Maryland’s consideration of introducing iGaming to its menu of gambling options received some important information Wednesday with the release of a third-party analysis of internet casino gambling. The report was commissioned by the Maryland Lottery & Gaming Control Commission and prepared by The Innovation Group, a consultancy firm that lists its business contacts in Denver, Orlando, New Orleans and Las Vegas,
The 48-page report is intended to inform state legislators on the basics of iGaming’s impacts financially, both regarding taxes and on the existing gambling industries in the state. Lawmakers very well could be considering Maryland online casinos in the 2024 General Assembly session that starts Jan. 10 and runs through April 8.
What Led Up to Report
In the 2023 General Assembly, an iGaming bill was introduced by state Sen. Ron Watson and state Sen. Nancy King, but it failed to advance in the legislature. Watson has said he will try again next year. Such an iGaming bill, if approved by the General Assembly, also would have to be signed by Gov. Wes Moore, and then approved by voters in the November 2024 election.
With all that in mind, the state’s Lottery & Gaming Control agency commissioned the iGaming study.
Only a handful of states allow for iGaming and The Innovation Group took the experiences of those states and applied those experiences to Maryland. Many hard and fast conclusions would be difficult to make because of the many vagaries of any prospective iGaming legislation, including, but not limited to, who would qualify for iGaming licenses, how many licenses would be issued, and importantly, the tax rates.
What Report Concluded
However, here are some of the key takeaways from the report:
- Given the timeline of legislation passage and voter approval, the best-case scenario for the first full year of iGaming in Maryland would be 2026 (although iGaming might be able to launch sometime in 2025).
- The first full year of iGaming (in 2026) is projected to produce gross gaming revenue (GGR) of $533.4 million.
- Ramping to full potential would occur in 2029 with a GGR of $904.9 million and level off with small increases in following years.
- The negative impact on existing brick-and-mortar casinos in the state is estimated to be about 10% (possibly about 1 or 2 percentage points less). In the case of Maryland, that’s a loss of about $200 million compared to a gain from iGaming of $900 million when iGaming reaches its full market potential.
- The study also examined impacts on other forms of gambling. For instance, the report forecasts little impact on the lottery, OTBs and horse racing, but perhaps 10% on bingo.
- Tax rates for online casino gambling remain a wild card. Only seven other states currently have operating iGaming and those tax rates vary enormously. The largest states with iGaming are New Jersey (20% tax rate), Pennsylvania (54% for slots, 16% for table games) and Michigan (20%-28% graduated rate).
- Also, regarding taxes, there seemed to be agreement that tax rates for slots and table games be blended into one rate rather than tiered by type of gambling. However, actual rates from stakeholders interviewed for the report varied from 10%-20%, to 20%-25%, to 25%-30%. One comment was that taxes should be higher than the brick-and-mortar rates.
- The report implied a consensus among stakeholders interviewed that Maryland iCasino licenses be tied to each of the state’s six bricks-and-mortar casinos with one or two “skins” (actually sub-licenses) allowed per casino.
Other points that report made were:
- There was a strong recommendation that regulators be given latitude to adjust iCasino regulations.
- Illegal gaming operators remain a substantial problem by siphoning off customers and that law enforcement had to become engaged in clamping down on the illegal operators.
- Job loss in the brick-and-mortar casino industry would potentially be greater than any added jobs from a new iGaming component.
There was also acknowledgement that iCasino as a gambling behavior presented greater challenges in terms of dysfunctional gambling, and the report included a lengthy contribution from the Maryland Center of Excellence on Problem Gambling. The center touched on consumer protections and responsible gaming with a note that comprehensive scientific research on problem gambling remains lacking.
For more coverage of advancing iGaming in the state, follow BetMaryland.com, which also is your home for Maryland sports betting.