More interesting discussions between industry leaders happened Thursday as Maryland’s second sweeps ban bill, House Bill 295, had a hearing before the House Ways and Means Committee.
John Martin, Director at Maryland Lottery and Gaming, said the agency sends cease-and-desist letters and refers “illegal” operators to the appropriate law enforcement entities. Over the last 18 months, they have sent 75 cease-and-desist letters. About one third of those operators have left the state or closed their businesses.
Martin said these illegal gaming operators are large multinational enterprises that offer online sweepstakes games, casino games, live dealer table games, and sports betting.
“They attempt to blur the line by equating themselves with legitimate sweepstakes like retailer merchant promotions and free to play social games,” he said. “Do not be misled. They are neither. Remember that if a player puts money into a game to play it and the player has a chance to win real money prize, that is gambling.”
Here are some other highlights from Thursday’s hearing, which did not result in a vote.
Casino reps came out in full force
“Sweepstakes casinos offer Internet gaming,” Brad Rifkin with Caesar’s Horseshoe Baltimore said. “This committee is acutely aware that Internet gaming is not the law of the land. They offer blackjack, they offer roulette. They offer all the different games that you could go into a casino and play, and they do so without any problem gaming oversight, without any regulatory regime.”
Rifkin said sweeps sites don’t pay taxes (which sweeps operators have offered to do in a regulatory framework but have yet seen a state go for that) and for the brick and mortars that invest billions of dollars into the state, he said it’s an affront.
“At the same time, we’re not protecting Maryland consumers,” Rifkin said. “You may hear from the opponents who come in and say, ‘Just tax us and regulate us’. iGaming is not legal yet.”
Ryan Eller, Executive Vice President and General Manager for Live! Casino Hotel Maryland, also urged a favorable report for House Bill 295.
“The bill moves in the right direction by going after certain types of illegal online gaming in the state of Maryland,” Eller said. “Data consistently shows that legalizing online gambling does not effectively reduce that illegal market. It actually could serve to grow it. We believe that bills like House Bill 295 go after illegal online gaming. We would also support any additional legislation that might go a step further by seeking enforcement measures on those individuals or enterprises involved in marketing or facilitating illegal iGaming transactions in our state.”
“A lot of the folks who operate casinos here — we’re in direct competition with the illegal market,” added Joseph Tyrell with Caesar’s Entertainment representing Horseshoe Baltimore. “How do we get customers to make sure they’re playing safely with responsible gaming, anti-money laundering? These are very serious things that we’re working with our regulators on. We applaud them for pushing for these issues because we are in a very deep fight to protect your revenue and our jobs.”
Caitlin McDonough with Penn National and Hollywood Casino in Cecil County reiterated the testimony of the earlier panel in support of this bill.
“We do see [sweeps] as iGaming,” she said. “We share the concerns of the agency and the other licensees that this creates an illegal, undesirable situation online, and it cuts into our ability to create revenues for our business and for the state.”
Rick Limardo, Senior Vice President of Government Affairs for MGM Resorts and MGM National Harbor, said offshore online gambling operators continue to capitalize on existing demand for online casino gaming in Maryland and fly by night operators who do not pay taxes are not subject to Maryland strict gaming standards.
Scott Ward with the Sports Betting Alliance said it’s estimated that $8 billion is wagered annually in Maryland in unregulated online sweepstakes and Internet games and that number is up 30% from just three years ago.
“HB 295’s ban on online sweepstake casinos is a good first step, but all of that money will continue to flow out of the state to offshore or other internet sites as the state engages in legal whack-a-mole trying to get these sites out of the state unless there is a legal regulated and safe alternative for this activity in the state,” Ward said.
SGLA, VGW reps testify against HB 295: ‘Our players are playing for fun’
Dwight Ramenaden, head of Responsible Social Gameplay at VGW, said their mission is to ensure their games are played for fun and entertainment. They do that by preventing underage participation, identifying and responding to potential risk, and providing players with tools and information to manage their gameplay.
“Our games are intended for adults 21-plus,” Ramenaden said. “We enforce that through multi-step age verification process that begins at first purchase and are reinforced throughout additional, know your customer checks in the player journey. Any account found to be operated by a minor is closed, purchases returned, and prizes voided. Our players also have access to a range of self-service RSG tools, including the ability to set a purchase limit and account access restrictions such as self-exclusion. We have actively promoted the awareness and use of these tools. We also proactively monitor player behavior using in-house alerts and a customer risk score.”
Lloyd Melnick, Chief Growth and Strategy Officer of VGW, said by banning sweeps casinos, Maryland will be setting a precedent that future interactive innovations aren’t welcome in the state to feed up.
“For those players who don’t want the stress or cost of risking real money on gambling websites or land-based casinos, our games provide a shared mechanic with casino games without players ever having to spend a dime,” Melnick said. “The majority of our players — most of whom are between 35 and 54 — never spend a penny. Our players are playing for fun.”
Josh White and Sean Ostrow with Social Gaming Leadership Alliance (SGLA) also testified in opposition to the bill.
SGLA is proposing an amendment that will bring industry-wide regulation to sweeps casinos and generate upwards of $20 million in annual revenue through a combination of sales tax on purchases and operator registration fees.
White spoke about how SGLA welcomes regulation and Ostrow reiterated that if this bill were passed, members of the SGLA would exit the state and illegal operators would stay.
Last week’s hearing of Maryland’s other sweeps ban bill, Senate Bill 112, featured much of the same dialogue, and it also hasn’t yet been voted on by its committee.
