State to Study Online Casino Gaming, Issue Could Be Before Voters in 2024

SB 267, which put up for referendum the issuance of internet gaming licenses to video lottery operators in Maryland, fell short during the 2023 legislative session. However, budget language requires the Maryland Lottery to study online casino gaming and submit a report to the General Assembly.

Online casinos enable gamblers to play and wager on casino games via the internet. While many states allow brick-and-mortar casinos and sports wagering, only six states allow online casinos: Connecticut, Delaware, Michigan, New Jersey, Pennsylvania, and West Virginia.

The study, due by November 15, aims to gauge the potential impact on Marylanders if the state legalizes online casino gaming, including:

  • the estimated iGaming market size in Maryland
  • the potential economic impact on the state’s physical casino locations
  • the potential impact on the state’s lottery system
  • results from other states with legal iGaming
  • iGaming’s potential impact on problem gambling

Maryland’s Current Landscape

Maryland law authorizes a varied range of legal gambling options. Still, the General Assembly may only allow additional forms or gaming expansion if approved through a referendum by a majority of voters in a general election.

As such, to put the issue before voters in the 2024 election, the General Assembly must pass legislation during the 2024 session. And even if voters approve a referendum authorizing online casino gaming in the 2024 election, online casinos would not be operational in Maryland until at least 2025.

Maryland has authorized video lottery operation licenses in Allegany, Anne Arundel, Cecil, Prince George’s, Worcester counties, and Baltimore City, with a maximum number of 16,500 video lottery terminals (VLTs) allotted in the state. Subject to approval by the State Lottery and Gaming Control Agency, licensees are also authorized to have table games.

Gross VLT proceeds are generally distributed from the proceeds of VLTs at each facility to a small, minority, and woman-owned business investment account, the State lottery for administrative costs, local impact grants, the horse racing industry, licensees, and the Education Trust Fund (ETF).

Licensees receive 80 percent of table game revenues of the balance, 15 percent is distributed to the ETF, and 5 percent is distributed to local jurisdictions where a video lottery terminal facility is located. County governments may use local impact grants for infrastructure improvements, facilities, public safety, sanitation, economic and community development, and other public services and improvements.

Last month, Maryland’s six casinos generated $169.4 million in gaming revenue, contributing $70.8 million to the state.

In addition, in 2020, Maryland voters approved a constitutional amendment to expand commercial gaming by authorizing sports and events wagering to raise revenue for education.

Maryland’s ten retail and ten mobile sportsbooks combined to generate $4,650,711 in contributions to the state during May 2023, the second-best single-month total to date. Each sportsbook contributes 15 percent of its taxable win to the Blueprint for Maryland’s Future Fund, which supports public education programs.

What Could Online Casino Gaming Mean for County Governments?

While the Comptroller’s Office estimates that online casino gaming could generate nearly $100 million annually for the Education Trust Fund, MACo anticipates that online gaming will impact revenues associated with in-person table games and VLTs. As such, in addition to advocating for an equitable share of new gaming revenue, counties will seek to protect existing revenue streams on which local governments have relied for several years and which support important services and infrastructure for our communities.

Stay tuned to Conduit Street for more information.