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Md. lawmakers to take another pass at sports betting

Neighboring states already in the game; legislators say it could provide some much-needed tax revenue

Ways and Means Chairwoman Del. Anne Kaiser. (The Daily Record / Maximilian Franz)

Ways and Means Chairwoman Del. Anne Kaiser, D-Montgomery. (File Photo)

Legislative leaders in the Maryland General Assembly say the odds on passing legislation to legalize sports betting are improving.

Maryland lawmakers punted on legalizing sports betting as the clock ran out on the 2018 session. Meanwhile other neighboring states not only legalized the activity, they’re luring gamblers away from Maryland’s six casinos.

“I’m not sure who the (legislative) opposition is,” said Del. Anne Kaiser, D-Montgomery and chair of the House Ways and Means Committee. “I think we’ll have better luck this year.”

The House of Delegates last year passed a bill that would have authorized sports betting at casinos and some racetracks, contingent on a favorable decision by the U.S. Supreme Court and approval from Maryland voters. But the effort stalled as the House and Senate, which wanted betting at casinos only, failed to reach a compromise.

“I think the challenges we had between us are gone,” said Kaiser, who chairs the House committee that will likely be responsible for any sports-betting legislation.

While a relatively small number of states have approved sports betting since May, Maryland finds itself behind its regional neighbors on the issue and, because of the need for voter approval, potentially handcuffed until 2020. As lawmakers acknowledge a need for more revenue – particularly if they dramatically expand funding for education — even the relatively small amounts promised by sports betting become appealing.

As a result, lawmakers are talking about a compromise on sports betting for the 2019 session. And some are even quietly exploring whether there might be an end-run around the requirement that sports betting be approved by voters as a change to the state’s constitution.

“We’re left in the dust,” said Sen. Nancy King, D-Montgomery and incoming chair of the Senate Budget and Taxation Committee. Noting that many simply choose to bet illegally, she added: “A lot of people are already doing it. I think it would be better if they can do it legally.”

Opening the door

The Supreme Court in a 6-3 ruling in a case out of New Jersey in May, struck down a 25-year-old federal prohibition on taking legal bets on sports games that affected the vast majority of states.

Maryland, which needs voter approval because gaming was placed in the state constitution in 2008, was left behind.

Senator Nancy King, co-chair of the Joint Oversight Committee on Gaming said three bills introduced on the subject are in limbo and legislation would not likely be ready in time to put the issue before voters, should lawmakers decide to legalize it. (File)

Senator Nancy King, d- Montgomery and incoming chair of the Senate Budget and Taxation Committee. (File Photo)

Currently seven states — Delaware, Mississippi, New Jersey, Mississippi, Nevada, Rhode Island and West Virginia — have sports betting. Pennsylvania, which has legalized the activity, is expected to begin taking bets soon.  In Washington, D.C.,, the city council is moving toward legalizing it.

West Virginia began advertising on Baltimore area television and radio stations highlighting the new offering in an attempt to lure gamblers from Maryland.

Lawmakers and gaming experts seem to agree that the addition of sports betting is more of a niche market and likely to result in more foot traffic to venues that offer it but not to any huge increases to gambling revenue and related state taxes.

King said she’s not even sure “there will be a lot of people asking for it.”

Recent polling seems to bear that out.

A plurality of voters — 41 percent — say they now favor legalizing sports betting in the state, with 38 percent saying they still oppose it and 21 percent say they’re not sure.

These numbers however represent a change from a January 2017 poll, when nearly two-thirds of those surveyed said they were opposed to sports betting in the state.

More education funds

The discussion to expand gaming for the third time in a decade comes as lawmakers are also looking at having to find more money for recommendations by a blue ribbon panel that could require the state to increase annual spending on education by as much as $4 billion.

When the General Assembly first approved slot machine gaming in 2007, it loosely promised to dedicate the state share of those revenues to funding K-12 education.

In November, voters approved a constitutional amendment requiring that the state’s share of gaming proceeds go to education. Lawmakers say that how the state’s share of sports betting is spent would depend on how a bill is written.

