iGaming in Maryland

Prepared for:

Maryland Lottery and Gaming Control Agency

November 2023

Prepared by:

The Innovation Group

101 Convention Center Dr.

Suite 600

Las Vegas, NV 89109

702.852.1150

www.theinnovationgroup.com

The Innovation Group November 15, 2023 Page ii

iGaming in Maryland

Table of Contents

EXECUTIVE SUMMARY .......................................................................................................... 4

Revenue Potential of a Legal iGaming Market in Maryland .................................................. 5

Impact of iGaming on Casinos and Lottery ............................................................................ 5

Impact of iGaming on Bingo, OTB Facilities, and Racetracks .............................................. 6

Experience and Learnings from Other States ......................................................................... 6

Impacts on Casinos through Partnerships with iGaming Operators ..................................... 8

Use of Multi-jurisdictional Gaming Agreements .................................................................... 8

Estimated Size of the Illegal iGaming Market and Methods to Transition Players to the

Regulated Market .................................................................................................................... 9

THE U.S. IGAMING LANDSCAPE ......................................................................................... 11

Delaware ............................................................................................................................... 12

New Jersey ............................................................................................................................ 13

Nevada .................................................................................................................................. 14

Pennsylvania ......................................................................................................................... 14

West Virginia ........................................................................................................................ 15

Michigan ............................................................................................................................... 16

Connecticut ........................................................................................................................... 16

Rhode Island ......................................................................................................................... 17

MARYLAND IGAMING ADDRESSABLE MARKET ......................................................... 18

MARYLAND IGAMING MARKET POTENTIAL .............................................................................. 18

IGAMING MARKET SIZE IN MARYLAND ..................................................................................... 19

ILLEGAL MARKET SIZE .............................................................................................................. 20

IGAMING IMPACT ON BRICK-AND-MORTAR CASINO MARKET ................................................... 22

IGAMING IMPACT ON LOTTERY SALES ....................................................................................... 25

IGAMING IMPACT ON BINGO, OTB FACILITIES, AND RACETRACKS ........................................... 27

BEST PRACTICES .................................................................................................................... 29

Discussion of Other States and Legislative Models .............................................................. 29

Cannibalization of Brick-and-Mortar Gaming ..................................................................... 29

Tax Rates and Structure ........................................................................................................ 30

Licenses and Distribution ..................................................................................................... 31

Demographics and Player Profile ........................................................................................ 32

Responsible Gaming and Public Health ............................................................................... 33

Capturing the Illegal Market ................................................................................................ 33

PARTNERSHIPS ........................................................................................................................... 33

Casinos with Online Operators ............................................................................................ 33

Multijurisdictional Agreements ............................................................................................ 35

CONSUMER PROTECTIONS & RESPONSIBLE GAMING ............................................. 36

The Innovation Group November 15, 2023 Page iii

List of Tables

Table 1. Index of Budget Bill Tasks ............................................................................................... 4

Table 2: Maryland iGaming Gross Revenue Forecast .................................................................... 5

Table 3: iGaming Impact on Brick & Mortar GGR ........................................................................ 5

Table 4: iGaming Impact on Lottery Sales (Approach #1, using all Lottery States) ...................... 6

Table 5: Pros and Cons of Partnership with a National Brand ....................................................... 8

Table 6: Maryland Black/Illegal iGaming Market Estimate ......................................................... 10

Table 7: Comparison of U.S. iGaming Implementation ............................................................... 11

Table 8: Delaware iGaming Trends .............................................................................................. 12

Table 9: New Jersey iGaming Trends ........................................................................................... 13

Table 10: Pennsylvania iGaming Trends ...................................................................................... 14

Table 11: West Virginia iGaming Trends ..................................................................................... 15

Table 12: Michigan iGaming Trends ............................................................................................ 16

Table 13: Connecticut iGaming Trends ........................................................................................ 16

Table 14: 2022 iGaming Revenue per Adult for Legal U.S. iGaming Markets ........................... 18

Table 15: Maryland iGaming Gross Revenue Forecast ................................................................ 20

Table 16: Maryland Black/Illegal iGaming Market Estimate ....................................................... 21

Table 17: Commercial Brick & Mortar Gaming Revenue ($ millions): Non-iGaming States ..... 23

Table 18: Non-iGaming State Brick & Mortar GGR Growth Summary ...................................... 23

Table 19: Commercial Brick & Mortar Gaming Revenue ($ millions): iGaming States ............. 24

Table 20: iGaming State Brick & Mortar GGR Growth Summary .............................................. 24

Table 21: iGaming Impact on Brick & Mortar GGR .................................................................... 24

Table 22: Maryland iGaming Cannibalization and Market Growth ............................................. 25

Table 23: iGaming State Lottery Sales Growth ............................................................................ 25

Table 24: Non-iGaming State Lottery Sales Growth .................................................................... 26

Table 25: iGaming Impact on Lottery Sales (Approach #1, using all Lottery States) .................. 26

Table 26: Non-iGaming State Lottery Sales Growth – iLottery States Excluded ........................ 26

Table 27: iGaming Impact on Lottery Sales – iLottery States Excluded ..................................... 27

Table 28: Forecasted Net Taxes by Tax Rate for 2029 ................................................................ 31

Table 29: Problem Gambling Services Budgets – iGaming States ............................................... 45

The Innovation Group November 15, 2023 Page 4

XECUTIVE

UMMARY

The Innovation Group was retained by the Maryland Lottery and Gaming Control Agency

(“MLGCA”) to develop a report on iGaming for the Maryland General Assembly’s Budget

Committees as legislation relating to iGaming is contemplated. In this report, when we refer to

iGaming, we specifically mean interactive (online/mobile) slot machines, table games, and

poker. We explicitly omit online sports betting from our categorization of iGaming, as Maryland

has already adopted online sports betting, and using the colloquial phrase iGaming is simpler

than using the more pedantic iCasino and iPoker throughout.

