Maryland Sportsbooks Might Soon Extend Fewer Promotions, as State Seeks Regulatory Change

• Maryland sportsbooks could soon see a regulatory change to their promotions
• The state gaming regulator has proposed reducing how much promotional funds mobile sportsbooks can deduct from their tax obligations
• Maryland has 15 operational online sportsbooks

Maryland sportsbooks might soon extend fewer promotions and incentives to bettors should a proposed regulatory change be enacted.

The Maryland State Lottery and Gaming Control Agency regulates all forms of gambling within the state, including retail and online sports betting. The regulatory agency has proposed an amendment to its conditions governing how online sportsbooks market to consumers.

Under the current law, a licensed online sportsbook can deduct 100% of the promotional money given to bettors from their tax obligations in their first year in business. After the license’s first full fiscal year in operation, that declines to 20%.

The state gaming regulator wants to further reduce how much promo money mobile sportsbooks can deduct. The agency has suggested a 5% cap in year two moving forward.

After the first full year of a mobile sports wagering licensee’s operations, the amount of money given away as free promotional play in a fiscal year may not exceed 5 percent of total sports wagering proceeds that the mobile sports wagering licensee generated in the prior fiscal year,” the proposed statute reads. “After the first fiscal year of sports wagering activity, the 5 percent cap specified of this regulation includes only mobile sports wagering revenues generated by the licensee.”

Maryland is currently home to 15 active online sportsbook platforms. Notable operators include market dominators FanDuel and DraftKings. 

Industry Shakedown

Maryland is home to one of the richest sports betting industries, as the small yet affluent population cherishes its Baltimore professional sports teams. In the 2024 fiscal year, the state directed over $60 million in sports wagering taxes to the Blueprint for Maryland’s Future Fund, a program that supports public education.

Lawmakers, however, continue to seek of bigger slice of the pie. Earlier this year, Gov. Wes Moore (D) signed the state budget into law that included a tax hike on sportsbooks from a rate of 15% to 20%. By greatly reducing how much promotional money an online sportsbook can deduct from its tax bill would further increase the state’s benefit from legal online sports gambling

For the Maryland State Lottery and Gaming Control Agency proposal to be enacted, the amendment needs to be approved by the General Assembly’s Joint Committee on Administrative, Executive, and Legislative Review. The 20-person AELR consists of 10 state senators and delegates. The AELR website does not list any imminent meetings.

Sportsbook Lawsuit

Some critics of Maryland’s sports betting market believe the state failed to properly regulate the gaming industry when it authorized online sports gambling in 2021. The City of Baltimore is suing FanDuel and DraftKings on allegations that the two online sportsbooks have engaged in deceptive and unfair business practices.

First, they use misleading promotions such as so-called ‘bonus bets’ and other tricks to attract new users, designing those promotions to encourage compulsive gambling behavior. Second, they leverage the vast array of data they have about their users, along with sophisticated analytics and personalized inducements, to identify those who suffer from a gambling disorder, and then extract what they can from them,” attorneys representing the so-called Charm City wrote in a release on the litigation.

The case remains ongoing in Baltimore City Court.

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