Top Issues of 2021 Session: Sports Wagering

With the 2021 Legislative Session rapidly approaching, MACo is profiling some major issues that stand to gather attention in the General Assembly’s work. Here, we preview the road ahead for legal sports wagering in Maryland.

The U.S. Supreme Court in 2018 found the Professional and Amateur Sports Protection Act (PASPA), the federal law prohibiting states from authorizing sports wagering, to be unconstitutional.

It is now up to individual states to decide if they want to authorize and regulate sports wagering. Congress can also take action on the authorization and regulation of sports wagering but has so far left it up to individual states.

Sports wagering operations are now underway in 19 states and the District of Columbia. In the coming year, North Carolina, Virginia, and Washington are expected to launch sports betting operations.

Maryland voters this year approved a constitutional amendment to expand commercial gaming by authorizing sports and events wagering for the primary purpose of raising revenue for education. However, the General Assembly must follow this approval by passing implementation legislation before sports wagering may begin in the state.

According to the constitutional amendment, the General Assembly will need to pass legislation that authorizes the State Lottery and Gaming Control Commission to issue licenses for sports and event wagering in the state. The legislation must include the criteria for eligible applications for a licensee and specify the permissible forms, means of conducting, and locations where sports wagering will take place.

Although sports betting is generally understood to be a low-margin, high-volatility business, proponents in the gaming industry tout the ancillary benefits of retail sportsbooks – specifically, bringing in younger, net new customers to a gaming facility with an aging customer base; increasing table games and slots revenue; and boosting onsite food, beverage, and hospitality business.

The Department of Legislative Services noted during the 2020 session that retail sports wagering revenues in Delaware, New Jersey, Pennsylvania, and West Virginia average approximately 2% of those states’ total gaming revenues from video lottery terminals and table games.

The Department of Legislative Services estimates revenue projections for sports wagering in Maryland in its annual compilation of Issue Papers:

If sports betting revenues in Maryland total 2% of Maryland’s gaming revenues, gross revenues after payouts to bettors could increase by $36.5 million in fiscal 2022. Assuming that the current table games tax rate of 20% is applied, the State share of gross revenues in fiscal 2022 would be $7.3 million.

DLS further estimated that gross revenues could increase up to $91.1 million in fiscal 2022, totaling 5% of Maryland’s gaming revenues if sports betting is authorized both online and at Maryland casinos and racetracks. Assuming a 20% tax rate, the State share of revenues would be $18.2 million.

More background on the legalization, regulation, and taxation of sports wagering in Maryland can be found in previous Conduit Street coverage, and in the DLS Issue Papers:

Supreme Court Allows States to Legalize Sports Betting

Statewide Ballot Questions Pass Comfortably

DLS Issue Papers: Sports Betting in Maryland

Helpful 2021 Session Links:

Maryland General Assembly website | 2021 Dates of Interest | Issue Papers
Re-opening procedures: Senate | House of Delegates | House Committees
Follow MACo’s advocacy efforts on MACo’s Legislative Tracking Database
MACo’s 2021 Priorities  |  MACo’s 2020 Wrap-Up

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