The Innovation Group submitted to the MLGCA a proposal to complete the tasks listed below,

with task numbers corresponding to those in the Maryland General Assembly budget bill from

which the report was commissioned. For reference, we have included page numbers in the below

table to indicate where in the report we address each task. Following this, we present a summary

of key findings.

Table 1. Index of Budget Bill Tasks

Task

Page #

1. The estimated size and revenue potential of a legal iGaming market in Maryland

19-20

2. The size of and revenue generated by iGaming in other states

12-18

3. The estimated impact of iGaming on revenue generated by Maryland's brick-and-mortar casinos,

other gaming venues, and the State lottery

22-28

4. The impact of iGaming on revenue generated by brick-and-mortar casinos, other gaming venues,

and the lottery in other states

22-28

5. The experience of other states in implementing iGaming

11-17, 29-35

6. The potential impacts on brick-and-mortar casinos and gaming venues through partnerships with

iGaming operators

33-35

7. The potential usage of multi-jurisdictional gaming agreements

8. The estimated size of the existing illegal iGaming market in Maryland and methods to transition

individuals from the illegal market to a legal market

20-21, 33

9. The consumer protections available for users of legal iGaming, including the verification process for

transactions and the ability to limit and monitor those transactions to ensure responsible gaming

36-49

10. The impact of iGaming on problem gambling and methods to encourage responsible gaming and

combat the growth of problem gambling

36-49

In addressing tasks 9 and 10, we include a memorandum developed by the Maryland Center of

Excellence on Problem Gambling (“COE”) that addresses the available consumer protections for

iGaming users and the impact of iGaming on problem gambling, including methods to encourage

responsible gaming. We append our own commentary following the inclusion of the

memorandum.

The Innovation Group November 15, 2023 Page 5

Revenue Potential of a Legal iGaming Market in Maryland

To estimate the market potential for iGaming in Maryland, we built a spend-per-capita model

based on iGaming performance in other states. As there are only six states that have launched

iGaming to date, we utilized those states. We considered spend per capita across those states,

scaled to reflect market maturation over time, noting that each of the comparable states is at a

different stage in its development. We then multiplied the scaled figure by forecasts for Maryland’s

gambling-age population to project gross iGaming revenue by year for the state. We arrive at a

stabilized annual forecast of more than $900 million in gross revenue (or “casino win”).

Table 2: Maryland iGaming Gross Revenue Forecast

Year

Ramp

Population 21+

Spend per Capita

iGaming Gross Revenue ($MM)

2026

60%

4,751,213

$112.26

$533.4

2027

75%

4,772,985

$140.51

$670.7

2028

90%

4,794,856

$168.84

$809.6

2029

100%

4,816,828

$187.86

$904.9

2030

100%

4,838,900

$188.11

$910.2

2031

100%

4,861,073

$188.36

$915.6

2032

100%

4,883,349

$188.62

$921.1

Source: The Innovation Group

Impact of iGaming on Casinos and Lottery

To estimate the impact of iGaming on land-based casino Gross Gaming Revenue (“GGR”), we

compared brick-and-mortar casino performance in 2019 and 2022 between states with and without

iGaming. To compare brick-and-mortar casino performance between 2019 and 2022, we

calculated ‘baseline growth’ rates for each group (states with iGaming, and states without) based

on how much each group’s total population and Gross Domestic Product (“GDP”) changed during

the period. We did so to adjust for increases and decreases in a state’s or region’s brick-and-mortar

gaming revenues due to changes in population or the overall economic environment.

In all, we observed 2% same-store casino revenue growth in non-iGaming states, versus an 8.2%

decline in iGaming states, suggesting a cannibalization rate of approximately 10% of casino

gaming revenue.

Table 3: iGaming Impact on Brick & Mortar GGR

Growth

Net GGR Growth, iGaming States

-8.2%

Net GGR Growth, Non-iGaming States

2.0%

Impact of iGaming on B&M GGR

-10.2%

Source: The Innovation Group

Since Maryland’s casino revenue is just over $2 billion annually, this would amount to a loss of

just more than $200 million in casino revenue, against a gain of $900 million in iGaming revenue.

The Innovation Group November 15, 2023 Page 6

Because of the expansion of distributed forms of land-based gaming in West Virginia (taverns)

and Pennsylvania (truck stops), and the addition of Category 4 gaming licenses in Pennsylvania,

we believe that the 10.2% impact is slightly overstated, and that the actual effect is more likely

between 8% and 9%.

We applied the same approach to lottery, where we saw only a negligible difference between

lottery performance in iGaming vs. non-iGaming states. This suggests a minimal impact of

iGaming on lottery performance.

Table 4: iGaming Impact on Lottery Sales (Approach #1, using all Lottery States)

Growth

Net Lottery Growth, iGaming States

11.9%

Net Lottery Growth, Non-iGaming States

12.0%

Impact of iGaming on Lottery Sales

-0.04%

Source: The Innovation Group

Impact of iGaming on Bingo, OTB Facilities, and Racetracks

We rely on the forecasted impacts of iGaming on land-based casino and lottery to drive our

forecasted impacts on bingo and off-track betting (“OTB”), as current iGaming states are not

appropriately compared to Maryland. In reading online reviews of the bingo halls in Maryland,

we find many references to the “slots” at these facilities – regardless of the technical differences

between electronic instant bingo machines and slot machines, players appear to be generally

unaware that bingo machines are not slot machines. As such, we anticipate the impact of

iGaming on electronic bingo machines to be approximately 10%, in line with the impact on land-

based casino gaming. This may overstate the impact slightly, as bingo halls are more

community-oriented and as such likely have higher levels of engagement. We also believe that

paper-card bingo is likely to experience very little impact on its own, holding that aspect of the

bingo business harmless.

