Maryland took a small, but important, step toward rolling out mobile sports betting when the state's Lottery and Gaming Commission (MLG) announced on Tuesday that it had begun accepting applications for online sports betting licenses.
Sportsbook applicants now have until October 21 to apply for either a mobile or retail sports wagering license. Each operator will then have an additional 30-day window to provide the required background check information.
This welcome development followed last week's news that Maryland’s Joint Committee on Administrative, Legislative, and Executive Review (AELR) had finally approved the emergency legal sports betting regulations issued by the state's Sports Wagering Application Review Commission (SWARC).
The AELR's approval of the SWARC emergency regulations, which allowed for betting license applications to begin this week, came only a few days after SWARC Chair Thomas Brandt sent a letter to the AELR asking the body to speed up its deliberations.
"After much work, we are nearly at the finish line, but we need your help," said the letter. "The sports wagering industry is ‘seasonal,’ and the football season (September through the Super Bowl in February) annually generates much more activity than other times of the year."
But even if the AELR may have been pushed into action, thereby unblocking the MLG, it will still take a giant procedural leap for Maryland to go live before the end of the year.
In remarks accompanying the Tuesday announcement, MLG Director John Martin enthusiastically declared that a late NFL season rollout of online sports wagering was "a good bet," albeit under very optimistic assumptions.
Take the over
"This is fantastic news," said Martin. "We know sports fans are eager to have mobile wagering, and we also know that it will substantially increase the contributions to education funding, so we’re eager, too.
"We’ve been doing everything we can to have it launch before the end of the year, and now we have a good chance to make that happen."
But Martin later qualified his optimism: "[Launching] by Super Bowl is extremely realistic. End of the calendar year is a good bet...[but] it’s probably going to be next football season before we’re fully operational."
The announcement was met with mild satisfaction from Maryland Gov. Larry Hogan, who has repeatedly faulted the state's licensing bodies for their sloth-like regulatory and approvals process.
Hogan had been counting on a Sept. 8 launch date to satisfy NFL bettors in particular but is now faced with a disappointing late December fait accompli.
After having to overcome numerous bureaucratic hurdles from the legislature’s commission, we’re finally seeing some progress on mobile betting. I am going to keep holding everyone’s feet to the fire until this is up and running. Marylanders have waited long enough. https://t.co/3vUSLNJrko
— Governor Larry Hogan (@GovLarryHogan) September 6, 2022
Martin tried to paint a rosier picture of the rollout process by stating that his oversight panel had been "hard at work" conducting a limited series of "background investigations" on prospective applicants anxious to speed up the approval process.
"A number of businesses that are planning to apply for mobile licenses have already submitted information to get their investigations started, and our licensing staff will continue guiding them through the qualification procedures," said Martin. "We’re focused on expediting our part of the process so mobile betting can start as soon as possible."
No matter how confident Martin may feel about a December launch, a calculation of the approval and licensing review periods suggests that this timeline is highly optimistic.
The closing date for applications is October 21. Then, there is a 45-day window to review such applications, which takes the MGC into the first week of December — and only after that can the MGC turn over its licensee recommendations to SWARC, which presumably will need at least a few weeks to review and issue licenses to sportsbooks.
Do we still feel confident about a pre-Christmas launch?
Missing the NFL season will cost millions
The reality is that Maryland will be missing out on virtually all the action — on the field and off — by failing to go live in time for the beginning of the NFL season. Similar to Massachusetts, which has chosen to slow walk the approvals process, Maryland has lost an estimated $15-$25 million in tax revenues on sportsbook earnings by dragging out the licensing process.
Maryland's casinos generated $76.1 million in tax revenues in the month of July alone, and residents will simply continue to use offshore sportsbooks or local bookmakers to wager hundreds of millions of dollars on NFL, MLB, NBA, and NHL games this Autumn — not to mention college football.
Diversity study provision added at last minute
The principal reason for the delay in getting the application process underway was the need to complete a diversity study that was intended to ensure that minority groups and women would be given greater opportunities to participate in what is largely a white male bastion.
The report that was concluded in mid-August led SWARC to include in its sports betting licensing regulations a provision requiring applicants to have at least one individual with a net worth of $1.8 million or less own 5% or more of the company. This stipulation is intended to increase, at least on a statistical basis, the chances that women and minorities would be able to get in on the action.
But this provision overlooks the overwhelming capital requirements of launching online mobile betting services. Mobile operators only begin to earn profits after spending massive amounts on advertising and promotions — an immediate barrier to entry for any small operator — and even then, sportsbooks require huge volumes of wagering action in order to generate a profit.
Diversity provision carries no penalties
As matters evolved on Friday, the AELR committee's regulatory approval came only a few hours after an additional diversity provision was added to the regulations, which requires sportsbook applicants to provide a diversity plan within 30 days of being granted a mobile sports betting license.
"When the MGA [originally] passed sports wagering, it did so with the goal of promoting diversity in the industry," Senate President Bill Ferguson (D-Baltimore City) and House Speaker Adrienne A. Jones (D-Baltimore County) said in a statement Friday. "The regulations approved, today, by AELR that require sports wagering licensee applicants to seek out minority investors, to use the State’s nationally recognized minority business enterprise program in contracting and submit a substantive diversity plan, will help achieve that goal.
"We are confident that these measures will ensure meaningful minority participation in this new industry."
Unfortunately, there are no teeth to the diversity requirement. Lawyers have observed that the amended regulations do not impose any financial penalties on sportsbooks failing to abide by the provision.
Nor is there any risk of revocation, as the license "has already been awarded."
