Diversity Study Stalling Maryland Online Sports Betting Could Become Model For Others

Written By Steve Friess on June 14, 2022 - Last Updated on November 21, 2022

Maryland bettors are frustrated that their state is delaying the creation of rules for licensing online sports betting until its study of the casino industry’s diversity is completed. However, that novel decision could provide a key spark that forces the sector to change, MGM Resorts Board Member Rose McKinney-James tells PlayMaryland.

The ongoing study aims to assess how the industry is doing in its efforts to promote diversity among owners and executives and on corporate boards, among other elements. It’s unclear when the report will be completed or how it will impact the rules.

McKinney-James is one of two Black members of the MGM board. She is also among a small handful of people of color on corporate boards of publicly traded gambling companies.

Mckinney-James says the Old Line State’s decision to stall its launch and forego months of tax revenues in the process is an important example of sacrifice for the greater good.

“Most companies have this on their radar screen because their investors are creating that expectation, but what you’re seeing in Maryland is what you will likely see in other jurisdictions where there is an expectation that the leadership of a company and the decision-makers represent some diversity of thought and background,” says McKinney-James, who chairs MGM’s corporate social responsibility and sustainability committee.

Del. Darryl Barnes, a Democrat who chairs the state General Assembly’s Legislative Black Caucus, is a leader in this effort in Maryland.

“We have an opportunity to get it right,” Barnes says. “We have an opportunity to create generational wealth across the board, and not just for one class of people.

“We have an opportunity to diversify and give other folks opportunities within this industry. We have an opportunity to move forward in a way that makes sense. And Maryland is trying to lead the way.”

How we got here

Maryland voters legalized sports betting in a 2020 referendum. A year ago, Gov. Larry Hogan signed a sweeping bill into law that created the prospect of more than 100 licensees for retail and mobile app-based wagering. That includes as many as 60 mobile licenses and 30 licenses for brick-and-mortar sites like bars and restaurants.

All are aimed at creating such a big playing field that minority-owned businesses have entryways into an industry that is otherwise almost exclusively white and male.

In December, the Sports Wagering Application Review Commission issued sports-betting licenses to two off-track betting facilities. They were to the Black-owned Riverboat-on-the-Potomac and woman-owned Long Shot’s. They were among the first five issued outside of established brick-and-mortar casinos, horse tracks and sporting venues.

What about mobile sports betting?

On online sports betting licenses, though, SWARC awaits the results of a disparity study being overseen by the state attorney general’s office. The AG’s office then must decide whether the outcome would legally justify implementing race- or gender-conscious measures to foster diverse ownership and leadership for licensees.

Best guesses now are that Maryland won’t be ready to launch mobile sports betting until fall 2022 or early 2023; the most optimistic predictions are sometime during the coming NFL season.

The SWARC will next meet on June 16. It remains to be seen whether an update comes out of it after not having one from the previous two.

Some lawmakers are grousing at the delay and bemoaning the loss of tax revenue. Barnes, for one, is more concerned with social progress than FOMO.

“They’re saying, ‘Gambling is an economic engine for the state. Let’s get it while we can.’ But gambling isn’t going anywhere, we have time,” Barnes says.

“We can and should take our time. We should make sure we set up a system so that those that want to participate in this industry have an opportunity to do so. If not, minorities will be left out of the equation.”

What the study may find

The specifics of how the state is assessing diversity are unclear. But even a casual look around the industry suggests the situation is bleak for people of color.

The exception, of course, is the heavy dominance of Native American ownership across the country on sovereign lands. This, in turn, is a form of reparations for centuries of displacement at the hands of European colonizers and, eventually, the United States government.

There are believed to be no Black-owned brick-and-mortar casinos in the nation. In November, voters in Richmond, Virginia, narrowly rejected a proposal from Alfred Liggins, CEO of the media conglomerate Urban One, for the company to build a $565 million resort. Liggins told reporters the project would create “the only Black-owned casino in the United States of America.”

The Richmond City Council, hoping for a different result, plans to hold a second referendum this fall.

Diversity history in the industry

Historically, there have been so few Black casino entrepreneurs that those who have existed became legends.

In 1950, Sarann Knight-Preddy, who died in 2014, became the first African-American woman to receive a gaming license when she bought the Tonga Club in tiny Hawthorne, Nevada. Don Barden, who died in 2011, became the first Black casino owner in Las Vegas in 2002 when he bought the Fitzgerald’s and at various points owned six casinos in five states.