The racetrack and OTB environments in iGaming states all have nuances that would render a

similar analysis irreparably flawed. However, having studied horse racing and casino databases

for decades, we would categorize horse bettors as not having strong demographic overlap with

casino clientele, which will skew younger and more female (even in the online realm) than

predominantly older, male racing enthusiasts. With OTBs and racetracks offering a very specific

product that is not replicated in land-based or online casinos, and given limited overlap in

database, we believe that the impact of iGaming on OTBs will be near zero, similar to lottery.

Experience and Learnings from Other States

To uncover best practices enacted in other states, The Innovation Group conducted a series of

interviews. We discussed a range of topics related to iGaming legislation with current and former

legislators, regulators, land-based casino operators in and outside Maryland, and online gaming

operators. We provide a summary table of key bill considerations below.

The Innovation Group November 15, 2023 Page 7

Discussion of Other States and Legislative Models

Interviewees generally suggest that Maryland should consider adopting aspects of the New Jersey

and Michigan legislation, as those states have fostered healthy and burgeoning iGaming markets

that produce economic benefit for both the state and the state’s existing casinos. Key aspects of

the bills in those states include, but are not limited to:

(1) licenses tethered to existing brick-and-mortar casino licenses,

(2) a reasonable tax rate,

(3) gaming board oversight, and

(4) reasonable responsible gaming requirements.

Future-proof the Market

There were strong suggestions to “future-proof” the market by setting broad frameworks in

legislation and allowing the regulators to make adaptable rules that can intelligently evolve to meet

changing market conditions, the state needs, and/or the advancement of products and technology.

Licenses

While there were competing viewpoints within Maryland about who should be eligible for

iGaming licenses, those we spoke with from other states were generally in consensus that licenses

should be tethered to casinos. Besides this being the only real precedent from other iGaming states,

experts pointed out:

• That casino gaming is casinos’ core business and expertise – they deeply understand

slot and table games product, consumers, and the general market;

• The extensive licensure process that key casino employees undergo – they are trusted

operators and satisfy the strictest suitability requirements;

• Casino staff experience and mandatory training with Anti-Money Laundering

(“AML”) and Know Your Customer (“KYC”) issues;

• The substantial investment that casinos have made in the communities, both in terms

of jobs and physical development;

• That host communities are reliant on revenue from revenue share agreements, and the

casinos need to be able to fulfill those commitments;

• That planning for major capital decisions and reinvestment in infrastructure is difficult

if operators cannot predict what the gaming landscape will look like over the next 5-10

years.

• That cannibalization of land-based gaming revenue can be mitigated with good

omnichannel marketing. Mobile apps extend a casino’s reach into other parts of the

state in a cost-effective way.

Skins

A “skin” is a sublicense of an online betting license. It allows for a license holder to monetize its

market access without necessarily operating an online gaming brand. Those we spoke with

believed that 12 brands, implying two skins each for six operators, would be sufficient for the

market without diminishing the salability of a skin. Several believed that six access points would

also be able to sustain a strong market.

The Innovation Group November 15, 2023 Page 8

Tax Rate

Ordinarily, we would say that online tax rates should be higher than land-based tax rates given 1)

that the land-based operations incur labor costs and physical development costs that exceed those

of online gaming, and 2) the job creation associated with ongoing operations and development of

land-based operations, and its downstream economic effects on the state. With online gaming,

there is some land-based job creation (e.g., head of interactive gaming, studios for live dealer

online games), but job creation may be substantially lower than the reduction of variable labor

(e.g., table games dealers or slot machine attendants) coming from cannibalization of land-based

gaming.

However, to attract the black-market player into regulated iGaming channels, operators must be

positioned to aggressively market to this group. With current gaming tax in Maryland at the level

it is, it would be challenging to give online gaming a higher tax rate and simultaneously expect

operators to aggressively market to players at illegal online casinos.

Lastly, nearly everyone we spoke with favored a blended (not split) tax rate. In other words, they

advocated for slots and tables to be taxed at the same rate.

Those interviewees willing to suggest tax rates for the state’s consideration offered 10%-20%,

20%-25%, and 25%-30% as reasonable options, and another simply stated that iGaming taxes must

be higher than the brick-and-mortar rates.

Impacts on Casinos through Partnerships with iGaming Operators

As iGaming emerges, casinos are faced with the decision of whether to partner with large brands

like FanDuel or DraftKings, or to create their own in-house solutions and brands. Partnerships

hold the promise of leveraging the brand reach, advertising prowess, and buying power of the

partner. It is important to note that while these partnerships offer significant advantages, each also

presents its own set of challenges.

Table 5: Pros and Cons of Partnership with a National Brand

Pros

Cons

Brand / Advertising

Product Innovation

Customer Experience / Technology

Player Marketing

Media Partnerships / Sponsorships

Buying Power and Brand Reach

Ease

Economic Leakage

Reduced Control

Dependency

Source: The Innovation Group

These items are discussed individually later in the report.

Use of Multi-jurisdictional Gaming Agreements

The Multi-State Internet Gaming Agreement (MSIGA) is the primary multi-jurisdictional

agreement of relevance to a legal iGaming market in Maryland.

