Come Monday, Dec. 12, Maryland regulators will release numbers from the first eight days of online sports betting.
Although the overall amount of wagers placed is expected to be substantial, sportsbooks’ tax contributions to the state will likely be negligible, warned the state’s top regulator this week.
Thanksgiving offers ideal Maryland launch landscape
The first seven Maryland sportsbook apps debuted in the state on Nov. 23 — just one day before the Thanksgiving holiday.
Thanksgiving week provided a rich landscape for launch, with NFL games, college rivalry week, World Cup matches and more all taking place.
In an interview this week, Maryland Lottery and Gaming Director John Martin said:
“It was the perfect storm for a launch. As frustrated as people were, we could not have thrown a dart and hit a better day on the calendar to get this up and running. Now the reality sets in.”
The results of these first eight days of action will do little to reflect the true scope of Maryland online sports betting.
Martin offered context:
“There will be people with their noses pressed to the virtual glass waiting to see what those numbers are. Let me, again, throw cold water on that one for you. The promotional dollars being thrown around in this player acquisition phase is immense — more than anyone could imagine.”
November’s online sports betting report will feature details concerning the overall amount wagered, the net revenue generated by sportsbooks and the amount of tax collected by the state. These results will be broken down by operator, providing a clearer view of the industry’s initial success. Specifics such as the most popular betting types and sports wagered on, however, will not be revealed.
Free bets & promos could mean negative net revenue for sportsbooks
Even without knowing precise November data, some aspects can already be deduced.
The overall money wagered by Maryland bettors will be strong. Meanwhile, the hold — a sportsbook’s net, taxable income — will be negated for the foreseeable future by promotional expenses.
During his recent interview with WNST, Martin continued:
“Spoiler alert: Seven entities launched, and I would not be surprised if somebody shows – on paper – a ‘loss’ . . . Meaning that they gave away in promotional dollars more than they netted out. Which means, to the state, we get butkus.”
According to Maryland sports betting regulations, operators can invest as much money into promotions such as free bets and sign-up bonuses as they’d like during the first year.
During the second year, on the other hand, regulators will begin enforcing a 20% cap on all promotional spending.
First year of Maryland online sports betting expected to be growth phase
Another five sports betting brands are working through the license approval and final requirement stages and could launch as early as late December.
Nevertheless, this trend toward the negative will likely continue throughout the December holidays and into Super Bowl season.
Martin anticipates the state of Maryland will look a lot like Oliver Twist during the first year. While the Old Line State waits hungrily for its share of tax money, sportsbooks will continue stuffing their pockets, doling out profits and promos to Maryland’s eager townspeople instead.
A year from now, however, an entirely different picture will come to light. Martin said that once online sports betting is fully up and running, the state expects to rake in between $25 and $30 million in annual tax revenue.
PlayMaryland’s projections forecast a relatively more robust 2023, suggesting that the state could have upwards of $75 million in tax revenue to look forward to in the first year.