Mobile sports betting in Maryland got off to a hot start last month. Unfortunately for the state, it didn’t get to cash in — at least not yet.
In the nine days that the mobile market was live in November — which includes an eight-hour soft launch period on November 21 — seven online operators accepted $186.1 million in mobile wagers, according to the Maryland Lottery and Gaming Control Commission (MLGCC). By comparison, nine brick-and-mortar operators had a combined handle of $33 million for the entire calendar month.
But deductions for promos tied to mobile sports betting, which totaled $63.8 million, wiped out nearly all of the tax revenue for the state.
That will change. Maryland’s gaming law allows operators to deduct an unlimited amount for promotions during the first full fiscal year of operations. After that, operators won’t be able to deduct more than 20% of their taxable win from the year before.
After two years of delays, Maryland’s mobile sports betting market officially launched on November 23.
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State Received $4k in Tax Revenue
Only BetRivers wound up paying taxes in November — a paltry $4,262, MLGCC data show.
BetRivers was on the hook because it had the smallest handle ($631k) of the seven that launched in November. With only $57k to deduct from promos, the state’s 15% tax rate nicked BetRivers on its $28k in taxable earnings.
FanDuel dominated with a $90 million handle from mobile sports betting, enough for 48% of the market. DraftKings was second with $69.6 million in wagers and a 37% share. Combined, FanDuel and DraftKings have already clinched nearly 86% of the market.
BetMGM Sports was a distant third with $15 million in mobile wagers and 8% of the market. Barstool, Caesars, and PointsBet closed out the group, with handles of $5.7 million, $3.5 million, and $1.7 million, respectively.
Hold ranged from a low of 6.4% at Barstool to a high of 26% at BetMGM. Barstool was the only operator to have a hold in the single digits, while Caesars (18%) and PointsBet (16.7%) had holds in the high 'teens.
Three operators — Betfred, betPARX, and Fanatics — have been awarded mobile sports betting licenses in Maryland, but have not yet launched. They have said they plan to do so in 2023.
Promo Deductions Limited After One Fiscal Year
Maryland officials said they knew going into the process that tax revenue would be impacted, at least initially, from deductions for promos.
“We expect mobile sportsbook operators to continue to offer a lot of promotional wagers in the coming months as they venture into a new market and work to attract customers,” said MLGCC Director John Martin.
“There was tremendous pent-up demand, and a lot of people are utilizing promotional offers from multiple operators simultaneously. But as many of the operators have acknowledged, this level of promotional play is not sustainable and, based on our regulations, will be curtailed over time.”
Commenting on the one year for deductions, Martin said they “obviously have an impact on the bottom line, and that’s why we have a cap that takes effect after each operator’s first full fiscal year. It protects the state’s interests and ensures that sports wagering will generate revenue for education, as intended.
“By awarding large amounts of promotional play in their first fiscal year, the sportsbooks’ promo play amounts will be limited in their second year.”
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November 2022 Mobile Sports Betting in Maryland
| Operator | Handle | Promotion Play | Taxes to MD |
|---|---|---|---|
| Barstool Sportsbook | $5,711,255 | $890,084 | 0 |
| BetMGM | $15,075,445 | $5,812,182 | 0 |
| BetRivers | $631,176 | $57,223 | $4,242 |
| Caesars Sportsbook | $3,469,246 | $707,790 | 0 |
| DraftKings | $69,598,659 | $26,637,796 | 0 |
| FanDuel | $89,945,687 | $29,421,730 | 0 |
| PointsBet | $1,653,028 | $308,513 | 0 |