The Innovation Group November 15, 2023 Page 9

The MSIGA was established to allow U.S. states to pool their online poker players. This is to

ensure that there are enough poker players online at any given time, which helps in sustaining the

games and making them more attractive for players. The initial states to sign onto the MSIGA

were Delaware and Nevada, joined later by New Jersey and Michigan.

Apart from poker, the MSIGA allows for other iGaming formats to be added to the agreement and

offered by Licensees in member states where such iGaming formats are permitted. For example,

the agreement permits Licensees to offer progressive slot jackpots that accumulate in size based

on play from multiple states (i.e., ‘wide-area progressives’). Even though Michigan and Nevada’s

participation in the MSIGA is limited to online poker by respective state laws, this does not

preclude the other member states (e.g., New Jersey, Delaware) from offering other gaming types

that share players from both states.

Each state continues to regulate and oversee its operators. The MSIGA does not replace a state’s

individual regulations but rather provides a framework for states to share players while maintaining

their regulatory autonomy. The MSIGA doesn’t centralize taxation but rather leaves it to individual

states, though it ensures that states get their appropriate tax revenue.

Estimated Size of the Illegal iGaming Market and Methods to Transition

Players to the Regulated Market

The Innovation Group completed estimates of unregulated online casino gaming, on a regional

basis, for the American Gaming Association in 2022. In brief, we surveyed more than 5,000 U.S.

adults aged 21 and older on their gambling behaviors. We asked survey respondents to indicate

how often in the past year they played slots or table games, their average budget when playing

these types of games, and what percentage of their play occurred online, at a casino, or at

distributed locations (e.g., bars, fraternal halls, gas stations, etc.). We also asked respondents about

their brick-and-mortar slot and table game spend and legal online slot and table game spend in

order to identify respondent tendency to over- or under-report their gambling spend. In other

words, we were able to calibrate respondents’ statements about play at land-based regulated

casinos to the actual size of the land-based casino market to adjust their collective over- or under-

reporting.

Our analysis of this survey data resulted in estimates of illegal online casino revenue, aggregated

to the U.S. census region level. In the Northeastern region, which includes Maryland, we found an

annual illegal online casino revenue per capita of approximately $42, implying an illegal online

casino market in Maryland of roughly $197 million in 2022.

The Innovation Group November 15, 2023 Page 10

Table 6: Maryland Black/Illegal iGaming Market Estimate

Northeast Region Population 21+

43.8 million

Northeast Region Estimated Illegal iGaming Revenue

$1.85 billion

Northeast Region Estimated Illegal iGaming Revenue per Capita

$42

Maryland 2022 Population 21+

4.7 million

Maryland Estimated Illegal iGaming Revenue (2022)

$197 million

Source: The Innovation Group, ESRI

To capture the black market, operators need to be taxed at a reasonable level to allow them the

latitude for substantial marketing and technology/product improvement. Doing so will give them

the opportunity to compete with illegally-operating, untaxed, and unregulated operators that can

reinvest heavily in players with marketing and bonusing programs. Second, there needs to be

alignment among state officials, including the Attorney General, to prioritize enforcement actions

against illegally operating gambling sites. As one interviewee described, success requires “an

aggressive and willing attorney general and a good partnership with the regulator.”

Responsible gaming in all its forms – e.g., prevention and mitigation of problem gambling,

thoughtful oversight and reporting requirements, consumer protections, public and researcher

access to data, and monitoring and strong testing of vendor software – are paramount. We

conclude the report with notes and best practices related to responsible gaming from both the

Maryland Center of Excellence on Problem Gambling and The Innovation Group.

The Innovation Group November 15, 2023 Page 11

U.S.

AMING

ANDSCAPE

Online iGaming proliferates throughout much of the world, including Europe, Latin America, and

Asia. However, when evaluating the iGaming market in Maryland, the more nascent iGaming

environment in the United States is more relevant for several reasons: (1) the customer profile is

similar, (2) the geographic distribution and overall nature of brick-and-mortar casino product is

much more similar, and (3) the continued growth of online sports betting in the United States

provides a natural impetus for the introduction of iGaming.

Since the repeal of PASPA in 2018, many states have authorized online sports betting, but only

seven states have launched legal forms of iGaming: Delaware, New Jersey, Nevada, Michigan,

Pennsylvania, West Virginia, and Connecticut (in that order). Rhode Island also has legalized

iGaming and will launch as early as March 2024. Nevada has online poker only, so we will focus

largely on the other six operating states. Delaware and New Jersey were early adopters of iGaming,

launching their first online casino gambling sites in 2013. In July 2019, Pennsylvania became the

next state to launch legal online gambling sites followed by West Virginia in July 2020. In 2021,

Michigan launched iGaming operations in January, followed by Connecticut in October. Several

other states have since introduced iGaming legislation, including New York, Illinois, Indiana, and

Missouri.

States implementing iGaming are required to make many decisions regarding regulatory

framework, such as who is eligible for licensure, whether license holders may operate multiple

brands or “skins,” and tax rates. In all states, licensure for online slots and tables is restricted to

only brick-and-mortar casino operators. As will be discussed later, this may be primarily due to

factors such as: (1) casino operators have already gone through a stringent licensing process; (2)

casino operators already have strict “Know Your Customer” (“KYC”) and “Anti-Money

Laundering” (“AML”) regulations, and have been trained on these matters; and (3) casino owners

have invested substantially in infrastructure and jobs in the state. The table below summarizes how

U.S. states have approached licensing and tax decisions.

