SB 4
Department of Legislative Services
Maryland General Assembly
2020 Session
FISCAL AND POLICY NOTE
Enrolled - Revised
Senate Bill 4 (Senator Zucker, et al.)
Budget and Taxation Ways and Means
Expansion of Commercial Gaming - Sports and Event Wagering Referendum
and Minority Business Enterprise Disparity Study
This bill establishes that, subject to voter referendum, the General Assembly may
authorize, by law, that the State Lottery and Gaming Control Commission (SLGCC) may
issue a license to offer sports wagering and event wagering in the State. Sports and event
wagering legislation must include the criteria for eligible applications for a licensee and
specifications of the permissible forms, means of conduct, and premises of wagering. The
bill also provides the General Assembly’s intent that, if the voter referendum is approved,
State revenues generated by sports and event wagering be used primarily for public
education. The Maryland Department of Transportation (MDOT) and SLGCC must
contract with an appropriate expert to review the 2017 minority business enterprise
disparity study to evaluate, by October 1, 2020, whether there is a compelling interest to
implement remedial measures to assist minorities and women in the sports and event
wagering industry and market. The bill takes effect July 1, 2020, with provisions of the
bill contingent on passage of a referendum by voters in the November 2020 general
election.
Fiscal Summary
State Effect: Transportation Trust Fund (TTF) expenditures increase by up to $120,000
in FY 2021 to conduct the required analyses. If approved at referendum, legislation would
still be needed to implement sports wagering.
Local Effect: None.
Small Business Effect: None.
 Analysis
Bill Summary: If it is determined that the 2017 disparity study does not appropriately
apply to the sports and event wagering industry, MDOT (the certification agency
designated by the Board of Public Works), in consultation with the General Assembly and
the Office of the Attorney General, must initiate a disparity study to evaluate whether there
is a compelling interest to implement remedial measures to assist minorities and women in
the sports and event wagering industry and market. SLGCC must provide MDOT any
information necessary to perform the study, and MDOT must report to SLGCC and the
Legislative Policy Committee on its findings.
Current Law: Chapter 5 of the 2007 special session amended the Maryland Constitution
so that after November 15, 2008, the General Assembly may only authorize additional
forms or expansion of commercial gaming if approved through a referendum by a majority
of the voters in a general election.
Wagering on a contest, event, game, or match between individuals or teams sponsored by
a professional league or association or hosted by a college or university is illegal in
Maryland.
Chapter 346 of 2012 exempts a specified “fantasy competition” from prohibitions against
betting, wagering, and gambling in State law. The law defines “fantasy competition” as
any online fantasy or simulated game or contest such as fantasy sports in which
(1) participants own, manage, or coach imaginary teams; (2) all prizes and awards offered
to winning participants are established and made known to participants in advance of the
game or contest; and (3) the winning outcome of the game or contest reflects the relative
skill of the participants and is determined by statistics generated by actual individuals.
Chapter 338 of 2019 authorizes an organization conducting an “eSports competition” to
offer prize money or merchandise to winning participants in the eSports competition. An
eSports competition is a competition involving video games, including first-person
shooters, real-time strategy games, and multiplayer online battle arenas in which players
compete against each other and the players’ skills generally determine the results.
Education Trust Fund
Established during the 2007 special session, the ETF is a nonlapsing, special fund
supported by gaming revenues that has been used to provide funding for formulas and
programs under the Bridge to Excellence in Public Schools Act. Chapter 357 of 2018, a
constitutional amendment approved by the voters at the 2018 general election, requires the
Governor to provide supplemental State funding for public education through the use of
commercial gaming revenues that are dedicated to public education in the State budget
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beginning in fiscal 2020. Supplemental funding must total at least $250 million in
fiscal 2021, growing to 100% of all gaming revenues dedicated to ETF by fiscal 2023. This
funding must be dedicated to public education as supplemental education or school
construction funding, in addition to the State funding provided through the Bridge to
Excellence in Public Schools Act.
Minority Business Enterprise Program
MDOT is the State’s Minority Business Enterprise (MBE) certification agency; in that
capacity, MDOT conducts the statewide MBE disparity studies roughly every five years.
