Report Provides Details About Potential Maryland iGaming Market
A Maryland Lottery iGaming report conducted by The Innovation Group has been completed and shared with the state’s General Assembly.
The legislature asked for the report after 2023 efforts to legalize mobile casinos failed. Rather than moving forward with a bill, the legislature agreed that receiving a report with relevant information about how legal online casinos could impact Maryland was worthwhile.
The report was completed by the imposed Nov. 15 deadline, and it contains 49 pages of information related to possible online casino legalization in Maryland. It’s expected that the state legislature will discuss an online casino bill in 2024.
Cannibalization fears unwarranted?
One of the biggest fears among Maryland legislators is the possible cannibalization of brick-and-mortar casino revenue, should the state allow for mobile casino games. The report, which suggests that tethering online licenses to brick-and-mortar casinos makes the most sense for Maryland, seems to put some of those fears to rest.
Between 2019 and 2022, the Innovation Group reported that it “observed 2% same-store casino revenue growth in non-iGaming states, versus an 8.2% decline in iGaming states, suggesting a cannibalization rate of approximately 10% of casino gaming revenue.” Importantly, the report also states, “Since Maryland’s casino revenue is just over $2 billion annually, this would amount to a loss of just more than $200 million in casino revenue against a gain of $900 million in iGaming revenue.”
While some legislators will still likely cite cannibalization fears during the 2024 legislative session, the report suggests that if online casino licenses are tethered to brick-and-mortar establishments, the retail properties will be just fine financially.
The report also suggests the legalization of online casinos would have a minimal effect on lottery revenue.
Tax revenue potential
Gross gaming revenue from online casino gaming could total more than $900 million annually once the market begins to mature in Maryland around 2029, according to the report. How much tax revenue online casino gaming would create for the state depends on the tax rate.
The report suggests legislators could consider tax rates anywhere from 10-40%. The report projects that a 25% tax rate could lead to just over $225 million in annual tax revenue in 2029 on about $900 million worth of gross gaming revenue. For comparison, mobile sports betting has generated just over $36 million for the state so far this year.
The prospect of increased tax revenue excites some legislators, but as the report points out, problem gambling concerns are expected to be a key topic of discussion in 2024. If Maryland legalizes online casino games, will the state have the necessary resources to prevent problem gambling and treat those who develop gambling problems?
The state’s 2024 legislative session starts on Jan. 10 and ends on April 8. At some point during the session, a bill related to online casino gaming is expected to surface.
Should legislators pass a bill, online casino gaming will need to be approved by voters through a referendum in November of 2024.