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Sen. Ron Watson already knew the arguments opponents of his Maryland online casino legislation would offer at Wednesday’s Senate hearing.
He got an extended preview Monday when they spoke at a House Ways and Means Committee hearing that lasted more than five hours.
So he came prepared with rebuttals in a 16-minute introduction to Maryland online casino enabling bill SB603 and constitutional amendment SB565 in the Senate Budget and Taxation Committee.
Watson said he would work with opponents to find language they could support.
“This version is a baseline. I believe we can work diligently together to pass a bill that satisfies all, realizes this new revenue stream, mitigates the illegal iGaming market and provides the support for problem gamers.”
Wednesday’s hearing featured many of the same speakers as Monday. However, the Senate hearing lasted about two hours, with committee members offering little discussion or questions to witnesses.
Senator answers Maryland online casino critics
Opponents to Maryland online casino legalization come mostly from four groups:
- Labor unions, casino workers and and construction workers concerned with cannibalization and lost jobs.
- Counties that house Maryland’s six casinos and are concerned that cannibalization lowers their casino revenue share.
- Problem gambling organizations.
- Two of Maryland’s six casinos — Maryland Live! (The Cordish Cos.) and Oceans Downs Casino and Racetrack (Churchill Downs) opposed Maryland iGaming.
Here’s how Watson addressed their concerns.
Maryland iGaming will cannibalize local casinos
The casinos that oppose Maryland iGaming cite studies that say online casinos will cannibalize their brick-and-mortar properties.
Watson particularly called out a study by Sage Policy Group for the county where Maryland Live! is located. On Monday, Anirban Basu, author of the study, said Watson had described iGaming as the “big enchilada,” but he saw it more as a tiny taco.
Watson fired back:
“Unfortunately his report falls short, kind of like a taco to an enchilada.”
Watson said cannibalization concerns don’t consider the cannibalization Virginia casinos slated to open this year will do to the Maryland market without iGaming. Nor that having online casinos in place mitigates the revenue shortfalls casinos would produce if there is another pandemic and minimizes revenue fluctuations due to harsh weather.
Online casinos will cost jobs at brick-and-mortar facilities
Throughout the two hearings, many workers testified on the impact of good-paying jobs at Maryland casinos on their lives and their families.
Watson said industry testimony would show evidence that existing iGaming markets did not experience cannibalization or job loss.
John Pappas, representing iDEA Growth, added that many reports showing job loss don’t take into consideration jobs lost as a result of the pandemic.
“There has not been jobs lost to iGaming. Some will pretend to say jobs were lost, but they fail to mention that a lot of jobs were lost during COVID. And those job losses are actually directly due to COVID, not because of iGaming.”
Watson added that live dealer studios will create between 700 and 1,000 additional jobs in Maryland. Watson showed committee members a video about online gaming with live dealers.
“The report does not address the many jobs that can be created through live gaming studios,” Watson said. “Nor the union and construction jobs to build these multi-million dollar facilities.”
Online casinos increase problem gaming
A portion of the revenue from Maryland brick-and-mortar casinos goes go to combat problem gambling. However, Maryland sports betting legislation did not add to the problem gaming funding.
Watson’s online casino bill sets aside 1% of gaming revenue to address problem gambling.
“His report failed to discuss the positive benefits of using technology to combat problem gaming,” Watson said. “Nor does it address the new revenue stream to deal with this issue and other mitigation efforts.”
Watson added that Maryland’s current illegal gaming market is estimated to be $200 million.
“This should be a huge concern to those interested in mitigating problem gaming. We must regulate and capture this revenue and earmark it for the blueprint. Problem gamblers will find a way to gamble. It’s our job to create the protections and secure the funding so those individuals can be treated. This bill does that.”
Watson’s bill also provides data for Morgan State and Bowie State universities in Maryland to determine trends related to curbing problem gaming.
Local media company wants online casino license
Urban One CEO Alfred Liggins checked a lot of boxes for the committee as a local minority-owned business that would increase jobs and production in the state if online casinos were legalized.
Liggins said he owned the Silver Spring-based media company with his mother, who founded it 43 years ago.
Although headquartered in Maryland, Liggins said Urban One does much of its production out of state. This is due to tax incentives it receives in Georgia and other states.
However, if Maryland legalizes iGaming, he said Urban One would look to launch its own Urban One-branded online casino. It would build a live dealer production studio that facilitates doing other TV productions in the state.
Liggins explained:
“We have the ability to build a dual-purpose studio that not only would be able to house our live gaming operations … but we would also make a commitment to bring our production to the state of Maryland to the tune of millions of dollars a year to create immediate jobs and actually spur additional production work because there will be a studio built there.”
Education funding void key for Maryland online casino chances
If the Maryland legislature gives voters the opportunity to decide on legalizing online casinos, it will be to generate revenue for education.
“Maryland boasts six brick and mortar casinos, each of which significantly contributes to funding our education trust fund, but they can do more,” Watson said. “We’re missing that critical fourth leg of the casino stool, iGaming.”
In both the House Ways and Means and the Senate Budget and Taxation Committees, it’s a legislative priority to identify future funding mechanisms for the Blueprint for Maryland’s Future.
The state has only funded the blueprint, emphasizing equitable early childhood education, through 2027.
“It is not funded for 2028 and beyond, a situation that this committee knows very well,” Watson said. “We’ve all heard of the significant pressure the blueprint has placed on our local school systems, and in Prince Georges County today we’re struggling to determine critical cuts in services to meet our obligations.”
Fiscal estimates project Maryland online casino could produce between $250 million and $300 million in tax revenue for 2028. But that is only likely to overcome labor concerns if legislators don’t see another option for the funding.
“Up to this point, this General Assembly knows we have budget shortfalls, and all I’ve heard us talk about were potential tax increases or potential fees that were being increased,” Watson said. “This is the only bill that I’ve heard which generates a really new revenue stream.”
