Maryland gambling officials hope to bring mobile betting to the state in time for the kickoff of the National Football League’s 2022 season.
If regulators are successful, fans will be able to bet on professional and collegiate events on their phones, an advance that is certain to super-charge the state’s new, and still relatively sleepy, sports betting industry.
In virtually every state that has legalized sports gambling, mobile has left bricks-and-mortar betting in the dust, accounting for approximately 90% of the handle.
Also true just about everywhere: The big-name firms, those with the massive advertising budgets, rake in the lion’s share of the action — and, therefore, the profits.
That scenario — in which FanDuel and Draft Kings, the Coke and Pepsi of sports betting, dominate — is precisely what the General Assembly sought to avoid after voters approved sports wagering in 2020. More so than in any state in the country, analysts say, Maryland has gone the extra mile to give minority- and female-led businesses the opportunity to crack into the new industry.
“For me, the concern is really how do we make sure that — from the intent of the bill — we are really looking to diversify those applicants that would not necessarily have an opportunity,” said Del. Darryl Barnes (D-Prince George’s), head of the Maryland Legislative Black Caucus.
Given the mandate to give Maryland-based and minority businesses the chance to compete, the state’s Sports Wagering Application Review Commission is hosting an educational seminar in early May.
The three-hour event will feature industry experts who have navigated the regulatory and financial hurdles. According to the SWARC, participants will get a “window into the true costs of running an online or brick-and-mortar sportsbook” as well as insight into the types of small businesses that are conducive to sports betting, such as “restaurants, sports bars, and other entertainment venues.”
Other experts will discuss the financial costs of operating a sportsbook, security considerations and “the impact of competitive promotions.”
The promotions offered by FanDuel and Draft Kings are perhaps the biggest obstacle newcomers to the industry face, according to experts. With their deep pockets and years of marketing experience, the firms have proven adept at luring new customers.
“They have an expertise in this all over North America that gives them a leg up,” said Zach Hall, an industry analyst and spokesperson for the network of sites that includes PlayMaryland.com.
Promotions routinely include “risk-free” wagers for first-time customers that run into the thousands of dollars. (Customers are advised to read the fine print on such offers before jumping in.)
Hall said even “well-established casino brands” like Caesar’s and BetMGM “have difficulty eating into the market leads of Draft Kings and FanDuel.”
Tennessee is one of the rare states that has a home-grown operator, Tennessee Action 24/7, that is still competing for bettors’ business, but the company is “way down on the market-share list,” Hall said. “They’ve survived, so far, so it’s not impossible. But the idea that somehow they would compete toe-to-toe with FanDuel or Draft Kings and win is unfathomable at this point.”
Tennessee Action 24/7 had an advantage unavailable to any Maryland firm — they were cleared to operate in November 2020, when sports betting was legalized.
Maryland’s law set up a multi-tier process in which existing casinos and race tracks were able to open first, because they were already heavily regulated enterprises. Entrepreneurs who want to operate bricks-and-mortar or online sportsbooks here will spend months getting approved, ceding the field to better-known rivals who will have had a months-long head-start.
Barnes knows that home-grown start-ups face long odds. He helped organize the May 6 seminar and is an opening speaker.
“It’s almost like getting into medical cannabis,” the lawmaker said. “It takes a lot of money to really be in this industry, and that is why I am trying to do my part to educate folks that want to get into this industry.”
Barnes said minority business owners need to be aware of the capital outlays that will be required “and to really figure out what true partnerships look like in a way that we’re still forging some of ownership for minorities to create generational wealth.”
Maryland law includes four funds that new businesses can tap to help them recoup some of their start-up costs. Members of the SWARC were told on Thursday that two companies have received three grants from the funds so far.
James R. Nielson, deputy director of the State Lottery & Gaming Control Agency’s regulatory division, told the panel that some new arrivals are finding the application process to be time-consuming.
“What we’re seeing is what we expected,” he said. “Some of the entities who have less experience in the gaming segment are learning that it’s more complicated than they had anticipated. There’s a learning curve for anybody new to the industry and we’re trying to over-communicate.”