Maryland Sports Betting Bill Moving Ahead, Includes Preferences for Minority Owned Operators

By: George Calhoun

Sports betting is now legal in Maryland. As part of the 2020 election, Maryland voters approved a Constitutional amendment to allow sports betting.  The Maryland legislature is now racing to legalize and regulate sports gambling in the state.  On February 2nd, 2021, the Maryland House of Delegates released a sports betting bill that would create a new Sports Wagering Application Commission to evaluate both online and retail sports betting licenses.  Although the bill differs significantly from legislation introduced last year, the smart money is being placed on the current legislation to pass.

Although there is broad industry consensus to legalize and regulate sports betting, the legislation introduced today shows that legal operators will still face hurdles to passage and are likely to face competitive pressure due to an expensive regulatory environment.  Moreover, Maryland’s existing casino operators may be miffed that their existing licenses will not automatically extend to sports gambling.

The legislation envisions a new licensure process – along with additional fees to the state.  The fees are hefty:  Application fees are $250,000 for a “Class A Sports Wagering Facility” (i.e. Maryland’s existing casinos and tracks), $50,000 for a Class B Sports Wagering Facility, and a whopping $500,000 for an online wagering license applicant.  The state will issue at most five Class B licenses (which must be at least 10 miles distant from any Class A Wagering Facility) and at most ten Mobile Wagering licenses.  Only holders of Class A or B licenses may apply for a Mobile Sports Wagering License.

The fees don’t end there. Class A licensees must pay an additional $50,000 per year.  Class B licensees must pay annual fees of $10,000 per year.  Mobile Wagering licensees must pay $100,000 per year.  It’s obvious where the legislature thinks the money is.

In practice, the envisioned structure will limit sports wagering to existing players with the capital and experience to justify the significant up-front investment.  Nonetheless, the Maryland House of Representatives appears intent on expanding minority participation in the Maryland gambling industry.  Although it’s a generalization, and progress is being made, the gambling industry is notoriously male and white.   The new legislation released today contains an entire section mandating efforts to study and expand minority participation in the Maryland gambling industry – including possibly through remedial measures.  The bill provides that one of its purposes is to maximize “the ability of minority and women–owned businesses to participate in the sports wagering industry.”  This seems to suggest that the legislation has gained the backing of Maryland’s powerful Legislative Black Caucus, which would bode well for its passage.  How that purpose plays with a license and fee structure that limits participation to a small number of established players remains to be seen.