Maryland Regulator Okays Draft Sports Betting Rules for Public Review

On Thursday, July 15th, the Maryland Lottery and Gaming Control Commission (MLGCC) unanimously approved the state’s draft sports betting regulations to mark another significant step towards launching legal sports betting in the Old Line State.

The ratified draft document is 228 pages long. It outlines the license application process, qualification criteria for interested operators and platform providers, and the technical standards of Maryland’s sports betting. Thursday’s sitting for approval of the draft regulations was principally a formality, but it marked a significant stride towards legal sports betting in the Old Line State. The meeting took place via teleconference, and it lasted only about half an hour.

The Public Comment Window for Maryland’s Expanded Gaming Kicks Off

Governor Larry Hogan opened the door for sports betting regulation when he signed House Bill 940 into law back in mid-May. HB 940 was essentially a shell bill passed as an emergency measure, tasking the MLGCC to work out the specifics of expanded gaming. With the approval of the draft regulations on Thursday, the proposals are now officially available for public scrutiny.

Anyone or any entity from operators and industry insiders to bettors and the generally curious Marylanders have 30 days to take a peek and see what the proposals are all about. Following the public scrutiny period, the MLGCC will review the responses and possibly make adjustments, if need be, before crafting the final rules.

Two-Step License Approval Process

One of the many items that stand out in the 228-page document is the roles that the MLGCC and the newly formed seven-member Sports Wagering Application Review Commission (SWARC) will play in the license approval process. Page 52 of the proposed regulations document reads:

“The Commission shall issue a license to a person covered in this chapter, on an award of a license by the Sports Wagering Application Review Commission to an applicant that meets the requirements for licensure under State Government Article Title 9, Subtitle 1E, Annotated Code of Maryland.”

The next page, Page 54, additionally states that the MLGCC shall:

“(1) Decide whether the applicant meets the qualification requirements as described in

COMAR 36.10.03 including any license category specific requirements and qualifications; and

(2) Notify SWARC of the Commission’s qualification provision.”

Still on Page 54 of the document, the draft regulation states that:

“C. SWARC cannot grant a license to an applicant that the Commission has not found educated.

D. After notifying SWARC that it has determined that an applicant is eligible, the Commission

SWARC must:

(1) Evaluate an applicant for license award; and

(2) Notify the Commission of the license.”

Further, skipping ten pages ahead to page 63 of the 228-page document, the draft rules say:

“Unless a person holds a valid mobile sports wagering license awarded by the Sports Wagering Application Review Commission and issued by the Commission, the person may not conduct, offer, or operate online sports wagering in the State.”

So, in a nutshell, both the MLGCC and the SWARC will draft their own set of standards, which applicants must pass for them to be allowed entry into Maryland’s regulated sports betting market.

Proposed Rules Shed More Light on Licensing Fees and Taxation

When HB 940 was passed by Gov. Hogan, it touched on aspects such as 15% taxation for retail and online sports betting and some application and licensing fees. In the 228-page document of proposed regulations, the MLGCC has provided more details about the license classes, entities that fall under each category, and associated fees.

HB 940 had outlined that there will be 10 Class A licenses and 30 Class B licenses, and now, the MLGCC draft laws have split them further into four categories. So, based on the draft laws, the licenses that will be available in the Old Line State along with the costs are as follows:

• Class A-1 Licenses: Casinos with over 1,000 video lottery terminals and professional sports team facilities (current and future) fall under this category. They’ll part with a non-refundable $2 million application fee and a 5-year license bond worth $6 million.
• Class A-2 Licenses: Casinos with less than 1,000 video lottery terminals and two horse racing felicities – Pimlico Race Course and Laurel Park, will be eligible for this license. The application fee here is $1 million, plus a $3 million bond for a 5-year license.
• Class B-1 Licenses: Here, the draft regulations partly define entities in this group as applicants that aren’t “eligible for a Class B-2 facility license”. These include Maryland State Fairgrounds and commercial bingo halls. They’ll pay $250K as an application fee and $750k for a 5-year license
• Class B2 Licenses: Entities with less than 25 staffers employed or ‘total gross receipts’ under $3 million will be assigned this license. Such establishments will part with $50K in application fees and $75k for an initial 5-year license.

Additionally, as had been highlighted in HB 940, Class A and Class B license holders will be allowed to apply for one of the 60 mobile licenses to be awarded in Maryland. In that case, mobile license applicants, including any Class A and B applicants, will be required to part with an application fee of $500K and pay $1.5 million for a 5-year license bond.