Minority-Owned Businesses Ask For Inclusion In Maryland Online Casino Bill

Maryland online casino legislation got wide support at its first hearing Wednesday, with a caveat.

Many who testified at the Senate Budget and Taxation Committee requested that Maryland online casino licenses include more than casinos.

If this sounds familiar, it’s exactly how sports betting legislation began in Maryland.

Sen. Ron Watson expected this response when he introduced the bill.

This is just the beginning of the process of discussing online casino legalization in Maryland. The expectation that Watson, a member of the legislative black caucus, would work with them on inclusion likely is why minority-owned gaming businesses spoke in favor of SB 267 despite not getting market access in the initial language.

Minority-owned businesses make pitch for inclusion

Maryland sports betting legislation originally limited licensing to casinos. One way Maryland opened up the market was to include off-track betting parlors.

Maryland’s four OTBs asked for
market access to Maryland online casino play at Wednesday’s hearing.

Antonio Jones, managing partner of the Riverboat on the Potomac, pointed out that the OTB already has proven its ability to operate online as a sports betting licensee.

Alyse Cohen, owner of Long Shot’s OTB and Sportsbook, said the four Maryland OTBs are primarily a coalition of women- and minority-owned business enterprises (MBEs). Cohen added that as one of the most diverse states in the country, Maryland has looked to prioritize underserved communities in the past.

“iGaming should be no different,” Cohen said. “By giving only the casinos the ability to expand their online presence, any true equity inclusion for women and minorities is lost.”

Cohen contended that launching Maryland online casino apps without OTBs has the potential to destroy them.

“To remain viable businesses, OTBs need to be treated equally,” Cohen said. “This means including OTBs in iGaming legislation.”

Through lobbyist Frank Boston III, even DraftKings asked the committee to consider expanding market access to state’s non-casino gaming stakeholders.

“When the licensing opportunity is limited to just the state’s casinos, it drastically limits competition and further limits the state’s ability to realize the most revenue possible,” Boston said. “As such, DraftKings asks this committee to please consider expanding market access provisions within the bill to give opportunity for the state’s non-casino gaming stakeholders.”

Lawmaker response to stakeholder testimony

After hearing the testimony, Watson pledged to work with MBEs for all to benefit from Maryland online casino.

“My initial conversations were minorities have never really played in this space and there are very few minority companies that actually have the $15 to $20 million backend to play banker. We saw that in several cases when it came to sports betting. But I would like to have that conversation with you. I would like, if possible, to build in some kind of either equity component or ability to engage and attract MBEs so that we can spread the wealth, if you will.”

Watson previously told Playin USA that he considered casino readiness to launch online casino. At that time, he didn’t think MBEs got enough as middlemen to large online sports betting operators.

Potential Maryland online casino revenue

Watson highlighted a fiscal note attached to his bill. The note estimates that Maryland online casino could generate $97 million in annual state tax revenue by 2028.

Jon Mandel represented the Sports Betting Alliance made up of the major online operators. He said their initial estimates were Maryland online casino could generate $102.9 million in the first year and $150.6 million by year five.

Kerry Watson of MGM added that Detroit casinos produced record revenue in 2021-22. Online casino launched in Michigan at the beginning of that year.

“That speaks to the potential and growth that we can receive here in Maryland if we do this in the proper way,” Watson said. “…Even as the fourth-highest revenue gaming state from casino gaming, iGaming could dramatically increase the amount of revenue that’s driven to the state.”

Sen. J.B. Jennings questioned where this revenue would come from. He lamented that all he heard from Thanksgiving to Christmas were nonstop FanDuel commercials.

“When you say these numbers about how much we’re giving to the education trust fund, that’s great until you really think about what that number is,” Jennings said. “That’s somebody who’s gambling that lost what’s going into that fund, so that means that’s less money in that person’s pocket.”

Lawmakers have time to work out Maryland online casino

Before filing the bill, Watson received an opinion from the Maryland attorney general. The AG considers online casino an expansion of gambling in the state.

As such, legalizing online casino requires a constitutional amendment. Amending the state constitution requires voter approval. So that means a potential ballot referendum in November 2024.

Lawmakers can wait until next year to figure out Maryland online casino details. They’ll still have time to get the ballot referendum ready for the next general election.

Sen. Craig Zucker pointed out that the referendum will require a disparity study for online casino. Zucker led the Maryland sports betting effort.

He also asked why the bill doesn’t include any money for problem gaming. Currently, 15% of state proceeds go to the Education Trust Fund.

“I’m more than happy to work with the committee to work out those details and make sure we’re doing what we need to do for people who have those issues,” Watson said.