businesses suffer,” she noted. “Our sister venue in Pennsylvania, Presque Isle, has been directly impacted by these trends.”

Proponents for Maryland’s online gaming bill highlighted the financial benefits observed in Pennsylvania since the introduction of igaming. They noted that the state has opened several new casinos—including two full-scale Las Vegas-style venues and three mini-casinos—since the legalization of online gambling in 2017.

John Pappas, who testified on behalf of iDEA, stated, “There are more jobs available now, even with igaming in Pennsylvania.” He emphasized the potential for creating jobs to support live-dealer studios, which would require staffing around the clock. However, opponents argue that the benefits do not extend to smaller operations. Committee member Jason Buckel lamented the broader societal shift toward digital isolation, remarking, “We’re becoming a tech-oriented world, where social interactions are increasingly relegated to our phones.”