A Maryland lawmaker said he thinks he can get online casino legislation passed in 2024. But he admits one area he hasn’t yet figured out is how to include minority-owned businesses.
The Maryland online casino efforts advanced Thursday when the Maryland State Lottery and Gaming Control Agency (MLGCA) awarded The Innovation Group with the contract to conduct an iGaming study.
The bill would amend the Maryland Constitution to allow online casino game wagering. Voters must approve constitutional amendments.
“If everything goes well, it will be on the ballot in 2024 and we’ll be able to implement it in 2025,” Watson said.
Learning from legislators in other states
Watson spoke with PlayUSA at the recent National Council of Legislators from Gaming States (NCLGS) meeting in Denver.
Illustrating Maryland’s serious approach, Watson and MLGCA Chief of Staff/Assistant Deputy Director James Butler attended NCLGS to learn more about what Maryland should do for online casino.
“It was just a great experience interacting with colleagues and talking about our different experiences with iLottery and iGaming,” Butler said. “Trying to figure out what people have done in their jurisdictions and what’s going to be happening in Maryland.”
Watson said he will bring back from NCLGS answers to questions Maryland legislators ask him about cannibalization and problem gaming.
“I think I got the answers to the questions most people were concerned about. One, there is no cannibalization of brick and mortars if you recognize how the market is going to come together to be mutually beneficial. Two, there is a solution to problem gaming, primarily because you have the technology and background that you’re able to do much more tracking and monitoring of people’s betting patterns than you can when people just walk into casinos.”
Maryland iGaming study results could set table
Watson never intended on passing the bill this year. He wanted to educate colleagues on the issue in preparation for next year.
Passage next year serves the same purpose, to get the question of legalizing online casino in front of Maryland voters in the November 2024 general election.
To further that goal, the Maryland budget instructed the MLGCA to fashion a study on iGaming.
Last month, the agency put out a request for proposals for a company to conduct the study and staff recommended bid winner The Innovation Group. It has 30 years of experience in the research and advisory space and previously provided research consulting to the Maryland Economic Development Corporation and Maryland State Senate.
The RFP instructs that the study conducted by The Innovation Group should:
- Estimate the online casino market size in Maryland
- Provide potential economic impact on the state’s retail casino locations
- Provide potential impact on the state’s lottery system
- Detail online casino’s potential impact on problem gambling
- Discuss results from other states with legal online casinos
The MLGCA is required to submit the iGaming study to the Maryland General Assembly by Nov. 15.
Watson unhappy with minority results for sports betting
Maryland has the largest Legislative Black Caucus in the country. And Watson is a member.
It’s no surprise that in passing sports betting legislation, Maryland took the most serious approach of any state in trying to ensure the inclusion of minority-owned businesses.
And yet Watson expressed that he and his colleagues in the Legislative Black Caucus aren’t happy with the results.
“I thought the sports betting piece from a minority perspective was a dismal failure,” Watson said. “What they came up with was something called Class B licenses for entities that made less than $2 million in revenue and had a certain number of employees. But it’s not profitable.”
Maryland put aside 30 Class B licenses. Although Maryland sports betting launched in November, just four Class B licensees are currently operating. That includes one minority-owned business, River on the Potomac, and one woman-owned business, Long Shot’s.
Watson lamented that all these Class B licensees could really do in the online space was partner as an affiliate with online sportsbook operators. And they missed the launch window when most people were signing up for online sports betting accounts.
“Well, it took so long to roll out the Class B licenses and the brick-and-mortar casinos had such a head start, we missed that curve. The people who were interested in sports betting have already signed up, so now there’s nobody for this little entity to sign up.”
Finding more inclusive path for Maryland online casino
Watson said he thinks a better system for minority inclusion is needed for iGaming, but he isn’t sure how to get there. That is the biggest impediment to passage of Maryland online casino in 2024.
“If I can find somebody who has a handle on that piece, that would break so many logjams,” Watson said. “Maryland has the biggest legislative black caucus in the country. Very loud, very vocal, and if they get behind stuff we can move things pretty quickly.”
Watson introduced SB 267 limiting online casino to brick-and-mortar casino properties. He knew he needed to include minority-owned businesses but he didn’t know how to get there, so he left it to be determined.
At a committee hearing in February, business owners asked for minority participation. Watson said Maryland needs to conduct a disparity study on iGaming.
“From our perspective, we need a disparity study on how we can get minority businesses into this space, which is going to be quite lucrative,” Watson said. “It would be nice if it’s more than just affiliate agreements, but something a little more tangible. Because my job is to help grow generational wealth in the area that I represent.”
For sports betting, the disparity study was done after passing the implementation bill. Watson thinks a disparity study might be needed to inform the iGaming language. But first he needs the iGaming study to set up a disparity study.
Seth Elkin, managing director of communications for the MLGCA, explained the process for a disparity study to PlayUSA.
“We anticipate that a disparity study related to iGaming will be a subject of discussion as the process moves forward. The General Assembly will set forth timelines and specific determinations, and we’ll initiate an iGaming disparity study at their direction.”
Watson sees working out minority inclusion as having the potential to delay Maryland online casino legislation past 2024.
“With sports betting, it caused all kinds of problems because there wasn’t enough thoughtfulness up front on how this would work. You can’t say we’re going to hold this percentage for minority businesses because minority businesses historically have challenges with access to capital.
“The thing that’s most disappointing when these things come up and you say you want minority businesses is you get one minority face who is up front but everybody else is regular folks in the industry, and they’re the ones reaping the bulk of the benefits. I want true partnerships with minority businesses to the extent we can get them, and we just have to figure out how to make it happen.”