Table 7: Comparison of U.S. iGaming Implementation

State%

Skins%per%License%

holder%

Tax%Rate%on%iGaming%

Delaware

57% slots – 20% tables (100% on the first $3.75m revenue)

New Jersey

20%

Pennsylvania

Unlimited

54% slots – 16% tables

West Virginia

15%

Michigan

20% – 28% (graduated)

Connecticut

18%

Rhode Island

61% Slots – 15.5% Tables

Source: Various State Gaming Regulatory Bodies

Delaware’s iGaming is operated by the lottery, so there are no private commercial skins.

The Innovation Group November 15, 2023 Page 12

Delaware

Online gambling in Delaware was legalized in 2012 with the passage of House Bill 333

, and the

first online gambling sites launched in November 2013. Since inception, Delaware has allowed

online poker, slots, and table games through a single platform manager. Each of the state’s three

brick-and-mortar casinos may offer online gaming, though technology providers are licensed by

the state and must go through a selection process with the Lottery. From its launch in 2013, a

collaboration of 888 Holdings and Scientific Games was the sole platform provider for online

gaming in the state, so each of the three brick-and-mortar licensees utilized this platform for its

online gaming product. In 2023, the Delaware Lottery conducted a Request for Proposal (RFP)

process for a platform and recently selected Rush Street Interactive to be its sole platform provider.

In 2015, Delaware signed the Multi-State Internet Gaming Agreement (MSIGA) with Nevada,

allowing poker players from both states to play against each other. In 2018, New Jersey joined this

agreement, and in April 2022, Michigan joined as well.

Revenue data shows the iGaming market continues to grow following brick-and-mortar casinos

re-opening post COVID, but the revenue per capita is still much lower than in other states.

Table 8: Delaware iGaming Trends

Year

Revenue

Annual Growth (%)

2013

$251,397

2014

$2,091,319

732%

2015

$1,798,839

-14%

2016

$2,906,887

62%

2017

$2,391,940

-18%

2018

$2,591,128

2019

$3,569,677

38%

2020

$8,448,037

137%

2021

$10,562,586

25%

2022

$13,630,043

29%

2022 Population (21+)

764,527

2022 Revenue Per Capita (21+)

$17.83

Source: Delaware Lottery

The tax environment for online gaming in Delaware is as follows: the state receives the first $3.75

million in Gross Gaming Revenue (“GGR”) generated state-wide, and marginal revenue is taxed

at 47% for slots and 15.5% for tables. An additional 10% of slot revenue and 4.5% of table revenue

goes to the horse racing industry. Prior to 2020, online casino GGR was effectively taxed at 100%

since statewide revenue totals had yet to exceed the $3.75 million threshold.

An Act to Amend Titles 4 and 29 of the Delaware Code Relating to the State Lottery. HB 333 (2012)

The Innovation Group November 15, 2023 Page 13

New Jersey

Online gambling in New Jersey was legalized in February 2013 with the passage of Bill A2578

and the first online gambling sites began operating in November of that same year. Each license

holder is allowed five skins, or sites. Currently, there are 8 land-based casinos offering an online

gaming option and 37 total authorized sites.

New Jersey is by far the leading domestic online gaming market, with a pre-pandemic iGaming

market size approaching $0.5 billion. New Jersey offers a full online casino experience, allowing

operators to offer slots, poker, and table games. Players may create and fund an account from

anywhere in the world; however, they must physically be in New Jersey to play.

Even as brick-and-mortar casinos re-opened and returned to pre-pandemic revenue levels, New

Jersey saw continued strengthening of the iGaming market.

Table 9: New Jersey iGaming Trends

Year

Revenue

Annual Growth (%)

2013

$7,058,061

2014

$110,397,924

1464%

2015

$148,880,180

35%

2016

$196,719,333

32%

2017

$245,605,981

25%

2018

$298,700,902

22%

2019

$482,695,306

62%

2020

$970,337,571

101%

2021

$1,366,902,642

41%

2022

$1,619,397,607

19%

2022 Population (21+)

7,004,722

2022 Revenue Per Capita (21+)

$231.19

Source: New Jersey Division of Gaming Enforcement

Online gambling GGR is subject to a 15% state tax and an additional 5% of GGR goes to the

Casino Reinvestment Development Authority (CRDA). By comparison, brick-and-mortar gaming

revenue is subject to an 8% state tax and an additional 2.5% community investment alternative

tax. This higher tax rate that NJ chooses to impose on online gaming may reflect two economic

realities: first, margins for online gaming ought to be higher than margins for land-based gaming

due to reduced labor and reduced facilities costs, though notably there are substantial marketing

costs that operators incur to produce robust and competitive iGaming markets. Second, the jobs

supporting iGaming, and therefore the downstream economic impacts from associated payroll, are

Authorizes Internet gaming at Atlantic City casinos under certain circumstances. Assembly Bill 2578 (2012-2013)

The Innovation Group November 15, 2023 Page 14

largely based in other states or other countries. It is therefore reasonable to incentivize land-based

operators, who provide jobs and economic benefit locally, with a lower tax rate.

Nevada

Online poker was legalized in February 2013 with the passage of Assembly Bill 114

, and the

player pool was restricted to adults located within Nevada. In 2015, the state signed a liquidity

agreement with Delaware, allowing poker players from both states to play against each other.

Despite many companies applying for poker licenses, only three providers have ever offered

licensed real money online poker in Nevada.

Due to the limited number of players, the market struggled to gain traction. Ultimate Poker, which

opened to players in early 2013, shut down in November 2014. The other two – WSOP.com and

Real Gaming Online Poker – opened in late 2013 and early 2014, respectively. Now, only

WSOP.com still exists, and the Nevada Gambling Control Board has stopped publishing revenue

reports due to low revenues from online gambling. Online poker revenue is subject to the same

6.75% state tax imposed on land-based gaming revenue.

