Questions Abound Over Maryland Online Casino Gambling Study

For more than a year now, the Maryland state legislature has been considering the legalization of online/mobile casino gambling. It seems natural to take up such an endeavor after the legalization of sports betting, something Maryland Governor Wes Moore signed off on in May 2023.

As is the case in many states, the Maryland legislature asked for a study on the effects of allowing mobile casino gambling access. That study was presented to the House Ways and Means Committee this past week with the results perhaps raising more questions than were answered.

Details on the Innovative Group Study

Bryan Wyman, a representative of Innovative Group, was at the House Ways and Means Committee meeting last week. He provided a lot of useful information from the group's study, starting with concerns regarding how the legalization of online/mobile casino gambling would savage the businesses of the state's retail casino resorts.

According to the Innovative Group's study, the state's retail casinos could lose up to 10% of their gaming revenue if customers went to the Internet. That number was derived by looking at the six (6) states that have already legalized mobile casino gambling. On average, those states reported an average loss of 8% in retail gambling revenue in the months after the start of Internet casino gambling. The other 2% proposed decrease was attributable to the average increase in retail gambling revenue in the states that had not approved mobile casino gambling.

In hard dollars, a 10% decrease would cost Maryland retail casinos almost $100 million annually. That would be on top of a possible reduction in labor of 4% to 8% due to less traffic in retail casino facilities.

All of this is designed to serve as fodder for online casino gambling opponents. What the study addressed but didn't emphasize was the revenue offset that would come from the registration of online gamblers. In fact, most of the states where online casino gambling is legal have seen big gross increases in iGaming revenue due to more residents having easy access to mobile casinos.

Since Maryland's retail casinos would likely hold mobile licenses, it would seem disingenuous to claim the casinos will get hurt. Of course, retail casinos would see a drop-off in revenue from non-gambling-related sources like food, entertainment, and accommodations revenue.

Tax Rate Proposal

One interesting tidbit that came out of the Innovative Group study was the mention of the tax rate that could be charged to online casino operators on gross revenue. In a bill presented by Senator Ron Watson, mention was made of a 45% tax rate. According to the Innovative Group's study, that would put over $400 million into the state's coffers each year. That's substantially higher than the $135 million that was proposed at a rate of 15% in prior bills.

Clearly, there is more work to be done on this front. It's difficult to derive meaningful data when only six (6) other states are successfully running mobile casino gambling services.