Legal online sports betting will soon be a reality in Maryland. The state’s Sports Wagering Application Review Commission (SWARC) recently approved regulations for licensing applications. Here’s a breakdown of Maryland’s online sports wagering regulations.
SWARC has targeted all along the start of the NFL season to get online sports betting up and going in Maryland. However, as the commission awaits the completion of a state-run disparity study, that is looking unlikely. With the 2022-23 regular season beginning the first week of September, launching at all during the upcoming NFL season should be viewed as a win.
These regulations are a key component of the Maryland online sports betting launch. At first glance, the additions to the retail sports betting policy seem focused on liquidity and a clean regulatory record. The agency’s focus, however, went beyond dollars and cents.
How to get a Maryland online sports betting license
Generally speaking, the application process involves two main steps. First, submitting a licensing application to SWARC. Second, undergoing a background check from the Maryland Lottery Gaming Control Commission. Both agencies must sign off on the application.
SWARC’s application is not available right now as it can’t be formally released until the industry analysis is complete. The application for a background check is currently on the gaming commission’s website.
What SWARC added for online sports betting
SWARC already had regulations for retail (in-person) sports betting. It integrated mobile sports betting licenses into those existing regulations.
So, while the changes were significant in that mobile sports betting is now a part of SWARC’s regulatory framework, the actual changes were fairly limited. In fact, the words “mobile sports betting” were added just five times to the 21-page regulations.
Definition of personal net worth
To earn a mobile sports wagering license, an applicant must have direct or indirect ownership of at least 5% of the company for which they’re applying. Also, their personal net worth must be at least $1.8 million.
SWARC updated its definition of “personal net worth” to exclude the following from its calculations:
- Ownership interest
- Equity in primary residence
- Mortgage used to secure primary residence as a liability
- Cash value of qualified retirement accounts or IRAs
Shortened window for submitting background check application
Applicants have up to 14 calendar days after they submit their SWARC application to submit their background check application. The previous deadline was 30 days. The benefit here is that the approval process will move faster.
Disclosure of past regulatory discipline
SWARC added a paragraph that requires applicants for both online and retail licenses to disclose certain disciplinary actions in the past three years that resulted in fines of more than $5,000. Those actions include:
- Disciplinary matters
- Judgments
- Settlements
- Orders
- Decrees
Requiring this allows SWARC and the gaming commission to better vet applicants.
Equity requirement
The applicant must show proof it has investors with at least a 5% ownership stake in the company and who has a personal net worth of at least $1.8 million.
Full-time equivalent employee definition
SWARC added a short clause that clarifies “full-time equivalent” employees. Basically, SWARC wants to know how many 40-hour-a-week schedules a company can accommodate. To calculate this, applicants must divide the total hours worked during a quarter (13 weeks) by 520 (13 weeks x 40 hours per week). This mainly applies to retail sports betting applications.
Diversity at the core of regulatory changes
To the outsider, SWARC’s limited but significant changes may seem to indicate it’s looking for mobile and retail sports betting operators that:
- Have solid financial backing
- A clean regulatory record
The state surely wants to avoid licensing companies that can’t weather the ups and downs of sports betting. In football terms, SWARC wants to build a team based on players with as few off-the-field issues as possible.
However, SWARC’s main goal in revising the regulations was to ensure it eliminated any gender- or race-based licensing criteria, SWARC Chair Tom Brandt said at the agency’s July meeting.
Doing so eliminates potential delays. Also, it puts the process in line with state and federal regulations intended to create applicant diversity, Brandt said.
“To avoid further delays, we have asked staff and our professional team to draft regulations which exclude race and gender-based license criteria. And in an effort to achieve diversity among applicants, the updated draft regulations for consideration today stipulate that each applicant include at least one individual entrepreneur. Each new mobile sports wagering applicant … must demonstrate that at least 5% of its direct or indirect ownership is by individuals with a maximum personal net worth.”
Brandt went on to note that, while the minimum net worth requirements seem high, they are suitable based on federal regulations used by the Maryland Department of Transportation.
What’s next?
With the proposed regulations and applications approved, SWARC will now submit them to the Maryland Legislature’s Joint Committee on Administrative, Executive, and Legislative Review for “emergency approval.” Once approved there, a 30-day public comment period will then begin, which could jeopardize mobile sports betting launching before the NFL regular season begins.
After the regulations have become effective and the industry analysis has been completed, SWARC can then determine a date for when formal applications and fees can be submitted. From there, the group can then work on a potential timeline for additional actions, ending with mobile sports betting finally making its way to Maryland.
SWARC is scheduled to next meet on August 17. However, there’s always the chance it adds an emergency meeting before then.
