Online casino bill in Maryland draws cannibalization concerns

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A proposed iGaming bill in Maryland is being opposed by hospitality workers and policy analysts over fears of cannibalization.

House Bill 1319, which proposes to authorize iGaming in the Old Line State, was heard in the Maryland House Ways & Means Committee on Monday where it received disapproval from hospitality workers, union leaders and problem gambling organizations over cannibalization concerns. The apprehension to support HB 1319 stems from the perceived potential loss of jobs, decline in casino revenue and increase in problem gambling for residents.

Cannibalization concerns extend beyond casino revenue

“There’s cannibalization with respect to casinos, but that’s where the issue starts,” said Sage Policy Group CEO Anirban Basu to the committee. “Because when you’re spending money on iGaming that’s when you do not have to spend elsewhere in the economy.”

HB 1319, which was introduced earlier this month, would offer iGaming to Maryland residents with oversight by the state’s Lottery and Gaming Control Commission. The regulators would be responsible for awarding up to 12 wagering licenses to operators.

Operators who are looking to secure market access in Maryland would need to provide proof of financial stability and integrity. Applicants also have to develop plans to employ residents from disadvantaged areas and provide responsible gaming initiatives.

Applicants who are awarded licenses, which last five years, are required to pay an initial $1 million fee, and to renew their licenses must pay 1% of their average annual proceeds.

Fiscal report projects $900M in annual revenue

Operators that secure a license would be hit with a 55% tax rate on revenue but could reduce it to 20% if they offer live dealers. A portion of the revenue from iGaming would be allocated toward the Blueprint for Maryland’s Future Fund, which aims to improve public education behind $3.8 billion in annual funding. RG initiatives would also receive a portion.

A fiscal report prepared for Monday’s hearing projects more than $900 million in annual revenue from iGaming but estimates a $64.7 million decrease in funding for the education trust fund. The projection is based on a drop in revenue for brick-and-mortar casinos.

The potential inclusion of online iGaming operators in Maryland is concerning for retail casino workers, who fear the implementation of online wagering could also impact jobs.

“This bill is a job killer for casino workers like myself, said MGM National Harbor Hotel & Casino employee Denisa Collins. “I have good benefits and wages which has allowed me to take care of myself and my family and even purchase my first home. These are things that come with a union contract and there just aren’t enough jobs like this in Maryland.”

Studies on Maryland iGaming draw different conclusions

Concerns raised by Collins have been both supported and refuted by gaming studies.

The Innovation Group released a study that estimates that retail casino revenue in Maryland could take a drastic hit when the implementation of iGaming.

On the other hand, a study by Eilers & Krejcik Gaming debunks those notions with evidence that iGaming boosts revenue for operators that own brick-and-mortar casinos.

The study, which was prepared exclusively for iDEA Growth, found that quarterly revenue at land-based casinos in America’s six iGaming markets increased at an average 2.44% rate. Eilers & Krejcik also concluded that iGaming could add a new demographic of customers as users of online casino platforms tend to be moderately younger than retail casino visitors.

Other iGaming measures in Maryland

The Maryland Senate is also considering legislation regarding iGaming. Earlier this year, Sen. Ron Watson introduced Senate Bill 603. The bill aims to legalize iGaming in Maryland via a voter referendum. SB 603 follows previous failed efforts by Watson to authorize iGaming.