Pennsylvania

In October 2017, Pennsylvania legalized online versions of poker, casino games, daily fantasy

sports, and sports betting after the state’s unsuccessful attempt in 2013. The state’s first two online

casinos launched in July 2019, making Pennsylvania the fourth U.S. state to legalize online

gambling. House Bill 271 was the comprehensive bill that brought iGaming and various new forms

of gaming to the state

. After undergoing multiple revisions throughout the years, the bill’s final

version legalized iGaming licenses for each of the state’s land-based casinos for online poker,

slots, and table games. VGT’s (video gaming terminals) at truck stops, daily fantasy sports, the

construction of ten category 4 (satellite) casinos, and sports betting were also authorized.

Table 10: Pennsylvania iGaming Trends

Year

Revenue

Annual Growth (%)

2019

$33,599,749

2020

$565,157,898

1582%

2021

$1,112,855,937

97%

2022

$1,364,392,468

23%

2022 Population (21+)

9,866,272

2022 Revenue Per Capita (21+)

$137.55

Source: Pennsylvania Gaming Control Board

Revises provisions governing interactive gaming. Assembly Bill 114 (2013)

An act amending Titles 3 (Agriculture) and 4 (Amusements) of the Pennsylvania Consolidated Statutes,

extensively revising gaming provisions as follows. House Bill 271. (2017-2018)

The Innovation Group November 15, 2023 Page 15

Pennsylvania’s online gaming tax rates vary based on the revenue channel: online table games and

poker are taxed at 16% while online slot revenue is taxed at 54%. These are the same rates that

apply to brick-and-mortar slot and table revenue.

West Virginia

West Virginia legalized online casinos in March 2019, with passage of the West Virginia Lottery

Interactive Wagering Act

. The law allows each of the state’s five land-based casinos to apply for

a permit to offer online poker and casino games and offer up to three separate iGaming websites

per permit. The state’s first online casino launched in July 2020.

In its first 12-months of operation, West Virginia iGaming operators earned $30 million in GGR,

which pales in comparison to first year revenue numbers for other emerging iGaming markets. A

potential explanation for this is weakened consumer confidence around mobile wagering. Prior to

iGaming going live, West Virginia experienced a rocky mobile sports betting launch that included

outages and disruptions to both in-person and mobile wagering.

Table 11: West Virginia iGaming Trends

Year

Revenue

Annual Growth (%)

2020

$9,185,010

2021

$59,953,010

553%

2022

$114,000,681

90%

2022 Population (21+)

1,377,604

2022 Revenue Per Capita (21+)

$82.75

Source: West Virginia Lottery

Online gambling revenue in West Virginia is taxed at 15%. By comparison, revenue from video

lottery terminals in the state are taxed at 49% and table revenue is taxed at 35%.

West Virginia Lottery Interactive Wagering Act. West Virginia Code Chapter 29 Article 22E. (2019)

The Innovation Group November 15, 2023 Page 16

Michigan

In 2019, Michigan passed the Lawful Internet Gaming Act

legalizing online casinos. The law

allows each of the state’s land-based commercial and tribal casinos to apply for a permit to offer

online poker and casino games. Online casinos launched in the state in January 2021 and generated

over $1 billion in gaming revenue during their first year of operation.

Table 12: Michigan iGaming Trends

Year

Revenue

2021

$1,113,999,386

2022

$1,582,454,458

2022 Population (21+)

7,579,080

2022 Revenue Per Capita (21+)

$208.79

Source: Michigan Gaming Control Board

Online gambling revenue in Michigan is taxed on a sliding scale ranging from 20 to 28% based on

adjusted gross receipts. For context, commercial land-based casino revenue is taxed at 19% (8.1%

to the state + 10.9% to the host city).

Connecticut

In 2021, Connecticut passed House Bill 6451

legalizing online casinos and sports betting in the

state. While the state does not have any commercial casinos, the law allows the state’s tribal casino

operators – the Mohegan Tribe and the Mashantucket Pequot Tribe – to offer iGaming and sports

wagering. Online casinos launched in the state in October 2021 and generated $159 million in

GGR during their first twelve months of operation.

Table 13: Connecticut iGaming Trends

Year

Revenue

2021

$36,831,240

2022

$225,382,371

2022 Population (21+)

2,725,705

2022 Revenue Per Capita (21+)

$82.69

Source: Connecticut Department of Consumer Protection

Connecticut taxes online casino games at 18%, with the rate rising to 20% five years after launch

(2026).

Lawful Internet Gaming Act. Act 152. (2019)

An Act Concerning The Authorization, Licensing And Regulation Of Online Casino Gaming, Retail And Online

Sports Wagering, Fantasy Contests, Keno And Online Sale Of Lottery Tickets. House Bill 6451. (2021)

The Innovation Group November 15, 2023 Page 17

Rhode Island

On June 22, 2023, Rhode Island Governor Dan McKee signed Senate Bill 948

into law, legalizing

iGaming across the state. The bill allows the state lottery to contract with Bally’s, which currently

operates two casinos in the state, to operate online slots and table games as early as March 1, 2024.

Slot revenue will be taxed at 61%, with an additional 1.45% going to the towns of Lincoln and

Tiverton, while table games will be taxed at 15.5%, with the same towns receiving an additional

1%.

Video Lottery Games, Table Games And Sports Wagering. Senate Bill 948. (2023)

The Innovation Group November 15, 2023 Page 18

ARYLAND I

AMING

DDRESSABLE

ARKET

In this section, we discuss the potential iGaming market size in Maryland. We summarize the per

capita performance in other states, and we use this information to deliver a forecast for Maryland.

