Anne Arundel County Chamber of Commerce commissioned an iGaming report from the Sage Policy Group about its potential impact of online casinos in Maryland. The Sage Policy Group CEO Anirban Basu, who is also the former Chair of the Maryland Economic Development Commission, conducted the report.
This is meaningful because Live! Casino and Hotel is in Anne Arundel County and is considered one of the top-five casinos in the country outside of Nevada. Any decision on iGaming could have massive repercussions to the locality as well as to the brick-and-mortar gaming establishment.
Let’s get the spoilers out of the way early. The report on potential online casinos in Maryland did not shed a positive light on iGaming for a multitude of reasons. The report included six takeaways and none were in favor of iGaming.
The Maryland casino industry is one of the most successful in the country. It makes sense there are economists who feel cannibalizing it is not good for the overall economic health of Anne Arundel County and the greater state of Maryland.
Takeaway 1: Possible cannibalization of thriving casino industry
This is a simple takeaway. Legalizing online casino gaming, will directly take players away from brick and mortar casinos in the state. That fact would hurt the casinos in Maryland, which could lead to a loss of jobs.
Most new industries the size of iGaming would bring new jobs to the community to replace the jobs that were lost, but iGaming is an online industry. The report claimed that iGaming jobs, “would primarily be performed beyond Maryland’s boundaries.”
Many casino jobs in Maryland are union jobs with a livable wage which includes benefits. Losing those jobs to out-of-state companies is not to be taken lightly. The report also outlined job destruction in areas that surround gaming such as technicians for casino games and food service employees.
Takeaway 2: Legalization of iGaming will destroy jobs in Maryland
The destruction of jobs was one of the main points of contention in the report.
The report noted that the six casinos in Maryland directly employee over 6,700 people. If all casinos were a single company, it would rank in the top four private employers in the state. Many of those jobs are union jobs with SEATU, UFCE and UNITE HERE which is the largest gaming union in the country.
That number of jobs could fall by 685 according to the report filed by Sage, and it was noted that future wage increases could also be compromised. Even more worrying is that only considers the number of casino jobs that would be impacted. Other jobs that run parallel to gaming could also be in danger.
The total loss in labor income could reach an estimated $65.6 million. That would mean $1.9 million less in state income taxes and $1.2 million less in local income tax collections. These estimations do not take into account anyone traveling from out of state to visit a Maryland casino.
Takeaway 3: It will not be only the gaming industry hurting if iGaming is legalized
The report then took a different perspective for its third takeaway. It openly admitted that the total increase in gaming revenue could climb as high as $686 million when considering casino losses.
But while a net gain in gaming revenue sounds good, the report argued there is more to consider. Diverting money to pass iGaming legislation would mean taking money that could create jobs that would support Maryland residents. According to the report, money could be spent on in-state leisure and hospitality activities such as restaurants, theaters, water parks, concert halls and more. Putting money toward that endeavor would create jobs for those living in Maryland.
Additionally, the report spells out the dire situation for Maryland leisure and hospitality. Of Maryland’s 10 major economic segments, leisure and hospitality has been the slowest to recover since the COVID-19 pandemic. As of Oct. 2023, there were 26,000 less jobs in the leisure and hospitality industry than it had in February 2020. The number of jobs lost in leisure and hospitality is nearly identical to the next three struggling economic segments combined.
Additionally, businesses based in Maryland are more likely to buy from other businesses in the state while online industries are not; further removing money from the state. Casinos in Maryland also employ many workers who lack a college degree. Creating job opportunities that pay a livable wage and provide benefits to those without requiring a college degree makes a large difference in the lives of people living in the state. Losing those jobs could hurt hundreds of Maryland residents.
Takeaway 4: Legalizing iGaming will reduce capital investments
This is extremely simple. Casino business also requires construction for other types of entertainment and businesses. Casinos require restaurants, shopping options, convention space and other spaces. Entertainment complexes built around casinos also need their own businesses to prop up the area by the way of shopping, bars and food options.
In order to build those types of establishments, investors are needed, but iGaming could hurt how much money is being invested in the state.
Legalizing iGaming will mean less capital investment from entrepreneurs because money could go away from casinos and into the hands of iGaming operators. That desensitizes investment into the community which is a worry shared in the report.
Takeaway 5: Trading casino foot traffic for online wagering will hurt other businesses
This is another simple yet impactful takeaway.
If casinos become less popular as iGaming takes off if legalized, less people will be walking through an entertainment complex toward or away from the casino. That limits how much money is spent at these businesses that surround these casinos and rely on the foot traffic it creates.
If more and more people stay home to use online casinos, the loss will be shared among all businesses in the area; not just casinos. That causality must be part of the overall calculus according to the report.
Takeaway 6: Will iGaming generate enough tax dollars to offset the sacrifices?
While there is no denying the addition of a new gaming industry will bring in more tax money in a vacuum, the iGaming report from Sage pointed out that an additional industry does not always mean the overall health of the economy would benefit.
New Jersey was used as an example in the report. Despite the $2.4 billion from online casinos in 2022, New Jersey saw a fall of about $180 million of economic activity and wages fell by a combined $900 million. This is because of all the issues outlined above in Basu’s iGaming report.
Basu also warned the Anne Arundel Chamber of Commerce that these same negatives would be prevalent in Maryland as well.
“These negative impacts — the loss of high paying union jobs and the associated labor income and income tax revenue, fewer agglomeration effects, and reduced capital investments — would also be present in the event that iGaming is legalized in Maryland.”