The Maryland State Education Association, the state’s largest teachers union, has not taken a position on the legalization of sports betting in the state. Officials for the group say they do hope any state revenues from the activity would go to education.

“Our public schools are chronically underfunded,” said Adam Mendelson, a spokesman for the union that represents 74,000 members statewide. If there is new revenue being generated, the state would be wise to direct more funds to close the $2.9 billion funding gap and address issues like improving educator pay, building safe and modern schools, and expanding career technical education and pre-kindergarten.”

King, the incoming Senate budget committee leader, said she wouldn’t be surprised if the cost of phasing in those recommendations could approach $4 billion.

In Maryland, the best-case estimates of legislative analysts places Maryland’s take from sports betting at $120 million annually.

And while Kaiser, the Ways and Means chair, sees little opposition to the proposition some are opposed. The dissent isn’t specifically because they oppose gambling.

Not every lawmaker is convinced of the case for sports betting. Last year, Del. David Moon, D-Montgomery, joined 13 others in voting against a House bill authorizing a change to the state constitution that would open the door for sports betting.

Moon said he broke with what he calls his libertarian philosophy not because he opposed that form of gaming but because he is unhappy with the state’s six casinos.

“I have a very hard time with being asked to expand the (gambling) business in this state when I know they do not have our interests at heart.”

Still, Moon said he believes the state will eventually add sports betting to the menu for gamblers.

A possible end-run?

While House and Senate leaders agree that the issue is a good bet to be settled this year, no one is quite sure what the final product will look like.

“The House passed a bill last session,” said Kaiser. “I think the bill will likely look a lot like what the House did last session.”

That proposal would involve a change to the state constitution. Voters could not be asked to do that until the next statewide elections in November 2020.

Another option being shopped around that presumably would avoid that two-year delay would be to have the legislature authorize the Maryland Lottery and Gaming Control Agency to take the bets.

Maryland Lottery and Gaming Control Agency Director Gordon Medenica (File)

Maryland Lottery and Gaming Control Agency Director Gordon Medenica. (File Photo)

Assistant Attorney General Sandra Benson Brantley, in an email obtained by The Daily Record, wrote in October that the General Assembly could potentially authorize the state gaming agency to handle sports betting.

“I believe that the General Assembly has authority to permit the Maryland Lottery and Gaming Control Agency to operate sports betting and that it is unlikely to be considered ‘commercial’ gaming,” wrote Brantley, who is the counsel to the state legislature. “Thus, the mandated referendum requirement would not be triggered because under your scenario, the sports betting would be government gaming.”

It is not clear which member of the legislature queried Brantley on potential alternatives to a constitutional referendum.

That authority, however, is not absolute and could be challenged in court.

“If the General Assembly authorized the lottery agency to operate sports betting a question would arise, I believe, as to how much involvement private entities could have with the program before the program becomes an expansion of commercial gaming,” wrote Brantley. “For example, if the State allowed private entities to conduct sports betting on behalf of the State and those private parties received a share of the proceeds, there is a risk a court could find the program was an expansion of commercial gaming.”

If sports betting were put under the auspices of the state’s lottery agency, existing lottery agents undoubtedly would seek a piece of the action.

Ellen Valentino, a lobbyist who represents gas stations and convenience stores before the legislature, said her clients would like to add sports betting to the lottery-related sales they already do. Valentino compared placing a sports bet at a convenience store to buying a Mega Millions lottery ticket.

“Someone comes in and buys a ticket on any given day for a game, goes home, watches the game and brings back the winning ticket to cash it in,” said Valentino.

Gordon Medenica, director of the Maryland Lottery and Gaming Control Agency, said his agency could likely handle sports betting but would need outside vendors for what he said is a highly specialized and volatile type of gambling that doesn’t bring in much money. And Medenica knows where he’d go for that outside help.

“We have a high level of confidence that our casinos can do this very well,” said Medenica.

In other words, a sports-betting system that would require a constitutional amendment and voter approval.

“We’re stuck for two years,” Medenica said.

 


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