Why the General Assembly might gamble on legalized sports betting

This article is part of The Daily Record's coverage leading up to the Annapolis Summit, an event that marks the start of Maryland's legislative session.

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Jan. 7: State budget | Jan. 1: Online harassment, gun control, cellphone tracking and more | Dec. 24: Sexual misconduct in Annapolis? | Dec. 17: Legalized sports betting? | Dec. 10: Health exchange woes | Dec. 3: Battle over beer | Nov. 26: Baltimore’s violence, online bullying, parental rights

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Jan. 10: Annapolis Summit - full audio recordings | Jan. 5: Bail reform | Dec. 25: The budget | Dec. 22: Sports betting | Dec. 22: Health Care | Dec. 18: 'Beer Wars' | Dec. 4: Baltimore violence

Some Maryland lawmakers as well as officials in the gaming industry are wagering on the General Assembly legalizing sports betting in the state.

With a Supreme Court decision in a case that could legalize sports betting nationwide expected perhaps weeks after the end of Maryland’s 90-day session, some are seeing a window of opportunity to further expand a Maryland gaming industry that is less than a decade old. The additional money could help the state offset, to some small degree, the price tag of recommendations for additional mandated spending for K-12 education coming by 2019.

“It’s definitely inevitable and why wouldn’t we do it?” said Del. Frank Turner, D-Howard and co-chair of the Joint Committee on Gaming Oversight. “We already have full casinos and you can clearly do it in Las Vegas. Why wouldn’t we do it in Maryland?”

The question comes down to timing.

“We don’t even have a full year of MGM under our belts yet,” Turner said, referring to the state’s newest casino at National Harbor. “I don’t think we have to rush to do it. If it happens in 2018 or 2020, we’ll be fine.”

“I’m pretty sure we’re going to see a bill this year,” he added. “The casinos would like to see it done now. Whether or not we pass a bill this year, I can’t tell you.”

‘Why wait?’

Lawmakers earlier this year rejected a bill that would have created a task force to study legalizing sports betting in Maryland. Del. Jason Buckel, R-Allegany and sponsor of the bill, said he’s likely to return to Annapolis this year with a bill that would legalize the form of gaming contingent on the Supreme Court’s decision.

“Nearly all of our gaming competition in states along the East Coast are one or two or three steps ahead of us,” Buckel said. “An additional delay would put us light years behind everyone else.

“We know this is already happening,” Buckel added, referencing illegal bookmaking and internet gambling. “We’re in bed all the way with the gaming industry. To me, we should be doing all we can to help them grow and be successful. This is going to happen all around us. Why should we wait?”

The first-term delegate he has not yet settled on the details of the bill but said he hopes that he can avoid having to go to referendum by simply granting casinos and racetracks the ability to accept the bets.

The addition of racetracks, such a Pimilico and Laurel Park, could complicate the plan. Some observers believe the state’s six casinos will balk at the plan. Buckel sees it as “a no brainer.”

“One of the reasons we got into gaming as a state in the first place was to help the horse industry in the state,” Buckel said. “It would be almost strange to say we wouldn’t allow them to participate if they wanted to. It would be a natural fit.”

Court case

The Supreme Court earlier this month heard New Jersey’s challenge to the 1992 Professional and Amateur Sports Betting Act, which banned sports betting in all states except for a handful that had approved sports wagering before the law took effect.

In 2012, sports leagues, including the NFL, NCAA, NBA, Major League Baseball and the NHL, successfully challenged a New Jersey law that would have legalized sports betting in that state.

Maryland, through Gov. Larry Hogan’s counsel, joined an amicus brief in support of New Jersey. Hogan and New Jersey Gov. Chris Christie are good friends, and Christie campaigned for Hogan in 2014.

“The Hogan administration doesn’t believe the federal government should have authority over this issue,” said Douglass Mayer, a spokesman for the governor. “It should be left to the states to decide what is best for them.”

Mayer said he hadn’t spoken to the governor about the issue of legalizing sports betting in Maryland but said Hogan typically delays taking a position on bills until they are passed by the legislature and sent to him for a signature.

Observers of the high court’s oral arguments believe a majority of the justices appear ready open the door for sports betting in New Jersey and other states. That decision could come as early as May, a month after the Maryland legislature completes its work.

In October, gaming industry groups and some casino operators appeared before Maryland’s Joint Committee on Gaming Oversight to ask lawmakers to consider passing legislation in the coming session. Such a law, contingent on the Supreme Court decision, would make it possible to place the issue on the ballot in the 2018 election.

Failing to jump on the issue early could put Maryland’s gaming industry behind neighboring states. Delaware already has limited sports betting. Pennsylvania and Connecticut are positioning themselves to legalize it should the Supreme Court rule in favor of New Jersey.

“If a state doesn’t jump on the sports betting opportunity, it’s likely a neighboring state might and then your citizens will go to those states that have it,” said Gordon Medenica, director of the Maryland State Lottery and Gaming Control Agency. “As with everything else in gaming, it will come down to competition among the states.”

Indirect impact

An estimated $50 billion to $400 billion is illegally wagered on sports games through offshore websites, bookies and friends, according to the American Gaming Association. A record $4.5 billion was wagered in 2016 in Nevada casinos where sports betting is legal. The wagering generated $220 million in revenue — roughly 2 percent of all of that state’s gaming revenue, according to the association.

Locally, industry representatives are cautious when it comes estimating how much money might be generated by sports betting.

In October, officials from Maryland Live told lawmakers the legalization of sports betting in Maryland could result in as much as $100 million in additional revenue for the state and “hundreds if not thousands of new jobs.”

The most significant impacts likely would not come directly from sports betting. Instead, casino officials said they expect sports betting to increase traffic to casinos, drawing in younger crowds and those already interested in sports betting. They project that up to 1.5 million new visitors would go to Maryland Live during the Super Bowl and the NCAA basketball tournament to place bets and gamble in the casino.

Education funding

Persistently tight state budgets are just one factor that could lead lawmakers to ignore the historical controversy that comes with expanding gaming in favor of promised revenues that aren’t seen buy the public as a tax.

Further adding to that pressure is the expected price tag that is expected to come with recommendations from the Kirwan Commission on public school spending in the state. A similar effort in 2002, known as the Thornton Plan, increased state spending by $1.3 billion. Legislators say Kirwan could be more expensive than the Thornton Plan, with one independent study finding there as much as $3 billion in unmet needs statewide.

The legislature is not expected take up any of the Kirwan Commission recommendations until after the election but some lawmakers say expanded gaming could potentially be timed to coincide with any phased-in increases for K-12 education.

But revenues from more gaming are not expected to fully cover the costs of increased mandated education spending.

“You’re not going to get from sports betting enough to offset the Kirwan Commission,” Turner said. “There’s not that much money out there. Every little bit helps though. I don’t mean to minimize it.”