Maryland racing industry makes case for sports betting

Posted: Jan. 30, 2020

During a Jan. 29 legislative hearing at which racing stakeholders strongly urged that the industry be included in a sports betting bill, lawmakers announced that a working group has been formed to develop consensus.

There are four bills related to sports betting, two in the Senate and two in the House of Delegates. Though they all call for a constitutional amendment, there are differences regarding which entities would be eligible to apply for sports betting licenses.

The Senate Budget and Tax Committee, chaired by Sen. Guy Guzzone, scheduled hearings on two sports betting bills: Senate Bill 4, sponsored by Sen. Craig Zucker, and Senate Bill 58, offered by Sen. Chris West. The former names casinos as eligible licensees and authorizes online wagering, while the latter lists casinos and racetracks but has no online component.

Zucker said Guzzone put together a working group to look at “licenses and fees, and we’ll certainly make sure the racetracks and others interested in this will be at the table. At the end of the day we want to have a product that works well with Marylanders’ interests in mind. We will be working this out.”

Zucker said sports betting “is something I’ve been hearing about a lot from my constituents.” He also noted that people have asked him if legislation would pass this year, and he told them: “I would bet on it.”

Senate Bill 4 calls for a license application fee of $2.5 million and an annual $250,000 renewal fee; for online licensees the application fee can be no less than $5,000. The tax rate in the legislation is 20% of proceeds from sports betting.

Representatives of the Maryland Thoroughbred Horsemen’s Association in testimony requested that horse racing not be placed at a competitive disadvantage.

MTHA general counsel Alan Foreman noted that the legal challenge that led to the federal ban on sports betting being overturned was initiated by the New Jersey THA, and that a goal was to provide revenue for the state’s horseracing industry. Three states that border Maryland–Delaware, Pennsylvania and West Virginia—already have full sports betting at racetracks and casinos.

“If our racing industry and tracks are not included, we would again be at a competitive disadvantage,” Foreman said. “If not for the horseracing industry, we would not have had gaming in Maryland.”

Generating additional revenue for racing was a driving force of authorization of video lottery terminals at five locations in Maryland in 2008. In 2012, a sixth casino and table games were approved via constitutional amendment.

Tim Ritvo, Chief Operating Officer of Racing and Gaming for The Stronach Group, which owns the Maryland Jockey Club tracks, said the legislature’s decision to grant a percentage of VLT revenue for purses and capital improvements has helped the industry grow and increase its economic impact.

“It’s important we are included in the bill and can continue to compete in the marketplace,” he said. “I appreciate all of the things this body has done for the Thoroughbred racing industry.”

Randy Cohen, a longtime Maryland racehorse owner and owner of a Frederick-area hotel and conference center that now offers off-track betting, suggested the state’s OTB network be included along with the tracks. Three casinos—Horseshoe Baltimore, MGM National Harbor and Hollywood Casino Perryville—have OTB areas operated by the MJC.

“This state needs sport betting and it needs it at racetracks,” Cohen said. “I appreciate that you have an open mind to that. It’s vital to realize all opportunities to take market share back from (neighboring) states that are taking it now. Now is the time to have sports betting at OTBs in conjunction with the racetracks. It would allow us to expand state dollars and generate more economic development.”

William Rickman Jr., who spoke on behalf of Casino at Ocean Downs, which he sold several years ago to Churchill Downs Inc., spoke in support of sports betting but recommended lawmakers “take a harder look” at the tax rate and license fees. As a VLT operator, Ocean Downs, which offers live harness racing, would automatically qualify for a sports betting license, but Rickman said: “In my personal opinion racetracks should be included (in the legislation).”

Other casino representatives also said the planned 20% tax rate is too high, and they also spoke of the importance of having a mobile component and “skins”—secondary mobile sports betting licensees that can expand the revenue pool.

Sen. Thomas V. “Mike” Miller, who formerly led the chamber, said revenue is key with a major education funding bill under consideration by the General Assembly. “Put your collective heads together and move forward,” said Miller, who supports racetracks and OTB facilities being in the mix. “This is a positive development for all segments. We all need to benefit.”

The hearing on Senate Bill 58 was cut short given previous testimony at the request of West, whose district includes the Maryland State Fair at Timonium, which has off-track betting year round. West said he supports sports betting at tracks and casinos.

“I would urge a composite bill that includes tracks as locations for licenses,” he said.

Hearings on the House bills are scheduled in the Ways and Means Committee Feb. 4.