Sports Wagering Panel Pursues New Approach to Diversify License-Holders

The commission charged with regulating Maryland’s move into sports wagering decided this week that the best way to diversify the new industry is to create an application process that does not take into account — at least initially — whether would-be sportsbook operators include Black and/or female investors.

The Sports Wagering Application and Review Commission decided instead to require applicants for bricks-and-mortar and mobile wagering licenses to have at least five percent of their ownership be persons whose net worth is less than $1.8 million.

The head of Maryland’s Legislative Black Caucus welcomed the effort, saying he has confidence it will lead to Black and disadvantaged entrepreneurs eventually gaining a foothold in the potentially lucrative industry.

Del. Darryl Barnes (D-Prince George’s), chair of that caucus, called the move an important “pivot.”

Maryland currently has sportsbook operations running at five casinos. Three off-track betting venues and a bingo facility have been awarded licenses and are in the process of clearing regulatory hurdles. But the state has yet to green-light mobile wagering which, in other states, accounts for upwards of 80% of the handle because it allows gamblers to place bets anywhere.

The legislature voted to require that the state attorney general conduct a study to determine to what extent companies owned by women, racial minorities and disabled persons face barriers to entry.

That analysis is expected to take several more weeks, making it unlikely that Maryland will approve mobile betting applications in time for the NFL season, which starts in September. The sluggish rollout has frustrated Gov. Lawrence J. Hogan Jr. (R), who sees Maryland stagnating behind states that are generating revenue through the taxes that are levied on mobile wagering.

On Wednesday, the Sports Wagering Application Review Commission approved draft regulations that would replace minority equity with the income standard in the hopes of speeding things along.

In approving sports wagering earlier this year, members of the General Assembly insisted that Maryland’s industry be diverse. They are determined to avoid a replay of the rollout of the medical cannabis industry, which saw licenses go to white-owned companies, many from out of state.

While the legislature wants homegrown firms to be able to compete with national leaders such as Draft Kings and FanDuel, industry experts caution those firms have advantages that no startup is likely to overcome.

Barnes signaled on Thursdays he approves of the commission’s approach.

“I think what the SWAWC is trying to accomplish, I agree with,” Barnes said. “I think this is a step in the right direction in trying to get more African-American minorities involved in sports betting.”

The emergency draft regulations must be approved by the Joint Committee on Administrative, Executive, and Legislative Review, a panel of legislative leaders. Then there would be a period of public comment.

Commission Chair Tom Brandt Jr. called the new regulations a “milestone” in the state’s long push — which he described as a “slog” — to open the gates to online betting.

Even if the legislative review committee adopts the new regulations, potential mobile betting applicants must still wait for the industry analysis and for an updated application to be drawn up, said John Martin, who heads the Maryland State Lottery & Gaming Control Agency.

“We have the application in a draft form, so applicants can today look at that application and begin to get their documents together,” he said. “They can begin their vetting process on the financial side. So the stepping stones are there. It’s just a matter of how quickly we can navigate that.”

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