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As Maryland lawmakers consider ways to close a multibillion-dollar budget deficit, two bills to raise new tax revenues through legalizing internet casino games are back on the legislative agenda for the second straight year.
Senate Bill 340, filed by Democratic state Senator Ron Watson, received its first hearing on Wednesday (January 29) before the Senate Budget and Taxation Committee.
Meanwhile, an identical bill filed in the House by Delegate Vanessa Atterbeary, a Democrat who chairs the House Ways and Means Committee, is scheduled to receive a committee hearing on February 4.
“This is one of the few bills introduced this session that raises revenue,” Watson told the Senate committee.
Currently, Maryland faces a $2.7bn budget gap, which is expected to double by 2030. Watson noted that legalizing iGaming is projected to raise $1.65bn over five years.
“The governor’s budget proposed increasing taxes, reducing public education funding and other cost containment measures,” Watson said, noting that one of the proposals would raise existing tax rates on sports betting and table games.
Democratic Governor Wes Moore’s budget proposal for fiscal year 2026 increases the sports-betting tax rate from 15 percent to 30 percent, which would raise a projected $95.4m in additional tax revenue. An accompanying proposal to increase taxes on table games from 20 percent to 25 percent of revenue would raise $31.3m.
Watson questioned the need for Moore’s gaming tax increase, when the state can raise $300m a year, or almost three times that amount, from iGaming.
If either bill is approved, the launch of iGaming in Maryland would be contingent on the passage of a referendum by voters in November 2026.
Both SB 340 and Atterbeary's House Bill 17 have identical language to establish a $10m displacement fund during the first year of iGaming to mitigate potential impacts on land-based casinos, plus a minimum $5m investment by an operator during its initial license period to construct and operate live-dealer studios in Maryland.
A total of 30 licenses would be available to the state’s six land-based casinos and so-called Class B sports wagering facility licenses.
The measure establishes a $1m license fee for an iGaming license. One percent of license fees collected would be directed to a problem gambling fund, with the remainder being deposited into the education fund known as the Blueprint for Maryland’s Future Fund.
Both bills propose to tax live-dealer games at 20 percent, with a 55 percent tax on the proceeds of other iGaming revenue.
Out of the six casino operators in Maryland, MGM Resorts International and Caesars Entertainment expressed their support for a ballot referendum on iGaming, but Baltimore-based Cordish Companies and Churchill Downs Incorporated are opposed to online gaming.
Cordish, which operates Maryland Live!, and Churchill Downs, operator of Ocean Downs Casino, have expressed concerns that iGaming would cannibalize their brick-and-mortar casinos. Those same concerns were shared on Wednesday by union officials and retailers.
“We are in opposition to this legislation,” said Cailey Locklair, president of the Maryland Retailers Alliance.
Locklair noted that proponents of legal iGaming “claim that online gaming would not have a negative impact on brick-and-mortar casinos in Maryland, and that this policy would increase revenue for the state”.
However, the state legislature's fiscal note on the bill “predicts a cannibalization rate to casinos of at least 10 percent once iGaming is fully implemented”.
Mark Stewart, executive vice president and general counsel of Cordish Companies, said the company had “opposed iGaming in every state we’ve been in.” Cordish and Churchill also oppose the effort to legalize iGaming in Indiana.
“This bill is the same as you saw last year but much is new since then,” Stewart said. “There is a growing mountain of evidence against iGaming and its many harms.”
Stewart noted that 24 percent of casino jobs in Pennsylvania have disappeared since iGaming was legalized in 2017, which impacted the union workforce and those workers with a high school diploma or less.
“The claimed tax benefit is a mirage,” Stewart said. “The real question is what is the net tax impact and after accounting for cannibalization, lost jobs, social costs and lost economic output ... the reality is there is no new tax revenue here for the state.”
Watson described Cordish’s objections to iGaming as the “fallacy of cannibalization”.
During last year’s debate, he accused Maryland Live! of spending thousands to “push a false narrative that jobs would be lost”.
Watson noted that Cordish’s casinos in neighboring Pennsylvania were reporting millions of dollars in online revenue, while opposing efforts to legalize iGaming in Maryland. Live! Philadelphia reported $47.49m in iGaming revenue last year, an 18.7 percent increase over the $40.01m in 2023.
“They’re misleading us, while we try to close budget holes,” Watson said.
Watson introduced two bills in the Senate last session, but other than one hearing in the Budget and Taxation Committee, his measures went nowhere. Last year, an iGaming bill passed the House of Delegates but failed to advance in the Senate.
