If Maryland House Del. Vanessa Atterbeary has her way, online casinos will be legalized in the state via a voter referendum.
She sponsored House Bill 1319, one of two measures to legalize iGaming in the General Assembly.
HB 1319, however, takes a unique approach on taxation that deviates from most other states where online casinos are legal.
HB 1319 would tax operators less if they have live-dealer games
While Maryland online casinos remain illegal for now, sweepstakes and social casinos are available to Marylanders online. Participants do not bet with real money, though prizes won in contests can be redeemed for real dollars.
In six of the seven states where online casinos exist, tax revenue comes from gross gaming revenue or adjusted gross receipts. Pennsylvania is the only outlier.
In Pennsylvania, taxation varies depending on the type of online game.
- 16% tax on online peer-to-peer games such as poker
- 16% tax on online non-peer-to-peer table games
- 54% tax on online slot machine games
- 36% tax on online sports betting
Atterbeary’s legislation is similar in that it has multiple tax rates. But it still taxes the entire casino at the same rate. If a Maryland operator spreads live-dealer games, the state taxes their revenue at 20%. But Maryland will tax revenue at a 55% clip if the operator only spreads online games.
Preserving jobs and creating new ones
Why have a tiered tax rate depending on the type of online game? Atterbeary, who outlined her employment creation plans during a recent hearing, wants to ensure that online casinos can be a source of job growth and “protect our in-state workforce.”
Maryland residents could get jobs working as live dealers or as employees in live-dealer media studios.
Alfred Liggins, CEO of Silver Spring-based and black-owned Urban One, is excited over the number of jobs that could be created via online casinos.
Liggins, previously the largest minority owner of MGM National Harbor, wants to build a production studio for live-dealer operations. During a House Ways and Means Committee hearing about the bill last week, he spoke about the economic benefits of making such a facility.
“We have the ability to build a dual-purpose studio that not only would be able to house our live gaming operations … but we would also make a commitment to bring our production to the state of Maryland to the tune of millions of dollars a year to create immediate jobs and actually spur additional production work because there will be a studio built there.”
Ensuring diversity and equal opportunity for existing casinos
During the HB 1319 hearing, Atterbeary also emphasized providing opportunities for minority-owned businesses to “encourage diversity, equity and inclusion in the iGaming industry.” Under her bill, operators would have to submit a diversity plan within 30 days of obtaining a license and outline how they plan to employ Maryland residents in certain economically disadvantaged areas.
Some operators want online gaming licenses to be tethered to brick-and-mortar casinos, so those existing venues won’t suffer from cannibalization from iGaming. There is the argument that cross-marketing in iGaming apps could also help generate foot traffic to traditional casinos and stem the tide of loss revenue from illegal online casinos.
Regardless of how online casinos become legal, the state is missing out on millions, Atterbeary said during the hearing.
“Illegal iGaming is already happening in our state to the tune of $200 million. This should be a concern for everyone on this committee and everyone who is interested in the issue of problem gaming. It is already occurring.”
