HB 940
Department of Legislative Services
Maryland General Assembly
2021 Session
FISCAL AND POLICY NOTE
Enrolled - Revised
House Bill 940 (The Speaker)
Ways and Means Budget and Taxation
Gaming - Regulation of Fantasy Gaming Competitions and Implementation of
Sports Wagering - Supplementary Appropriation
This emergency bill establishes and implements sports wagering in the State and provides
for regulation of sports wagering and fantasy gaming competitions. The State Lottery and
Gaming Control Commission (SLGCC) must generally regulate sports wagering and the
conduct of sports wagering to the same extent that it regulates the operation of video lottery
terminals (VLTs) and table games in the State. Certain revenues are distributed to the
Blueprint for Maryland’s Future Fund (BMFF), the Problem Gambling Fund, and a new
Small, Minority-Owned, and Women-Owned Business Sports Wagering Assistance
(SMWOBSWA) Fund. Several provisions address the ability of minorities, women, and
minority and women-owned businesses to participate in the sports wagering industry.
Fiscal Summary
State Effect: No material effect in FY 2021. Special fund revenues increase by
approximately $31.8 million in FY 2022, mostly due to application fees, and $15.7 million
in FY 2026, due to increasing annual proceeds. Special fund revenues increase further to
the extent that registration fees are imposed on fantasy competition operators. Special fund
expenditures increase by $15.8 million in FY 2022, due to $14.3 million in specified BMFF
appropriations plus certain expenditures for the State Lottery and Gaming Control Agency
(SLGCA) and from the SMWOBSWA Fund, escalating to $74.4 million in FY 2026, as
discussed below. General fund expenditures increase by $784,900 in FY 2022 primarily to
cover certain SLGCA and consulting costs, increasing to $4.3 million in FY 2023 to
account for annualization of those SLGCA costs as well as $3.0 million in mandated higher
education appropriations, and by $1.8 million by FY 2026, reflecting certain SLGCA costs
only (SLGCA costs reimbursed by applicants are not reflected below). This bill
establishes a mandated appropriation in FY 2022 and 2023.
(in dollars) FY 2022 FY 2023 FY 2024 FY 2025 FY 2026
SF Revenue $31,849,200 $15,099,500 $15,292,200 $15,487,700 $15,686,100
GF Expenditure $784,900 $4,272,400 $1,547,900 $1,608,600 $1,814,600
SF Expenditure $15,769,800 $1,354,300 $963,700 $965,200 $74,396,800
Net Effect $15,294,600 $9,472,800 $12,780,600 $12,913,900 ($60,525,200)
Note:() = decrease; GF = general funds; FF = federal funds; SF = special funds; - = indeterminate increase; (-) = indeterminate decrease
Local Effect: It is assumed that sports wagering does not materially affect VLT and table
game revenues in the State; thus, local impact grants are not substantially affected. The bill
is not anticipated to materially affect the circuit courts.
Small Business Effect: Potential meaningful.
Analysis
Bill Summary:
Sports Wagering Operations
“Sports wagering” is the business of accepting wagers on any sporting event by any system
or method of wagering. A “sporting event” is:
 a professional sports or athletic event;
 a collegiate sports or athletic event;
 an Olympic or international sports or athletic event;
 an electronic sports or video game competition in which participants are at least
18 years old;
 a motor race event sanctioned by a motor racing governing entity;
 certain horse races held in or out of the State;
 any portion of a sporting event, including the individual performance statistics of
athletes or competitors in a sporting event; or
 an award event or competition of national or international prominence if authorized
by SLGCC.
A “sporting event” does not include a high school sports or athletic event or a fantasy
competition. Specified individuals may not wager on a sporting event; likewise, a sports
wagering licensee may not accept a wager from those individuals, including among others
specified in the bill, those younger than age 21, those not physically present in the State,
and athletes, coaches, referees, directors, or employees of a sports governing entity or any
of its member teams.
A sports wagering facility licensee may accept wagers made by an individual physically
present on the licensee’s specified property, including wagers on a self-service kiosk,
device, or machine at the specified property. Likewise, a mobile sports wagering licensee
may only accept wagers by an individual physically located in the State. To participate in
online sports wagering, an individual must register using a website or mobile application
approved by SLGCC, or in person at specified facilities. A mobile sports wagering licensee
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may conduct and operate online sports wagering or may enter into a contract with
one online sports wagering operator to conduct online sports wagering on its behalf;
however, an online sports wagering operator may conduct online sports wagering on behalf
of more than one mobile sports wagering licensee.
A sports wagering licensee must promptly report to SLGCC any of a number of specified
suspicious, corrupt, or illegal activities associated with the integrity of sporting events and
sports wagering operations, and a sports wagering licensee must maintain records of its
sports wagering operations. SLGCC may share this information with any appropriate law
enforcement agency, sports team, sports governing entity, or regulatory agency. SLGCC
may deny a license, reprimand or fine a licensee, or suspend or revoke certain licenses for
specified violations. SLGCC may impose a per day penalty of up to $5,000 for each
violation.
