Big-name sportsbooks want to shelve Maryland’s proposal to limit free promotional play offers in the Old Line State’s emerging sports betting market.
Free promotional play offers would be limited to 20 percent of a sportsbook’s total sports betting proceeds generated the prior fiscal year should the proposed regulation be made permanent. The limit would apply after the first full fiscal year of operation — about the same time that Maryland’s market is getting established.
FanDuel called the proposed rule a “major concern” in written comments it submitted on Maryland’s 227 pages of proposed sports betting regulations during a public comment period last month.
The sportsbook said the limit isn’t in statute and shouldn’t be in regulation.
“The Maryland General Assembly made the deliberate decision not to place a cap on the amount of free promotional play that sports wagering licensees may issue and acknowledged the vital role that free promotional play holds in converting sports bettors from the illegal, offshore sports wagering market to legal, regulated market,” FanDuel wrote. “We strongly urge the (Maryland Lottery and Gaming) Commission to follow the intent of the legislature and strike proposed (regulation).”
Sports betting regulations in Maryland are now in effect on an emergency basis through Jan. 25, 2022 to expedite licensing at certain venues listed in statute. Public comment gathered last month will help determine what makes it into permanent regulation.
A Statutory Issue?
FanDuel added that the proposed limit on sportsbook promos is similar to Maryland’s limits on VLT machines. The difference, it said, is that the commission doesn’t have statutory authority to establish such limits where sports wagering is concerned.
“No such authorization for the Commission to establish a limit was included in the definition of ‘proceeds’ for the purpose of sports wagering under (the law),” FanDuel stated.
The same argument was made by rival DraftKings, which said the cap on promotional play deduction is not part of the state’s sports betting law signed in April 2021. The law (2021 HB 940) allows up to 60 mobile licenses and up to 47 retail licenses, with licensing of 17 retailers named in the statute now underway.
“It is not the purview of the regulator to alter the statutorily provided definition of “proceeds” by imposing limits that are not contemplated in statute,” wrote the company — “proceeds” meaning the amount wagered and not returned to winning bettors, according to the statute.
Other Sportsbooks Weigh In
DraftKings, PointsBet, Penn Interactive, and Bally also used their written comments to weigh in on the impact that the proposed limit could have on Maryland’s nascent sports betting industry, and their business. Bally said the proposed limit based on first-year proceeds could hurt market growth “if an operator does not have an explosive first year, allowing for increased free promotional play in the following years.”
“(At) the beginning stages, most promotional funds are attributed to signup offers as sports wagering operators are operating in growth mode,” Bally told regulators.
PointsBet honed in on the bettor experience, which it said would be negatively affected by “potentially limiting the amount of free promotional play that we can offer Maryland bettors.” The sportsbook said the proposed requirement should be clarified, or stricken from the regulations altogether.
DraftKings asked that the proposed regulation on free promotional play be removed altogether.
“Promotions are a paramount means of attracting bettors from the illegal market to the regulated market and should not be capped from a deduction standpoint, as signaled by the legislature,” the company wrote.