Maryland Considers Sports Betting License Allocation

Maryland Considers Sports Betting License Allocation article feature image
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Michael Robinson Chavez/The Washington Post via Getty Images. Pictured: Maryland Gov. Larry Hogan.

A group of Maryland female and minority business owners and gaming stakeholders pushed a Senate panel to assure sportsbook ownership opportunities on Thursday, as lawmakers consider larger plans to create the nation’s first sports betting market with codified provisions for minority business ownership.

Multiple Maryland off-track betting facilities and small business stakeholders testified before the Senate Budget and Taxation Committee that any legislation offers and promotes sportsbook licenses to a wide variety of sports betting interests. Stakeholders said they largely supported the sweeping sports betting legislation already passed through the House of Delegates, but that it must assure a robust market that guarantees qualified minority and female business ownership have a fair participation stake.

“When examining how most states have written and implemented their sports wagering programs, you find that it heavily favors the larger corporations and conglomerates,” said Shane August, owner of Washington D.C. sportsbook Handle 19, during testimony Thursday. “Minority and women entrepreneurs have long been waiting to participate in the sports wagering industry.”

Maryland’s sports betting authorization bill would be the first of roughly two-dozen legal sports betting markets with explicit minority business participation provisions. A 2020 bill that authorized a sports betting constitutional amendment ballot measure included a loose framework for such minority business provisions but didn’t specify implementation regulation.

Maryland voters overwhelmingly supported the sports betting ballot measure. Lawmakers must now pass follow-up legislation that outlines sports betting regulations, taxes and eligibility that also fulfills the 2020 bill’s minority and female participation requirements.

Current Bill

The House expanded its original sports betting bill last month to allow as many as 15 online and 22 retail licenses. “Class A” retail licenses would be granted to Maryland’s six commercial casinos, three major professional sports venues and state fairgrounds. Laurel Park Racecourse and Pimlico Race Course owner Stronach Group, as well as an off-track betting riverboat facility located near the mouth of the Potomac River would also be eligible for one “Class A” retail license apiece, leaving 12 combined between the various entities.

The 2021 bill creates a commission to allocate the remaining 10 “Class B” retail licenses. The 15 online licenses would be distributed between Class A and Class B organizations, though a business that didn’t apply for either could also be eligible.

The bill effectively guarantees several major sportsbook brands with existing Maryland gaming deals or casino affiliations such as BetMGM, FanDuel, William Hill and Barstool Sports will earn a license. Multiple Maryland small-business interests argued for further opportunities as not necessarily a way to compete with the larger brands but offer additional entities a chance at Maryland’s legal sports betting market.

That includes independent off-track betting facilities, which can apply for licenses but aren’t explicitly granted them. Several OTB stakeholders asked lawmakers Thursday to expand language that guaranteed their licensure, arguing it would boost Maryland sports betting’s minority and female participation.

Multiple stakeholders also asked lawmakers to expand the number of licenses for online sportsbooks, which are far more lucrative than their retail counterparts. Assuming all 12 “Class A” license holders earn online licensees, that would leave three for all other interested parties.

“Given everyone’s stated goal for minority inclusion, it appears the best option is pursuing the mobile licenses,” said Maryland business owner Malik Edwards. “Without enough mobile licenses available, you run the risk of having no minority participation.”

Further Action and Next Steps

If legislators keep the license cap, they must also consider if 10 “Class B” retail licenses or 15 online licenses are enough. If that figure is too low, as multiple gaming interests testified Thursday, they must determine the appropriate figure.

House Majority Leader Eric Luedtke said existing law hamstrung lawmakers’ ability to include aspects of the state’s Minority Business Enterprise (MBE) program, limiting solutions to many key licensing decisions.

“Our goal was to design the strongest MBE language we could that (legal council) assured us could pass legal muster if there was a lawsuit,” Luedtke said. “It would have frankly simplified things tremendously if we were able to do certain MBE set-asides, but we were advised that was not legally viable.”

Senate Budget and Taxation Chair Guy Guzzone said his committee would discuss the legislation “as soon as possible.” Both chambers have less than a month to pass identical versions of the bill before it can pass into law, and every indication is the Senate will amend the current version, just like the House did previously.

Most Maryland lawmakers, including Adrienne Jones, the House speaker and bill sponsor, support the bill, virtually ensuring it passes in some form before the April 12 deadline. Thursday’s hearing reiterated that key decisions remain for what would be a groundbreaking sports betting bill.

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