The state of Maryland is the latest state to kick off online sports gambling.
According to state regulators, seven operators launched last month. The online sportsbooks held eight hours of “controlled demonstration wagering” on November 21 and fully launched on November 23. In nine days of operations during November, the online sports wagering handle was $186,084,496.
However, that amount included $63,835,319 in free promotional play, which is provided to customers and is deducted from the taxable win. As a result, mobile wagering accounted for just $4,262 in contributions to the state in its first nine days.
Regulators explained the paltry amount of tax revenue.
“We expect mobile sportsbook operators to continue to offer a lot of promotional wagers in the coming months as they venture into a new market and work to attract customers,” said Maryland Lottery and Gaming Director John Martin. “There was tremendous pent-up demand, and a lot of people are utilizing promotional offers from multiple operators simultaneously. But as many of the operators have acknowledged, this level of promotional play is not sustainable and based on our regulations, it will be curtailed over time.”
Maryland’s sports wagering regulations do not limit the amount of a sportsbook’s promotional play in its first full fiscal year of operation. However, after the first full fiscal year, regulations require that a sportsbook’s promotional play amount may not exceed 20% of its taxable win from the prior year.
“Deducting promotional play obviously has an impact on the bottom line, and that’s why we have a cap that takes effect after each operator’s first full fiscal year,” Martin said. “It protects the state’s interests and ensures that sports wagering will generate revenue for education, as intended. By awarding large amounts of promotional play in their first fiscal year, the sportsbooks’ promo play amounts will be limited in their second year.”
Maryland also has nine retail sportsbooks. The brick-and-mortar books generated $700,466 in tax revenue for the state in November.
The state is one of more than 30 in the country with some form of legal sports betting. About half of those states have online betting.