Maryland’s iGaming Legalization Debate

The Maryland Senate Budget and Taxation Committee convened on January 29, 2025, to discuss the proposed SB 340 bill, which seeks to legalize online casinos, or iGaming, in the state. The hearing featured a split between supporters and opponents, with the contentious issue of “cannibalization” emerging as the primary point of contention. While proponents of iGaming emphasize its potential for increased revenue, opponents argue that it could harm existing land-based casinos and the local economy.

 

Cannibalization

Cannibalization, the concern that legalizing online gambling would redirect funds from brick-and-mortar casinos, dominated the hearing. Opponents, particularly smaller regional casinos, argue that digital platforms would siphon off customers, leading to revenue loss, job cuts, and increased pressure on traditional casinos. The Cordish Companies, which owns Maryland’s Live! Casino, voiced concerns, with representative Mark Stewart calling iGaming “bad for Maryland” and warning of significant job losses. In Pennsylvania, for example, Cordish’s land-based casino saw little benefit from the legalization of iGaming, with the company only hiring one person to operate online casinos, compared to 3,000 for its physical venue.

However, proponents challenge this narrative. John Pappas, representing the iDevelopment and Economic Association (iDEA), pointed to Pennsylvania's figures, showing that legalizing online gambling had resulted in a rise in both retail and digital casino revenue, with retail slots seeing an 11% increase. According to Pappas, states with legal iGaming have seen a boost in tax revenue, suggesting that both sectors can coexist and thrive. Supporters argue that online and physical casinos complement each other, with both contributing to a more dynamic and diversified gambling landscape.

 

The Illegal Market

One argument for legalizing iGaming is the potential to combat Maryland's $200 million illegal gambling market. As lawmakers discussed the bill, they acknowledged that illegal gambling continues to thrive without regulation, diverting potential tax revenue. Former New Jersey Division of Gaming Enforcement chief Dave Rebuck emphasized that states with legal iGaming frameworks have tools to shut down illegal operators, thereby strengthening the state's economy. However, critics, such as Stewart, believe that legalizing iGaming may not effectively reduce the illegal market, which remains a significant concern for policymakers.

Another major point of discussion was the inclusion of minority and women-owned businesses in the iGaming sector. SB 340 includes provisions for these businesses, but some advocates, such as Antonio Jones of Riverboat on the Potomac, argue that the bill’s $1 million licensing fee is prohibitive for smaller entities. Many local businesses fear that the current framework would exclude them from the potential benefits of the iGaming market. Calls for amending the bill to reduce fees and expand eligibility for smaller businesses were voiced, particularly from those who have already entered the gambling market through sports betting.

Beyond economic and regulatory concerns, some opponents of iGaming raised issues related to the broader social impact of online gambling. Kristen Pironis of Visit Annapolis expressed concerns about the potential negative effects on tourism, suggesting that the shift to online platforms could reduce foot traffic to physical casinos, harming local businesses, hotels, and restaurants. The concern is that the online gambling experience cannot replicate the communal and tourism-driven atmosphere of land-based casinos, which contribute to the vitality of Maryland’s local economies.

 

The illegal gambling market in Maryland is valued at $200 million annually, with proponents of iGaming arguing that legalizing online casinos could help eliminate this unregulated market.

 

Conclusions

The debate over SB 340 and the future of iGaming in Maryland is far from settled. While proponents highlight the potential for increased tax revenue and the elimination of illegal gambling, opponents warn of the detrimental effects on land-based casinos, local economies, and jobs. The discussion reveals the complexities of integrating digital gambling into a traditional casino framework, with varying opinions on the net benefits for both the industry and the state. As lawmakers continue to weigh these arguments, the outcome remains uncertain, with both sides of the debate holding strong views on the economic and social consequences of legalizing online casinos.