Maryland boasts $3bn potential but local dependency could slow progress

Maryland could become an attractive proposition for operators due to the embrace of an open market, but analysts have issued a slight warning due to the region’s almost entirely local dependent nature.

When Governor Larry Hogan signs the bill to officially legalise sports betting in Maryland, which is expected, the state will join 26 other US states, and Washington DC, that have regulated sports betting in some form. Twenty-two of those have launched.

At maturity, which could come as soon as the market’s third year, Maryland operators could take in as much $3.1bn in bets annually, which would then produce between $125m and $225m in taxable revenue each year, according to projections. 

With the region’s tax structure, which is 15 per cent of an operator’s taxable revenue, that could mean as much as $35m in state taxes.

“Maryland will be an attractive market for operators in large part because regulators have embraced an open market,” said Eric Ramsey, analyst for the PlayUSA.com network.

“The best predictor of a successful market has been whether it is designed to foster competition among numerous operators, which Maryland has done. A competitive market is more appealing to bettors, which in turn makes the industry a reliable revenue producer for the state.”

Maryland is set to become the first market to launch while being completely surrounded by jurisdictions that have already legalised sports betting in some form, with the jurisdiction also lacking a significant sports betting tourism industry. These factors, say analysts, will make the market almost entirely locally dependent.

“Maryland won’t have much opportunity to draw bets from neighbouring states, which makes it a test case for the future of sports betting as more and more states legalise sports betting and make each state locally dependent,” Ramsey added. “But Maryland has enough local advantages to make it a strong bet to be a successful market.”

Jessica Welman, lead analyst at PlayMaryland, commented: “We have seen just how attractive sports betting has been in Virginia, which has a similar tax rate as Maryland, so we know this structure won’t scare away any potential operators. 

“There are questions unique to Maryland about whether local operators will be able to compete with the DraftKings and FanDuels of the world, which will surely be coming. Or if the state’s inclusion efforts will affect the early growth of the state’s industry. But the bottom line is that sports betting should be a reliable revenue generator for the state.”

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