Maryland lawmakers are inching closer to taking a big swipe at online sweepstakes gambling.
The Maryland House of Delegates’ Ways and Means Committee met Thursday and heard from Republican Sen. Paul Corderman on his Senate Bill 860, which targets the online sweepstakes casinos and sportsbooks popping up across the U.S.
While committee chair Del. Vanessa Atterbeary suggested a vote on the bill would take place later in the day, it doesn't appear one actually took place. The committee also had to address other matters on Thursday, including budget-related legislation that now includes a reduced tax hike for online sports betting sites.
Nevertheless, the Ways and Means Committee is scheduled to meet again next week. The Maryland General Assembly is scheduled to adjourn on April 7, although May 7 is the final possible date for an extended session.
Senate approved
S.B. 860 was also unanimously passed by the state’s Senate earlier this month and would prohibit someone from operating, conducting, or promoting an online sweepstakes game in Maryland. A host of entities would also be banned from supporting sweeps, including gaming licensees (and their media affiliates), payment processors, and geolocation providers.
The legislation says anyone caught breaking the proposed law would be guilty of a misdemeanor and could face up to three years in jail and fines of between $10,000 and $100,000. Any gaming licensee or applicant could have their permit revoked or their application denied.
Corderman said during Thursday’s hearing that the bill targets illegal online casinos that are “continuing to rip off Maryland citizens,” adding that state residents are “conned into wagering” an estimated $6 billion a year with “black market” sites.
“These online casinos present unfair competition to our highly regulated and economically important casinos,” the senator said.
Online sports betting is legal in Maryland, but online casino gambling is not. And while some lawmakers have proposed iGaming legislation this session, they have not got far. In the meantime, Maryland lawmakers look much more willing to crack down on sweeps.
Corderman's bill is part of a growing trend in the U.S., as lawmakers and regulators are becoming more aware of online sweepstakes casinos and sportsbooks and more willing to try to shut them down. Anti-sweeps legislation has been introduced in other states, such as New York, where it is making progress.
“This is a systemic problem across the country,” Corderman said.
We want sweeps, not Starbucks Rewards
Maryland regulators have already taken steps to try to slow down on the sweeps industry, namely by sending cease-and-desist letters. One of the more recent of those was addressed to Chumba-operator Virtual Gaming Worlds, which was duly noted by Corderman during Thursday’s hearing.
Corderman also said companies are “not paying attention” to the cease-and-desist letters sent their way. His bill, he added, would provide a mechanism for addressing the issue.
There were two amendments to the legislation mentioned on Thursday. Both are more technical in nature, Corderman explained, but one will help the Maryland Lottery and Gaming Control Agency in making determinations about a “dual currency” structure that doesn’t lump in things like customer loyalty programs with the sweeps being targeted by the bill.
S.B. 860 defines an online sweeps game as something using a "dual currency system of payment" that allows a player to exchange that currency for a prize, award, or cash and cash equivalents. A sweeps site could also simulate "casino-style gaming," such as slot machines or blackjack, as well as lottery games or sports wagering. The definition would not include a game that does not award cash prizes or cash equivalents.
“I think everyone can understand and agree here that Lottery has no interest of shutting down peoples’ coffee rewards, but they do have an interest of getting rid of illegal iGaming, basically,” Corderman said.
Other tweaks
S.B. 860 would also make other gaming-related tweaks to Maryland law, requiring potential licensees to disclose whether they have received any revenue over the past year for supplying iGaming content in a jurisdiction that does not permit iGaming. Any "material" misrepresentation or omission for that disclosure could cost someone their license.
Moreover, state regulators would be prohibited from licensing someone if they receive revenue from jurisdictions on a "black list" for money laundering, a country designated as a state sponsor of terrorism by the U.S. government, or somewhere iGaming is prohibited and the revenue in question is from iGaming.
The Maryland Lottery and Gaming Control Commission would also have to stop a company from operating if the regulator determines they or their affiliates are knowingly receiving revenue from one of those aforementioned areas. The commission could then potentially revoke licenses.
