The Maryland Lottery and Gaming Control Commission has proposed new rules for sportsbooks, including one that would eliminate promotional deductions. This move is part of a trend among states to focus on revenue instead of handle as the sports betting market matures. The proposed rule change could impact new entrants to Maryland, as free bets are a common tool for sportsbooks to gain market share.
Some industry experts are concerned about the potential impact of this rule on businesses looking to enter the Maryland market. Other states, such as Ohio, Illinois, and Tennessee, have also made changes to their regulations to increase revenue from sports betting. Neighboring Virginia has already restricted promotional deductions, allowing sportsbooks to deduct promotional dollars for their first 12 months of operation.
Maryland has seen success in drawing sports betting revenue, reporting a 10.6% hold on $5.3 billion in bets in the last fiscal year. However, after promotional deductions totaling $167.2 million, the hold fell to less than 8%. Leading sportsbooks like FanDuel and DraftKings spent millions on promotions, with potential tax revenue lost due to these deductions. If Maryland had taxed these promotional dollars, an additional $25 million could have been contributed to school funding. The discussion around the proposed rules reflects the ongoing evolution of the sports betting industry and the balancing act between operators and regulators.
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