Maryland debates sports betting licensing and taxation

Maryland sports betting regulation is being debated.
Maryland sports betting regulation is being debated.

Legislators are debating how to regulate the licensing and taxing of sports betting.

US.- Legislators in Maryland have begun to debate the regulation of the state’s sports betting market following the approval of legislation last month.

House Bill 940, which was introduced by Maryland House of Delegates speaker Adrienne A. Jones, allows mobile betting and for Maryland’s casinos and race tracks to apply for retail sports betting licences.

Early debates in both chambers have focused on establishing a licence distribution plan that is both equitable and profitable.

The fiscal analysis of the bill suggests roughly $18m a year would be generated to fund the state’s new multi-billion dollar education plan.

Maryland voters approved legal sports betting on the ballot in November by a 2-1 margin.

All of Maryland’s neighbouring states have already successfully launched legal sports betting markets.

P.J. Hogan, a representative of the Rocky Gap Casino, which is close to the Pennsylvania and West Virginia state lines, told Capital News Service: “I’m hoping we can all get this worked out this year because we were behind the curve on passing casino legislation many other states got a jump on us. We’re almost behind the curve already on sports betting.”

Licences for sport betting operators

The current debate centres on two main topics: licensing and the taxation of revenue.

The bill establishes three categories of sports wagering licences: Class A covering already-licensed casinos and racetracks; Class B covering other interested businesses such as stadiums, restaurants, and hotels.

Finally, mobile licences for online wagering are expected to account for 85 per cent of market share, according to the Maryland Lottery and Gaming Control Agency.

Class A licences would be distributed by 2022 to the nine licensed casinos and racetracks in the state. Businesses would pay a $250,000 application fee and a $50,000 annual fee.

Class B licences would be distributed to a maximum of five businesses and mobile licences to a maximum of 10 businesses, numbers that many operators have said are too low.

For Class B licences, businesses would pay a $50,000 application fee and $10,000 annual fee. Mobile licenses would come with a $500,000 application fee and $100,000 annual fee.

John Pappas, the state advocacy director for iDEA Growth, a sports betting advocacy group, said that limiting Class B and especially mobile licences would hinder competition and lessen government revenue.

He said:“There is no policy benefit for the state to have a cap. The state benefits when there are more online licensees because those companies are required to pay upfront licenses fees. The market will expand and contract to what the market can support.”

Taxing revenue from sports betting

The bill establishes a 15 per cent tax on sports betting revenue, rising to 17.5 per cent on annual mobile wager revenue above $5m.

Low taxes are seen as key to competing with illegal sportsbooks, which take an estimated $2bn in wagers from Maryland each year, according to the Lottery and Gaming Control Agency and Oxford Economics.

Only two states have a mobile wagering tax rate of more than 15 per cent, while 9 states have a tax rate of 15 per cent or less.

In terms of neighbouring states, Pennsylvania’s mobile tax is 36 per cent, Virginia’s is 15 per cent, Washington DC’s is 20 per cent, and West Virginia’s is 10 per cent.

However, Sarah Koch, senior director of legal and government affairs for Draftkings, said: “States have recognized that the tax rate needs to strike a balance between generating adequate revenue for the state while allowing operators to compete effectively with the robust offshore market.

“Keeping taxes fair and reasonable allows legal operators to offer competitive pricing and also to reinvest in the market.”

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