Sports Wagering Application Review Commission and Sports Wagering Licensing
The bill establishes the Sports Wagering Application Review Commission (SWARC) and
specifies the procedure for appointment of members and member qualifications. SWARC
must review applications for sports wagering facility and mobile sports wagering licensure.
SWARC must award licenses to applicants meeting specified requirements, including a
Class A-1 sports wagering facility license to an applicant who is a video lottery operator
with more than 1,000 VLTs; the owner of a stadium in Prince George’s County used
primarily for professional (National Football League (NFL)) football; the owner of an
NFL franchise that leases a stadium in Baltimore City; the owner of a major league baseball
franchise that leases a stadium in Baltimore City; and the owner of specified professional
hockey, basketball, or soccer franchises that lease a stadium in the State. SWARC must
award a Class A-2 sports wagering facility license to a qualifying applicant who is a
video lottery operator with 1,000 or fewer VLTs and to an applicant that is a specified
horse racing licensee (Maryland Jockey Club). No more than 60 mobile sports wagering
licenses may be issued in the State.
SWARC must award Class B-1 and B-2 facility licenses to applicants meeting specified
requirements. Qualifying applicants with fewer than 25 full-time equivalent employees or
less than $3.0 million in annual gross receipts are awarded B-2 licenses, while qualifying
applicants exceeding either of those thresholds are awarded B-1 licenses. SWARC must
award a Class B-1 or B-2 license to specified qualifying horse racing, simulcast betting,
and commercial bingo entities and to no more than 30 additional qualifying applicants.
Those eligible for or holding a Class A-1 or A-2 license are not eligible for a Class B-1 or
B-2 license. Further, a Class B-1 or B-2 license may not be awarded to an applicant whose
facility is located within (1) a 15-mile radius of a Class A1-1 or A-2 facility located in
Allegany, Cecil, or Worcester counties or (2) a 1.5-mile radius of a Class A-1 or A-2
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facility located in any other county, or any other Class B-1 or B-2 facility. On award of a
license by SWARC, SLGCC must issue a license to an applicant that meets the
requirements for licensure.
An applicant must pay to SLGCC a nonrefundable application fee of $2.0 million for a
Class A-1 license, $1.0 million for a Class A-2 license, $250,000 for a Class B-1 license,
$50,000 for a Class B-2 license, and $500,000 for a mobile sports wagering license. The
applicant must reimburse SLGCC for background investigation expenses. The term of a
sports wagering license is five years. SLGCC must renew a license if the licensee complies
with all statutory and regulatory requirements; the renewal fee equals 1% of the licensee’s
average annual proceeds from sports wagering revenues for the preceding three years, less
proceeds distributed to the State. SLGCC must also adopt regulations that establish an
application and renewal fee for the five-year term online sports wagering operator license;
however, the application fee may not be less than $5,000.
SWARC must adopt regulations governing the evaluation of applications for certain types
of licensure (Class B-1, Class B-2, and mobile). SLGCC and the Department of Legislative
Services (DLS) must staff SWARC. DLS must contract with an independent consultant to
assist SWARC in the review and analysis of license applications. The bill expresses the
intent of the General Assembly that SWARC review the factors examined and remedial
measures implemented by the Natalie M. LaPrade Medical Cannabis Commission with
respect to the licensure of medical cannabis growers, processors, and dispensaries and
determine whether similar factors and remedial measures may be applied to the sports
wagering industry. It also expresses the intent that SWARC evaluate specified studies and
conduct its work as expeditiously as possible and in a manner that is in the best interest of
Maryland and its citizens.
The bill requires licensing for the following who are involved in sports wagering:
 a person that operates sports wagering;
 a person that operates sports wagering on behalf of a sports wagering licensee,
including an online sports wagering operator;
 a person that manages, operates, supplies, provides security for, or provides service,
maintenance, or repairs for sports wagering equipment and devices; and
 an individual directly employed in the operation of sports wagering by a sports
wagering licensee if the individual does not otherwise hold a valid State gaming
license.
Additionally, SLGCC may, by regulation, require a person that contracts with a licensee
and the person’s employees to be licensed if deemed necessary. From the application and
license renewal fees collected for sports wagering, the Comptroller must pay an amount to
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SLGCA necessary to reimburse SLGCA for expenses related to the issuance and renewal
of sports wagering licenses, 5% collected for Class A-1 and A-2 licenses to the
SMWOBSWA Fund, and the remainder to the BMFF.
Mandated Funding and New and Existing Special Funds
The BMFF is altered to include revenue from sports wagering and fantasy gaming. From
additional revenues credited to the BMFF under the bill, supplementary appropriations
totaling up to $14.3 million in fiscal 2022 (per specified prioritization), and to the extent
possible, must be made for certain programs authorized by Chapter 36 of 2021. The
Governor must include in the State budget for fiscal 2023 an appropriation of $1.5 million
each for Bowie State University and Morgan State University to establish centers at each
university for the study of data analytics and sports gaming.