Maryland iGaming Market Potential

Below, we show iGaming revenue per adult (21+) by market and year for all legalized U.S.

iGaming markets. Delaware, for its part, has had a troubled iGaming launch from the start. It is

run through the state’s lottery with no national brands involved in the marketing, and it was never

able to get the level of trial that we believe would come from a branded provider with a top-notch

product offering. As a result, Delaware’s iGaming revenue per adult is below $20 – and well below

other U.S. states.

Table 14: 2022 iGaming Revenue per Adult for Legal U.S. iGaming Markets

State

Full(Year(of(

Operations

Revenue(per(

Adult

New Jersey

$231

Michigan

$209

Pennsylvania

$138

West Virginia

$83

Connecticut

$83

Delaware

$17

Sources: Gaming Regulatory Bodies, ESRI

We believe that the strongest states in per capita revenue – Michigan, Pennsylvania, and New

Jersey – will be the most apt comparables for Maryland. West Virginia’s market has significant

growth potential, but its sports betting launch in 2019 was fraught with technological problems

that created customer service issues and an inability to bet on mobile apps. We believe this, along

with only two of the five potential licensees in the state offering mobile and online casino in the

early stages of the market (FanDuel and BetMGM launched in 2020, but other licensees waited

until 2021), played an important role in West Virginia’s underperformance in years 1 and 2

Meanwhile, Pennsylvania and Michigan achieved per capita revenues in year 1 that exceeded New

Jersey’s sixth-year revenues, demonstrating the large revenue opportunity that iGaming represents

and the technology and preparedness improvements on the operator side between launching New

Jersey in 2013 and launching in emerging states today.

Michigan launched in January 2021, so we regard 2021 as the first “full year” of operations.

In 2023, West Virginia is performing nearly 40% better year-over-year than in 2022, suggesting that they are

overcoming their slow startup.

The Innovation Group November 15, 2023 Page 19

iGaming Market Size in Maryland

To estimate the market potential for iGaming in Maryland, we modeled spend per capita using

average iGaming spend data in comparable states, scaled to reflect market maturation over time,

and multiplied the scaled figure by annual forecasts for Maryland’s gambling-age population to

project gross iGaming revenue by year for the state.

To model spend per capita in Maryland, we assume that gamblers in Maryland will generally

behave like gamblers in other states where iGaming is legal and operational. While there are likely

regional differences in iGaming spending behavior due to the availability of brick-and-mortar

gaming, the structure of the online market, and demographic differences between populations,

these differences are likely to be subtle. Further, Maryland is a relative neighbor to multiple states

that have legalized iGaming (Pennsylvania, West Virginia, Delaware, and New Jersey), so these

regional differences are likely to be even less pronounced. As such, to model spend per capita, we

calculate aggregate per capita spend across all legal iGaming states (except Nevada), summing

2022 iGaming spend across states and dividing by the sum of the 2022 population over 21 years

old in those states. This results in a spend per capita of approximately $169 in 2028.

While this number captures the spending behavior of the individuals in various states, it’s

important to note that each of these states is at a different stage of market development – it’s

unlikely Maryland will realize this full per capita spend metric in its first full year of operation. In

other words, it is common for spend per capita to increase somewhat rapidly, or ‘ramp,’ in the first

several years of operation and then to level off.

There is considerable disparity in comparable states in the ramp to full market development. States

like Pennsylvania and Michigan appear to be growing revenue per capita more slowly, suggesting

that they realized much of their market growth within a few years of launching. In contrast, New

Jersey had a slower start and has grown at a steadier pace. Even after ten years, New Jersey

iGaming revenue per capita is still growing. West Virginia’s growth seems to more closely mirror

the largely post-COVID markets of Pennsylvania and Michigan, though its iGaming revenue per

capita is much smaller. Delaware presents a difficult comparable, given its poor adoption. With

the recent selection of Rush Street Interactive to partner with Delaware Lottery, we expect to see

Delaware’s iGaming revenue take on a more traditional growth trajectory, though the launch may

have less luster given the past decade of unremarkable offerings.

Based on recency, we believe that Maryland is likely to follow a ramp to market maturity that

looks more similar to Michigan’s, Pennsylvania’s, and West Virginia’s and less like New Jersey’s

or Delaware’s. As such, we believe that our modeled per capita spend figure of $169 represents

what is achievable in the third full year of iGaming operation in Maryland, and our models suggest

that this number represents approximately 90% of total ramped spend per capita. We model 2026

as the first full year of operation based on the earliest possibility of a referendum in Maryland and

the subsequent regulatory development and licensure of technology providers. This results in total

iGaming revenue of approximately $905 million with a fully ramped market in 2029 – i.e., growth

from 2030 forward will mirror adult population and Gross Domestic Product (“GDP”) growth.

Our projections of revenue by year are below.

The Innovation Group November 15, 2023 Page 20

Table 15: Maryland iGaming Gross Revenue Forecast

Year

Ramp

Population 21+

Spend per Capita

iGaming Gross Revenue ($MM)

2026

60%

4,751,213

$112.26

$533.4

2027

75%

4,772,985

$140.51

$670.7

2028

90%

4,794,856

$168.84

$809.6

2029

100%

4,816,828

$187.86

$904.9

2030

100%

4,838,900

$188.11

$910.2

2031

100%

4,861,073

$188.36

$915.6

2032

100%

4,883,349

$188.62

$921.1

Source: The Innovation Group, ESRI

Illegal Market Size

The Innovation Group has previously completed estimates of unregulated online casino gaming

on a regional basis for the American Gaming Association

in 2022. In brief, we surveyed more

than 5,000 U.S. adults aged 21 and older on their gambling behaviors. We asked survey

respondents to indicate how often in the past year they played slots or table games, their average

budget when playing these types of games, and what percentage of their play occurred online, at a

casino, or at distributed locations (e.g., bars, fraternal halls, gas stations, etc.). We also asked

respondents about their brick-and-mortar slot and table game spend and legal online slot and table

game spend in order to identify respondent tendency to over- or under-report their gambling spend.

