Movement on iGaming Bill (HB 1319) in Maryland House

The tax rate in unchanged from the original bill, but the promo-deductions have been altered. We expect the bill to go to the full Ways and Means Committee for a vote later today or tomorrow. The bill could be amended during the full committee meeting as well.

Highlighted below are other substantive changes to the bill.

• No more full promo deductibility for year one. Instead, provides a 5-year window where a percentage of promo play can be deducted from proceeds:
  • 35% if under $4m
  • 31.25% if between $4m and $8m
  • 27.5% if between $8m and $10m
  • 23.75% if between 10m and 12m
  • 20% if over $12m

• Creates new “Social Equity Applicant” category this is someone who:
  • has lived in an economically disadvantaged area for at least 5 of the 10 years immediately preceding the submission of the application;
  • attended a public school in an economically disadvantaged area for at least 5 years; or
  • attended a 4-year institution of higher education in the state for 2 years, where at least 40% of the individuals who attend the institution of higher education are eligible for a pell grant; or
  • has a personal net worth that does not exceed an amount determined by the commission to encourage diversity, equity, and inclusion in the internet gaming industry.
• Prohibition on licensing companies that derive, or have derived, revenue from terrorist sanctioned jurisdictions or that have prohibited online gaming.
• Permitted License Holders
  • Casinos
  • OTBs/Bingo Halls licensed for retail sports betting
  • License for Urban One Media (does not call them out explicitly, but we know who it is intended for)

• Casinos have access to up to 3 skins;
  • 1^st skin – must have 5% social equity partner
  • 2^nd skin – must have 33% social equity partner
  • 3^rd skin – (only get if you meet the 2^nd skin requirement)
  • If skins are not used by the casino, they go into a competitive bidding process with the first round for applicants that have a 33% social equity ownership

• Applicants must produce a plan for hiring employees from residents who reside is “economically disadvantaged areas.”
• $1m initial license fee for 5 years. Renewal 1% of average annual proceeds from the previous 3 years. Can only transfer a license after 3 years.
• 30 days after a license award the licensee must submit a diversity plan to promote diversity within the company
• Requirements for entering into labor agreements
• 20% tax on live dealer games, 55% tax on all other iGaming
• Revenue share requirements for jurisdictions that have casinos; rev share with horse tracks; funding to the small, minority and woman owned business fund
• Requires an internet gaming account holder to establish deposit limits over a specific period of time
• Prohibits the use of credit cards for iGaming
• If an individual places themselves on a self-exclusion list they will be directed to problem gambling assistance, unless they explicitly opt-out.
• Licensees must annually report on the number of players who exhibited signs of problem gambling and what if any interventions were taken to respond to the behavior.
• Live dealer studio can be anywhere in the state, except if it is tied to supporting a casino licensee, then the studio must be located at the casino.
• Requires to commission to conduct a study of “unauthorized” activity that looks like iGaming such as online sweepstakes games.