An exploratory study found that online gambling in Maryland could generate more than $533 million in revenue in its first year but would impede brick-and-mortar casino revenue.
The study, conducted by The Innovation Group and commissioned by the MLGCA, Maryland State Lottery and Gaming Control Agency, provided an in-depth examination of states with legal online gambling.
Released this week, the study offered predictions about how Maryland iGaming revenue could grow from 2026 to 2032 and noted the impact it could have on other legal gambling markets in the state.
Seven states have legal iGaming, which, generally speaking, encompasses casino-style games played online through desktop and mobile devices. Six of those states have launched their markets, while Rhode Island could launch iGaming in 2024.
Here’s what the five active states’ revenue looked like in 2022, according to the Innovation Group:
- Connecticut: $225.4 million
- Delaware: $13.6 million
- Michigan: $1.6 billion
- Pennsylvania: $1.4 billion
- New Jersey: $1.6 billion
- West Virginia: $114 million
What online gambling in Maryland could look like
The Innovation Group estimated Maryland’s online gambling market, which would include online poker and real-money online casinos, could generate $533.5 million in 2026.
At that point, the market will be around 60% mature, the study noted. By 2029, the market will hit full maturity, producing an estimated $904.9 million in revenue.
If that’s how Maryland iGaming revenue plays out, the state would be the fourth-biggest market in the country behind New Jersey, Michigan and Pennsylvania.
The study also pointed out that online gambling markets typically follow two maturity patterns. They reach nearly full maturity in the first few years after launch (e.g. Delaware, Pennsylvania and Michigan), or they grow steadily even after they hit maturity (New Jersey). The Innovation Group believes Maryland will mimic the first pattern.
“Based on recency, we believe that Maryland is likely to follow a ramp to market maturity that looks more similar to Michigan’s, Pennsylvania’s, and West Virginia’s and less like New Jersey’s or Delaware’s,” The Innovation Group study said.
The Innovation Group believes that, if legalized in 2024, Maryland iGaming will likely launch in 2026.
State Sen. Ron Watson filed an online casino bill, SB 267, along with Sen. Nancy King, which carries into the 2024 legislative session beginning in January. The 2024 session runs from Jan. 10 to April 8.
The bill, if passed, would amend the state constitution to allow online casino gaming. If signed by Gov. Wes Moore, it could be on the 2024 ballot. Constitutional amendments in Maryland must be approved by voters.
Land-based casinos will feel the sting of Maryland iGaming launch
One of the key areas of discussion around iGaming is how online slots and table games affect land-based casino revenue. The main concern is that launching online gambling will cut into land-based revenue, a trend known as “cannibalizing.”
The Innovation Group believes cannibalization is a real possibility in Maryland based on national trends.
For example, brick-and-mortar casinos experienced 2% gross gaming revenue (revenue after certain deductions) growth from 2019 to 2022 in markets where there is no online gambling. However, in markets with iGaming, land-based casinos saw their revenue drop 8.2% over the same period.
What does that look like in dollars? The Innovation Group predicts brick-and-mortar casinos will lose around $218 million in revenue in 2029 when the Maryland online casinos reach full maturity.
To counter that loss, the study suggested that Maryland casinos adopt a “lost brick & mortar tax”. This tax provides casinos with $98.3 million in 2029 to offset losses due to iGaming.
While land-based casinos are predicted to lose out on revenue because of online gambling, the study noted that iGaming won’t have a material impact on lottery sales and revenue generated at horse tracks and off-track-betting sites.