The last one was completed in February 2017. For an overview of the State’s Minority
Business Enterprise (MBE) program, please see the Appendix – Minority Business
Enterprise Program.
Background: The federal Professional Amateur Sports Protection Act of 1992 (PASPA)
made betting on sports in most states illegal under federal law. New Jersey challenged the
PASPA in the U.S. Supreme Court, arguing in Murphy v. National Collegiate Athletic
Association that the federal ban violated the U.S. Constitution by commandeering the states
into enforcing federal law. In May 2018, the U.S. Supreme Court ruled in Murphy that the
PASPA was unconstitutional, leaving states free to authorize sports betting.
On June 5, 2018, less than one month after the PASPA was struck down by the
U.S. Supreme Court, Delaware became the first state outside of Nevada to offer
single-game sports betting. New Jersey launched single-game sports betting just nine days
later. Since then, there has been a rush of legislative activity in states hoping to capture a
new source of gaming revenue. Exhibit 1 shows the states that have enacted sports betting
laws as of January 2020.
SB 4/ Page 3
 Exhibit 1
States with Enacted Sports Betting Laws
WA
MT ND ME
NH
OR MN
VT
ID WI
SD NY MA
No Law WY MI
PA RI
NE IA
Enacted Law NV OH CT
UT IL IN
CA CO WV NJ
KS VA
MO KY DE
TN NC MD
AZ OK
NM AR SC DC
MS AL GA
TX
LA
AK FL
HI
Source: Department of Legislative Services
Along with Nevada, sports betting operations are now underway in 13 of those states as of
January 2020. Exhibit 2 shows how the states recent to sports betting have structured their
operations and the revenues generated since going live. Additionally, six other states
(Colorado, Illinois, Michigan, Montana, North Carolina, and Tennessee) and the
District of Columbia are expected to launch sports betting operations in 2020. The majority
of states with sports betting laws authorize online sports betting.
SB 4/ Page 4
 Exhibit 2
Post-PASPA Sports Betting Active States and Revenues
Retail Sportsbook Data
First Bet Sportsbooks Mobile (Launch Date through
State Placed Tax Rate Fees Type / # Betting December 2019)
DE 6/5/18 59.8% (includes No separate Racetracks (3) No Handle – $189,620,117
a 9.8% share for sportsbook Revenue1 – $21,407,621
race purses) licensing fee State Share – $10,703,827
required
NJ 6/14/18 8.5% onsite $100,000 Casinos and Yes Handle – $5,837,241,986
betting application fee racetracks (10) Revenue – $393,503,018
State Share – $46,802,942
13% online
betting
MS 8/1/18 12% (includes a Not specified Landbased and No Handle – $477,236,811
4% local share) riverboat Revenue – $56,148,121
casinos (23) State Share – $6,737,774
WV 8/30/18 10% $100,000 Racetracks (4) Yes Handle – $282,110,247
application fee and the private Revenue – $26,265,588
club at State Share – $2,626,559
Greenbriar
NM2 10/16/18 Not specified Not specified Tribal casinos No Not currently available
(2)
PA 11/17/18 36% (includes a $10,000,000 Casinos and Yes Handle – $1,506,982,035
2% local share) application fee racetracks (12) Revenue – $86,664,503
State Share – $31,199,221
RI 11/26/18 51% No separate Casinos (2) Yes Handle – $221,911,697
sportsbook Revenue – $16,265,850
licensing fee State Share – $8,749,801
required
AR 7/1/19 First Application fee Racetracks (2) No Not currently available
$150,000,000 at not to exceed and proposed
13%, any $250,000 casinos (2)
additional
revenues at 20%
NY 7/6/19 10% No separate Casinos (4) No Handle – Not currently
sportsbook available
licensing fee Revenue – $7,783,424
required State Share – $778,342
SB 4/ Page 5
 Retail Sportsbook Data
First Bet Sportsbooks Mobile (Launch Date through
State Placed Tax Rate Fees Type / # Betting December 2019)
IA 8/15/19 6.75% $45,000 Casinos and Yes Handle – $212,225,573
application fee racetracks (18) Revenue – $19,283,573
State Share – $1,301,641
OR 8/27/19 Not available Not specified Tribal casinos3 Yes Not currently available
IN 9/1/19 9.5% $100,000 Casinos and Yes Handle – $435,998,649
application fee racetracks (16) Revenue – $41,385,968
State Share – $3,931,665
NH 12/30/19 Negotiable Not specified Lottery (5) Yes Not currently available
AR: Arkansas NM: New Mexico
DE: Delaware NY: New York
IA: Iowa OR: Oregon
IN: Indiana PA: Pennsylvania
MS: Mississippi PASPA: Professional Amateur Sports Protection Act
NH: New Hampshire RI: Rhode Island
NJ: New Jersey WV: West Virginia
1
Vendor fees are subtracted from the handle before the distribution of the revenue.
