At a Maryland House Ways and Means Committee hearing discussing the potential legalization of online casino, the bill’s sponsor and committee chair appeared to float the idea of preventing existing in-state casino operator The Cordish Companies from taking part in iGaming.
Cordish EVP Mark Stewart testified in opposition to HB17 after the Maryland Live! parent company previously opposed Del. Vanessa Atterbeary’s 2024 version of the bill which passed through the House but drowned in the Senate.
Stewart noted that the company has been “consistent” in opposing iGaming in other states such as Pennsylvania. He was queried by chair and sponsor Atterbeary on why Cordish would seek an online casino license if it opposes such expansion.
“We stand to make a lot of money if iGaming is legalized,” Stewart said. “We’re a market leader in this state, on the sports betting side we’re partnered with FanDuel and we have nearly 60% of the market. We will do very well but we think Maryland won’t do very well and we know our employees won’t do very well, and that’s why we’re opposed to it.”
“OK, so then we should be put in the legislation that all of the brick-and-mortars get a license except Live,” Atterbeary countered. “Maybe that should go in since it’s such a detriment to the state of Maryland. Perhaps that’s what we should do.”
PENN also opposed current bill
PENN Entertainment also opposed the proposal. PENN runs Hollywood Casino Perryville in the state.
The company’s rep Sean Malone also cited cannibalization concerns but did note the firm “could have easily testified in support with an amendment.” He noted that while PENN would also seek a license if the market opened, the company does not want iGaming opened up to operators who do not have a land-based footprint in the state. MGM testimony submitted into the record expressed a similar sentiment.
Atterbeary says state powerless without regulation
HB 17 would tax most iGaming at 55%. Atterbeary said she filed the new version of the bill to capture an existing illegal online gaming market worth $7 billion annually, as well as to help protect players.
“At this point, we’re not being left behind,” she said, pointing to other states who have moved iGaming legislation. “We are behind, quite frankly.”
Responding to a suggestion that iGaming is “too much too fast,” Atterbeary contended that leaving things unregulated allows vulnerable people to be targeted by bad actors. “What’s happening too much too fast is sweepstakes and all these unregulated operators that are coming out and targeting just the people that you’re trying to protect,” she stressed.
James Nolan of the Maryland Center of Excellence at Problem Gambling opined that the best solution is to shut down the unregulated market. Atterbeary said things aren’t so simple.
“Legally, we can’t, because it’s not regulated,” she said. “If it’s overseas, we can’t do it either. Our Attorney General sent out 11 cease-and-desist letters and was essentially told by six of them that they were operating legally. So unless we regulate it, we can’t shut any of it down.”
Cannibalization concerns considered
Speaking in support, John Pappas, state advocacy director for the iDevelopment and Economic Association (iDEA Growth), said that based on a lower-than-proposed 30% tax rate, Maryland could expect $1.65 billion in revenues over the next five years. He noted that Pennsylvania’s retail gaming business has increased since it legalized iGaming, “a testament to how iGaming and land-based casinos can grow together, and how the worker community can thrive under an iGaming environment.”
In stark contrast, The Innovation Group EVP Brian Wyman said data through 2024 projects that iGaming will cannibalize revenue at the six land-based casinos by 16%, up from the 10% projected based on data through 2022. That, he claimed, could lead to up to Maryland losing up to 1,600 jobs, $412 million in GDP and $242 million in gaming-related taxes.
The study Wyman was citing was originally commissioned by the Maryland Lottery and Gaming Control Commission. The latest edition was commissioned by the National Association Against iGaming.
Atterbeary makes tweaks to appease committee
In addition, to address possible cannibalization and unemployment concerns, the bill stipulates that certain proportions of gaming revenue would be dedicated to initiatives such as an employee displacement fund. The Lottery would also be required to publish an annual report on the effects that iGaming has had on any ancillary businesses such as restaurants and bars surrounding physical casinos.
Applicants for licenses would have to maintain a Maryland headquarters for 10 years, employ a certain number of people and meet a variety of other conditions, unless they have existing standing in the state as a gaming licensee.
Could Maryland bypass a referendum?
To be enacted, HB 17 would require a change to the state constitution requiring a referendum. Or would it?
Another intriguing topic of the hearing was the notion that a public vote may not actually be required. Atterbeary noted that as retail casinos already exist the state, if iGaming servers are located in the state, it may not have to go to a referendum.
The Attorney General would have a decisive say on the matter.
No vote was taken on the bill in Monday’s hearing.
