Legislative session ends on positive note for Maryland horsemen

The Maryland Senate and House of Delegates April 12 both passed broad legislation authorizing implementation of sports betting as approved last November in a statewide constitutional referendum. Most horse racing facilities and off-track betting outlets are eligible for licenses.

The General Assembly also passed a video lottery terminal bill that will generate substantially more revenue for the Purse Dedication Account.

The Senate had amended the House bill (HB 940), which resulted in a compromise hammered out just days before the General Assembly ended its 2021 session April 12. The final vote in the Senate was 47-0, while the House voted 122-16. The measure, which has emergency status to facilitate the awarding of licenses, now goes to Gov. Larry Hogan for his signature.

The compromise legislation calls for 10 designated Class A licenses, 30 Class B licenses--plus seven designated Class B licensees--and 60 mobile betting licenses. The Class A licenses would go to the six casinos in the state, the Maryland Jockey Club for Laurel Park and Pimlico Race Course only, and the three professional baseball and football stadiums in the state. The seven designated Class B licenses are for the Maryland State Fair at Timonium, four standalone OTB facilities--Long Shot's in Frederick, the Boonsboro Event Center, Greenmount in Hampstead and Riverboat on the Potomac--and two commercial bingo operations with 200 or more machines.

Class A-1 licenses would go to VLT facilities with more than 1,000 machines--MGM National Harbor, Live! Casino and Horseshoe Casino Baltimore--and the three professional team stadiums. Class A-2 licenses are for the MJC Thoroughbred racetracks and VLT facilities with 1,000 or fewer machines: Hollywood Casino Perryville, Casino at Ocean Downs and Rocky Gap Casino & Resort.

Class A-1 initial license application fees are $2 million. The license renewal fee after five years is 1% of a licensee's average annual proceeds from sports wagering from the preceding three-year period less any proceeds remitted by the licensee. The Class A-2 license fee is $1 million.

Class B licenses, like those for OTB facilities, are two-tiered. The license fee for Class B-1 facilities is $250,000; for Class B-2 the fee is $50,000. Class B-2 is a facility with less than 25 full-time employees or $3 million in annual gross receipts. All others are Class B-1.

Mobile licenses will cost $500,000. Class A and B licensees are eligible to apply for mobile licenses.

The state tax rate for retail and mobile sports bets is 15% across the board.

Under the definition of "sporting events" permitted for sports betting, the law permits fixed-odds wagering on horse races only if it is consented to and approved by the horseracing licensee of the applicable breed, the organization representing the owners and trainers of the applicable breed in the state, the organization representing the applicable breeders in the state, and the Maryland Racing Commission

The VLT legislation (HB532), which deals with payout percentages, distribution of proceeds and building restrictions, changes previous statute regarding Purse Dedication Account payments by Rocky Gap Casino & Resort in western Maryland. The casino's annual payment of 2.5% of VLT revenue for purses was to sunset after 10 years, but the revised law sets a continued payment of 6%, the amount paid by the other five casinos.

Through March 2021 of the current fiscal year, PDA revenue generated at Rocky Gap totaled $951,000. Using a 6% share instead of 2.5%, the PDA would have received $2.28M based on the same gross revenue figures.

The revised VLT law also allows casinos to adjust the average percentage payout from VLTs from a floor of 87% to 85% and an average percent payout of more than 88% but not more than 95%.

Estimates suggest that this change could generate an additional $5M annually for the PDA based on early projections.

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