Beyond ownership, the number of non-indigenous people of color in upper management in the industry is microscopic.

PlayMaryland reviewed the lists of executives and board members of more than a dozen casino-related companies. While most had had at least one person of color on their corporate boards, the upper-level management was overwhelmingly white, Native American, or, often when a company has interests in the Far East, Asian.

To wit, when Melonie Johnson became president and chief operating officer of the Borgata Hotel Casino & Spa in 2020, she was the first Black woman to ever run an Atlantic City casino. Shortly thereafter, Caesars installed Jacqueline Grace, also a Black woman, as senior VP and GM of Tropicana Atlantic City. (Johnson, now president and COO of MGM National Harbor, was earlier in her career also the first Black person to be president of a casino in Tunica, Mississippi.)

“On occasion, it does feel a little lonely because there are so many qualified directors and many, many qualified executives who could be active in the space,” McKinney-James says.

Signs of change?

Slot manufacturer American Gaming Systems is highlighted in a 105-page report published in March 2022 by the AGA as having people of color as half its senior executives. It also has participated in the McKinsey Black Leadership Academy Management Accelerator to cultivate and promote aspiring leaders of color. Forty percent of AGS employees in the U.S. are people of color, too, which is consistent with the population.

Yet even in that report, beyond AGS’s efforts, the question of improving the numbers of people of color in the industry’s c-suites and boards is seldom addressed. Instead, most companies talk up their efforts to improve purchasing with minority vendors and gender diversity in leadership. Barnes says that’s not where his concerns lie.

“I’m looking particularly at Black folks as the chair of the Maryland Legislative Black Caucus, which is the largest Black caucus in the Union. And I am looking for diversity participation within the African-American community. Not to exclude any other minority but our focus is this,” Barnes says.

What else can be done

McKinney-James, who in the 1990s was an unsuccessful Democratic nominee for lieutenant governor and served as the state’s director of Nevada’s Department of Business and Industry, believes such governmental pressure is necessary. There are several well-regarded leadership programs for minorities, including one she has worked with at Santa Clara University. Other industries, however, seem to try harder to recruit and promote the graduates who emerge, she says.

“There isn’t any momentum in that regard aside from what Maryland is doing,” McKinney-James says. “And especially as someone who came from government, you have to be intentional if you want to have any success.

“And, candidly, we have to eliminate this falsehood that you can’t find qualified people for these boards and positions. I’m over that because I know it’s not true. It just requires some additional effort.”

McKinney-James says it is easier for the industry to diversify its boards and executive ranks than ownership. This is due to the fact that “gaming is a highly regulated, cash-intensive undertaking and is not for the faint of heart. You have to identify someone who has significant resources to meet all of the obligations that come with a licensing process.”

Barnes is undeterred. He hopes the pressure the state can bring to bear will create opportunities for casino companies to partner with minority business owners with the capital and desire to get in the game but perhaps not the know-how.

“I’m the only person that is upfront and saying that we must put this in law. We must put it in writing,” he says. “And I am trying to get my colleagues in Black caucuses around the country to also do the same thing within their respective states.

“For the longest time, there have been folks just making gobs of money without any challenges at all. But we’re in the year 2022, and we should look at these things.”

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Steve Friess

Steve Friess is the national gambling industry correspondent for PlayUSA and its related local sites. A Long Island native who earned a journalism degree at Northwestern University, Friess worked at newspapers in Rockford, Illinois, Las Vegas, and South Florida before launching a freelance career in Beijing, China, where he served as chief China correspondent for USA Today. After his return to the U.S. in 2003, he settled in Las Vegas, where he covered the gambling industry and the American Southwest regularly for The New York Times, Playboy, The New Republic, Time, Portfolio, BusinessWeek, Newsweek, New York magazine, and many others. During that time, he created and co-hosted two successful and groundbreaking podcasts, the celebrity-interview show The Strip and the animal affairs program The Petcast. In 2011-12, Friess was a Knight-Wallace Fellow at the University of Michigan. That was followed by a stint as a senior writer covering the intersection of technology and politics at Politico in Washington D.C. In 2013, he returned permanently to Ann Arbor, where he now lives with his husband, son, daughter and three Pomeranians. He tweets at @SteveFriess and can be reached at [email protected].

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