In addition to currently authorized uses, expenditures from the Problem Gambling Fund
managed by the Maryland Department of Health (MDH) may be used to develop and
implement free or reduced-cost problem gambling treatment and prevention programs
targeted at individuals with problem gambling issues related to sports wagering,
participation in fantasy competitions, and other forms of legal or illegal wagering. Also, a
winning wager on a sporting event that is not claimed within 182 days becomes the
property of the State and is distributed to the Problem Gambling Fund.
The bill creates the SMWOBSWA Fund to provide grants or loans to small,
minority-owned, and women-owned businesses to facilitate participation in the sports
wagering industry. The fund receives 5% of the fees collected for each Class A-1 and A-2
sports wagering facility license.
Distribution of Sports Wagering Proceeds
Sports wagering facility licensees and mobile sports wagering licensees retain 85% of
proceeds from sports wagering. The remainder of the proceeds must be transferred monthly
to the State Lottery Fund and, in turn, distributed on a monthly basis to the BMFF. If a
sports wagering licensee returns to successful players more than the amount of money
wagered in any month, the licensee may subtract that amount from the proceeds of up to
the three following months.
Fantasy Competition
A “fantasy competition operator” is any person that offers services in connection with a
fantasy competition to individuals by specified means, but it does not include an individual
who participates in the fantasy competition that the individual organizes and who receives
no compensation for organizing the competition. The bill requires a fantasy competition
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operator to register with SLGCC before offering a fantasy competition or related services
in the State. Unless a registration is renewed for a one-year term, the registration expires.
SLGCC may impose a registration fee for a fantasy competition operator. The fantasy
competition operator retains 85% of its proceeds and must pay the remaining 15% to
SLGCC, which must distribute these funds to the BMFF.
Minority Business Enterprise Program/Minority and Women-owned Businesses
The bill expresses the intent of the General Assembly that the sports wagering program is
to be implemented in a manner that, to the extent permitted by law, maximizes the ability
of minorities, women, and minority and women-owned businesses to participate in the
sports wagering industry, including through the ownership of licensed sports wagering
entities under the bill. Accordingly, a sports wagering licensee must, to the extent
practicable and authorized by the United States Constitution, comply with the State’s
Minority Business Enterprise (MBE) program until July 1, 2024. Within six months of the
issuance of a sports wagering license, the Governor’s Office of Small, Minority, and
Women Business Affairs (GOSBA) – in consultation with the Office of the Attorney
General (OAG) and the licensee – must establish a clear plan for setting reasonable and
appropriate MBE participation goals for the procurement of goods and services related to
sports wagering, including procurement of construction, equipment, and ongoing services.
To evaluate compliance with any relevant federal and constitutional requirements, the
Maryland Department of Transportation (MDOT), as the State’s certification agency and
in consultation with OAG and GOSBA, must initiate an analysis of specified MBE
program requirements under the bill, of specified remedial measures, and of the most recent
disparity study. A report on the analysis must be submitted to the Legislative Policy
Committee by December 1, 2023.
Further, for Class B-1, B-2, and mobile sports wagering licenses, SWARC – in consultation
with MDOT, GOSBA, and OAG – must (1) evaluate a study of the sports wagering
industry and market to determine whether there is a compelling interest to implement
remedial measures, besides the application of the MBE program or a similar program, to
assist minorities and women in the sports wagering industry; (2) evaluate race-neutral
programs or other methods to address the needs of minorities, women, and minority and
women-owned businesses seeking to participate in the sports wagering industry, including
through ownership of licensed sports wagering entities; (3) consider whether an applicant
for a Class B-1 or B-2 license intends to conduct sports wagering at a facility located in an
opportunity zone or an enterprise zone; and (4) consider allowing early access to the mobile
sports wagering market to entities with a meaningful partnership with minorities, women,
and minority and women-owned businesses. Emergency regulations must be adopted to
implement remedial measures, if necessary and to the extent permitted by State and federal
law. SWARC must actively seek to achieve racial, ethnic, and gender diversity when
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awarding licenses and encourage MBE and small, minority, and women-owned businesses
to apply for sports wagering licenses.
An applicant for a sports wagering license that is seeking investors must make serious and
good-faith efforts to solicit and interview a reasonable number of minority and women
investors and must submit related documentation as part of the application. An applicant
that is awarded a license must sign a memorandum of understanding with SWARC that
requires the licensee to again make good-faith efforts to interview minority and women
investors in any future effort to raise venture capital or attract investors.
Additional Provisions
Except as otherwise provided under the bill, sports wagering licensees and facilities must
meet certain requirements relating to data security, advertising, and local zoning laws.
In addition to annual reports, SLGCC must, by December 1, 2025, report on license holder
diversity and market saturation regarding Class B-1, B-2, and mobile sports wagering
operations.
Certain prohibitions (described below) regarding development of lodging facilities w