States move on sports betting, but Maryland a question mark

By: Tom LaMarra

Posted: May 15, 2018

In the wake of the United States Supreme Court decision to overturn the Professional and Amateur Sports Protection Act, multiple states have fast-tracked the regulatory and legislative process to facilitate legal sports betting.

Several states in the Mid-Atlantic region are poised to begin taking bets, including New Jersey, where Monmouth Park officials are hopeful to be up and running in a few weeks. Delaware, one of four states previously authorized to offer limited parlay sports betting on professional football, could be less than a few months away from a major expansion.

West Virginia and Pennsylvania already have laws on the books authorizing sports betting. Maryland does not, and that has led to speculation over when the state may act.

The Baltimore Business Journal on May 14, the day the Supreme Court decision was made public, reported that legislative leaders are receptive to holding a special session this year to re-address legislation that passed the House of Delegates but died in the Senate earlier in 2018. The publication also reported that Gov. Larry Hogan, who is running for re-election this year, has currently has no plans to call a special session.

Bills introduced earlier this year called for a constitutional amendment on sports betting. Under Maryland law, a referendum could be held this year or in 2020, but not next year.

A House bill sponsored by Del. Frank Turner passed on a vote of 124-14. It specifies that a video lottery terminal licensee—a casino—or a licensee for mile-track Thoroughbred racing or Standardbred racing—Laurel Park, Pimlico Race Course, Rosecroft Raceway and Casino Ocean Downs—would be eligible to offer sports betting.

The bill, had it become law, would have taken effect July 1 of this year contingent upon PASPA no longer prohibiting sports betting, which ended up being the case. The measure never made it beyond a hearing before the Senate Budget and Taxation Committee the last week of March.

At that hearing, Turner explained that the House opted to include language specifying that casinos and racetracks both be eligible for sports betting licenses. But Joe Weinberg, an executive with Cordish Companies, which operates the Live! Casino in Anne Arundel County, told the committee sports betting should be offered only at casinos.

Weinberg said there’s “not a ton of money on the revenue end” from sports betting, so the real benefit comes from attracting more customers to casinos. He said racing already gets a percentage of revenue from VLTs, and increased traffic at casinos could then benefit racing.

The racing industry, however, made its case at an earlier House committee hearing. There was full support for sports betting from the tracks, horsemen’s groups and breeders, all of which said the additional form of gambling would attract more people to racing.

William Rickman Jr., the former owner of Ocean Downs and owner of Delaware Park, spoke in support of tracks offering sports betting.

“(Ocean Downs) will be included regardless, but it’s important to remember the history in Maryland,” he said. “It would be unfair not to have Laurel, Rosecroft and Pimlico not included in the bill.”

Turner’s bill doesn’t set a tax rate on sports bets. A second bill that didn’t progress through the Maryland General Assembly called for a 20% state tax and it prohibited wagering via electronic devices.

In comparison, New Jersey lawmakers are expected to quickly pass a regulatory bill that currently sets the tax rates at 8% for bets made at casinos and racetracks and 12.5% for mobile wagers.

Dennis Drazin, Chief Executive Officer of Darby Development, which operates Monmouth on behalf of the New Jersey Thoroughbred Horsemen’s Association, on May 14 said of the $400 billion illegally wagered on sporting events, roughly $10 billion comes from New Jersey. The amount that would be bet legally in the state is open to speculation, but Drazin believes it will generate enough revenue for Monmouth to invest in its racing product through increased purses and racing dates, physical plant, and expanded amenities on the sprawling property.

Horsemen at Delaware Park currently receive about 9.6% of parlay sports betting revenue. The three tracks in the state take sports bets from late April through January, but Gov. John Carney indicated May 15 that could change quickly.

“We continue to review details of (the Supreme Court) opinion,” Carney said in a prepared statement. “But when the Supreme Court took this case last year, the Delaware Lottery began preparing for the possibility that the court could overturn the federal Professional and Amateur Sports Protection Act. In the coming days, the Lottery office will consult with the Delaware Attorney General’s Office to more fully understand the details and impact of this decision on Delaware.

“Specifically, we will be looking at whether the opinion allows Delaware to offer full-scale sports gaming beyond parlay betting on National Football League games that was re-instituted in 2009. We believe that Delaware likely already has all necessary laws and regulations in place to implement full-scale sports gaming under the direction of the Delaware Lottery. If it is permissible under the opinion, full-scale sports gaming could be available at Delaware’s casinos before the end of June.”

(Laurel Park sports bar photo by Tom LaMarra)