2
In New Mexico, two of that state’s nine tribal casinos offer sports betting under the existing tribal gaming
compact, although the activity remains unsanctioned under state law.
3
Currently, only 1 of Oregon’s 10 tribal casinos offers sports betting. Oregon has a lottery-operated online
app.
Note: Handle is the total amount of all wagers. Revenue (or gross gaming revenue) is the handle minus
total win.
Source: Department of Legislative Services
The Department of Legislative Services (DLS) notes that retail sports betting revenues in
Delaware, New Jersey, Pennsylvania, and West Virginia average approximately 2% of
those states’ total gaming revenues from video lottery terminals and table games. Thus, if
sports betting revenues in Maryland total 2% of Maryland’s gaming revenues, gross
revenues after payouts to bettors could increase by $36.5 million in fiscal 2022. Assuming
that the current table games tax rate of 20% is applied, the State share of gross revenues in
fiscal 2022 would be $7.3 million. However, authorizing mobile sports betting could
significantly increase revenues. Based on mobile sports betting revenues in surrounding
states, DLS estimates that gross revenues could increase by $91.1 million in fiscal 2022,
totaling 5% of Maryland’s gaming revenues, if sports betting is authorized both online and
SB 4/ Page 6
at Maryland casinos and racetracks. Assuming a 20% tax rate, the State share of revenues
in fiscal 2022 would be $18.2 million.
State Fiscal Effect: MDOT and SLGCC must contract with an expert to determine if the
2017 disparity study is applicable to the sports and event wagering industry, which MDOT
advises could cost up to $50,000. If the 2017 disparity study is not applicable, MDOT, as
the State’s certification agency, is responsible for carrying out the study specified in the
bill. MDOT estimates that a reanalysis of the 2017 study will cost approximately $70,000.
Thus, TTF expenditures may increase by up to $120,000 in fiscal 2021 for MDOT to
contract with an expert and complete the disparity study if necessary. If the disparity study
is not necessary, TTF expenditures only increase by up to $50,000.
Additional Information
Prior Introductions: None.
Designated Cross File: None.
Information Source(s): Comptroller’s Office; Maryland State Lottery and Gaming
Control Agency; Maryland Department of Transportation; Department of Legislative
Services
Fiscal Note History: First Reader - January 27, 2020
rh/jrb Third Reader - March 17, 2020
Revised - Amendment(s) - March 17, 2020
Enrolled - April 3, 2020
Revised - Amendment(s) - April 3, 2020
Revised - Amendment(s) - May 18, 2020
Revised - Clarification - May 18, 2020
Analysis by: Heather N. MacDonagh Direct Inquiries to:
(410) 946-5510
(301) 970-5510
SB 4/ Page 7
 Appendix – Minority Business Enterprise Program
The State’s Minority Business Enterprise (MBE) program requires that a statewide goal
for MBE contract participation be established biennially through the regulatory process
under the Administrative Procedure Act. The biennial statewide MBE goal is established
by the Special Secretary for the Governor’s Office of Small, Minority, and Women
Business Affairs (GOSBA), in consultation with the Secretary of Transportation and the
Attorney General. In a year in which there is a delay in establishing the overall goal, the
previous year’s goal applies. The Special Secretary is also required to establish bienni