Sports betting bills have initial hearings in Maryland

Posted: March 6, 2019

Three bills that would authorize sports betting—two via statewide referendum and another with only legislative approval—had their first hearings March 6 in the Maryland House Ways and Means Committee.

Each bill would allow casinos and racetracks to apply for licenses, though one bill would exclude the Maryland State Fair at Timonium through language that says only “mile Thoroughbred tracks” and harness tracks are eligible.

Because of the similar nature of the bills, most of those offering comments spoke only once. Among them were representatives of the Maryland Jockey Club, which owns Laurel Park, Pimlico Race Course and Rosecroft Raceway.

“We appreciate the racetracks being included once again,” MJC lobbyist John Favazza said in reference to similar legislation that easily passed the House of Delegates last year but failed to advance in the Senate. “All of our surrounding states have included racetracks (in sports betting) so we’re looking for parity.”

Delaware, Pennsylvania and West Virginia have sports betting at all or some of their racetrack casinos.

“This will allow us to be competitive with our neighbors,” MJC President Sal Sinatra said. “We’re excited and look forward to it going to a referendum (in 2020).”

House Bill 739 states that sports betting licenses can be issued to the holders of “a license for Thoroughbred racing or harness racing.” House Bill 963 is almost identical but states only “mile” Thoroughbred tracks or harness tracks qualify.

Maryland State Fair Chairman Gerry Brewster requested an amendment to House Bill 963 that would include Timonium. He said the fair, which is home to year-round off-track betting as well as its live race meet, supports the other legislation.

“We are a prime site for sports betting,” Brewster said. “And we may be the only location that has gotten the support of 30 community associations.”

Del. Eric Luedtke noted that the language in House Bill 739 would include Fair Hill, which offers pari-mutuel steeplechase racing and hopes to expand its racing program when renovations including a reconfigured turf course are completed. Representatives of Fair Hill did not appear at the hearing.

“We’re not for excluding anybody,” Brewster said.

As was the case last year, Joe Weinberg, Chief Executive Officer of Cordish Global Gaming, said the owner of Live! Casino in Maryland believes only casinos should have sports betting. He argued that the real value of sports betting, because of its small margins, would be driving traffic to casinos and increasing revenue for the state through additional play on other gaming offerings.

“You need to be careful of dispersing sports betting outside of the casinos,” he told the committee.

“If we give casinos the opportunity why wouldn’t we give racetracks a shot at it?” Del. Jay Walker said. “Racetracks want the same (increased traffic). We’re going to agree to disagree.”

Del. Teresa Reilly also disagreed. She said people who go to racetracks and not casinos would be “locked out” from on-site sports betting if it was approved for only casinos.

The bills don’t directly address mobile or online sports betting, but it was discussed at the committee meeting. Maryland doesn’t allow online casino gambling but advance deposit wagering on horse races is legal.

Sara Koch, a government affairs director for DraftKings, a fantasy sports entity, told the committee the best way to compete with the black market in sports betting is to have a mobile component. She claimed that about 1.2 million Marylanders already bet on sports in illegal markets.

The earliest a referendum could be held is November 2020. The bill authorizing the Maryland Lottery and Gaming Control Agency to offer sports betting via General Assembly approval only includes an analysis that notes sports betting could be available before the start of the professional football season in fiscal 2020—this summer.

The Maryland constitution states the General Assembly may authorize additional forms or expansion of commercial gaming if it passes a statewide referendum. An analysis of the bill, however, states “it is unclear as to whether a sports wagering operation conducted by the (MLGCA) could be implemented without approval by voter referendum.”

Del. Jason Buckel, who co-sponsored the bill, indicated he’s not sure how far the legislation will progress.

“I don’t know that it will work, but there have been a variety of conversations to find a legal workaround,” Buckel said. “We may be faced with the reality of seeking a referendum, which would put the state behind another two years.”

The bill authorizing the MLGCA to conduct sports wagering allows for the agency to contract for sports betting operations should it decide to go that route. It says a “video lottery operator or horse racing licensee” may apply for a license, but an attached fiscal note bases revenue projections on the six casinos—Ocean Downs racetrack has one—and Laurel, Pimlico and Rosecroft.

Each facility would pay an initial $300,000 license fee and $50,000 a year to renew the license. The operators would keep 20% of gross receipts and 80% would go to the state Education Trust Fund.

The Department of Legislative Services estimates total revenue from sports betting in fiscal 2020 at $35.57 million with a gradual increase to $37.32 million in fiscal 2024. Total revenue for licensees is estimated at $7.11 million to $7.46 million over the same period. The analysis notes that revenue would likely double if online wagering is offered.

As the House Ways and Means Committee hearings were being held, the Senate Budget and Taxation Committee held hearings on three bills a House committee heard a week ago. Similar testimony was offered March 6 on legislation that would authorize a work group to study financing for a Pimlico rebuild; a bill that would make the Bowie Training Center eligible for Racetrack Facility Renewal Account funds; and a bill that would expand RFRA and allow the Maryland Economic Development Corp. to float roughly $120 million bonds for major projects at Bowie and Laurel.