The journey to Maryland’s remarkably novel sports gambling law started in a decidedly unremarkable fashion.
However, determined efforts by some state legislators, an unexpected pause in the course of legislative events by the COVID-19 pandemic, and the course of events in America in 2020 contributed to Maryland lawmakers crafting a sports betting law that stands alone in the inclusion that it invites for new sports betting operators.
What’s In Maryland’s Law
Maryland’s sports wagering law (formally known as HB940) provides for the licensing of potentially dozens of retail sportsbooks in four categories as well as a similar number of online licenses, although operator costs and a sober calculation of return-on-investment may limit how many operators actually venture into the mobile end of the business.
The law provides for four tiers of retail sportsbooks. The state’s larger casinos (more than 1,000 slot machines) and professional sports franchises comprise Class A-1.
The smaller casinos and the state’s horserace tracks make up Class A-2. And a total of 30 Class B licenses (Class B-1 and B-2) will go to facilities such as the Maryland Fairgrounds, OTBs, bingo halls, even sports bars and restaurants with the distinction between B-1 and B-2 determined by the size of the business, the demarcation being 25 or more full-time equivalent employees or $3 million in annual gross receipts.
The application process for online/mobile licenses is essentially wide-open with all retail license-holders and applicants eligible for online/mobile licenses.
It is fair to say that no jurisdiction in the United States has created an opportunity for such a wide range of businesses and entrepreneurs to enter the sports gambling market – but that’s not the way things appeared in the days just before the COVID-19 pandemic.
How We Got Here
In early 2020, a sports wagering bill was making its way through the legislative process in the Maryland state senate and that bill resembled some other sports gambling bills that have been hammered out in other states. The approach was familiar. The state’s six casinos were certain to get licenses.
Up for debate was whether the state’s horseracing industry, mainly Laurel Park and Pimlico Race Course would be included. Other facilities that already featured some sort of gambling – the Maryland Fairgrounds, OTBs and bingo halls – were making their pitches for inclusion in legislative hearings.
By late winter, the state senate had hammered out a version of a sports gambling bill but on the proposal’s way to the House of Delegates, there was pushback from the Legislative Black Caucus which cited a previous instance when minority-equity participation was absent as Maryland first moved to legalize medical marijuana. Black leaders in the General Assembly didn’t want a repeat with sports gambling.
However, before a meaningful conversation could be had on greater inclusion, the pandemic hit and ended the 2020 General Assembly session early.
To keep the momentum going on sports wagering, the Maryland legislature put a referendum question on the 2020 ballot (voter approval was needed for sports wagering) that amounted to a barebones up-or-down vote with tax money going toward education. It was basically details-to-come-later. As it turned out, voters approved sports wagering by a 2-to-1 margin.
Throughout 2020, as the country experienced unrest over racial inequity, those working on sports wagering legislation in Maryland understood there was an opportunity to create a law that not only brought sports gambling to the state but also to do so in a way that could meet loftier goals.
That was apparent when early in the 2021 General Assembly session, House Speaker Adrienne Jones introduced HB940 that pointedly addressed minority-owned and women-owned businesses being encouraged to participate in the state’s news sports gambling industry.
How The Law Works
It was in that bill that the concept of a Sports Wagering Application Review Commission was introduced that would be tasked with evaluating applications for licenses with an emphasis on minority and women businesses having substantial equity interests. A key, as the House and state senate hammered out a final legislative product, was broadening the scope of businesses that could apply for retail and online licenses.
To level the playing field, fees were adjusted by business size: Class A-1, pays a $2 million application fee ($6 million bond); Class A-2, $1 million application fee ($3 million bond); Class B-1, $250,000 application fee ($750,000 bond), and Class B-2, $50,000 application fee ($150,000 bond). For mobile licenses, the application fee will be uniform — $500,000 with a $1.5 million bond.
State gaming regulations introduced in July reinforced minority and women participation by requiring that licensees report to the appropriate state authorities comprehensive information that illustrates how faithfully license-holders are hewing to the spirit of the legislation, such as the number of minority and women owners of the licensee; the ownership interest held by minority and women owners; the number of minority and women employees of the licensee, and the number of contracts the licensee has with minority-owned and women-owned subcontractors.
As a result of Maryland’s approach to sports wagering, sports betting customers are likely to have the broadest array of choices among retail and online sportsbook operators of any state in the country. And, importantly, minority- and women-owned businesses will have an unprecedented opportunity to participate in the sports gambling industry.
It’s a grand game plan.