In other words, we were able to calibrate respondents’ statements about play at land-based

regulated casinos to the actual size of the land-based casino market to adjust their collective over-

or under-reporting.

We asked respondents who indicated that they played slots or table games online to select from a

list of 22 prominent online slot and table game providers (including both legal and illegal sites)

the sites on which they played and the percentage of their play on each site. We included an

option for respondents to write-in sites on which they bet that were not included in the list and

are comfortable that the list captured the most popular online slot and table game providers.

The chart below shows the nationwide percentage of iGaming respondents who reported betting

only in legal channels, in both legal and illegal channels, and in only illegal channels.

“Sizing the Illegal and Unregulated Gaming Markets in the United States” American Gaming Association.

November 2022. https://www.americangaming.org/wp-content/uploads/2022/11/Sizing-the-Illegal-and-Unregulated-

Gaming-Markets-in-the-US.pdf

The Innovation Group November 15, 2023 Page 21

Figure 1: Percentage of Players who Participated in iGaming in Legal vs Illegal Channels

Our analysis of this survey data resulted in estimates of illegal online casino revenue aggregated

to the U.S. census region level. In the Northeastern region, which includes Maryland, we found an

annual illegal online casino revenue per capita of approximately $42, implying an illegal online

casino market in Maryland of roughly $196.7 million in 2022.

Table 16: Maryland Black/Illegal iGaming Market Estimate

Northeast Region Population 21+

43,768,409

Northeast Region Estimated Illegal iGaming Revenue

$1,849,130,416

Northeast Region Estimated Illegal iGaming Revenue per Capita

$42.2

Maryland 2022 Population 21+

4,665,897

Maryland Estimated Illegal iGaming Revenue (2022)

$196,668,484

Source: The Innovation Group, ESRI

The Innovation Group November 15, 2023 Page 22

iGaming Impact on Brick-and-Mortar Casino Market

A core component of this work is to gauge the impact of iGaming on the brick-and-mortar gaming

market. To accomplish this, we performed our own internal modeling of how the launch of

iGaming affected brick-and-mortar casinos in other markets.

Our review of iGaming’s impact on casinos compares revenue growth from 2019 to 2022 in states

with iGaming against those without it. In 2020, while brick-and-mortar casinos were closed,

iGaming revenues soared. They show no signs yet of slowing down despite U.S. casinos having

been reopen now for some time.

To estimate the impact of iGaming launching, we compared brick-and-mortar casino performance

in 2019 and 2022 between states with and without iGaming. In selecting our non-iGaming states

for this study, we excluded:

• Markets with heavy tourism play (e.g., Nevada),

• Markets with major non-pandemic related changes (e.g., new property opening), and

• Markets with significant tribal competition, as these properties are not required to report

revenue.

For the non-iGaming group, these states were: Colorado, Florida, Illinois, Indiana, Iowa, Kansas,

Maine, Missouri, New York, Ohio, and Rhode Island. We take a blended average of population,

GDP, and gross gaming revenue in each state in order to model the overall growth in the gaming

industry during the period in question. While individual gaming markets fluctuate for a variety of

reasons, a weighted average across many markets reduces the noise produced by regional variation.

To compare brick-and-mortar casino performance between 2019 and 2022, we calculated ‘baseline

growth’ rates for each group (states with iGaming, and states without) based on how much each

group’s total population and GDP changed during the period. We did so to adjust for increases and

decreases in a state’s or region’s brick-and-mortar gaming revenues due to changes in population

or the overall economic environment. Our findings are substantially the same even if we omit the

normalization by GDP and population growth.

The charts below contain brick-and-mortar gaming revenue performance data for non-iGaming

states during our analysis window. Revenues stated exclude sports betting revenue and include

only commercial gaming revenue from casinos on a same-store basis. Among these states, while

there is state-to-state volatility, in aggregate the brick-and-mortar gross gaming revenue in 2022

has grown approximately 10.6% on average versus 2019 levels for non-iGaming states. After

accounting for baseline growth in population (3.1%) and GDP (5.4%), the net growth in gaming

revenue for these states is 2.0%.

The Innovation Group November 15, 2023 Page 23

Table 17: Commercial Brick & Mortar Gaming Revenue ($ millions): Non-iGaming States

State

2019 GGR

2022 GGR

GGR Growth

Baseline Growth

Net GGR Growth

Colorado

$833.7

$1,060.0

27.1%

10.6%

16.6%

Florida

$574.6

$694.0

20.8%

15.1%

5.7%

Illinois

$1,354.2

$1,348.7

-0.4%

4.0%

-4.5%

Indiana

$2,059.6

$2,317.2

12.5%

7.8%

4.7%

Iowa

$1,467.5

$1,765.2

20.3%

5.3%

15.0%

Kansas

$416.2

$401.6

-3.5%

6.7%

-10.2%

Maine

$145.2

$165.1

13.7%

11.3%

2.4%

Missouri

$1,729.5

$1,748.4

1.1%

5.6%

-4.5%

New York

$2,537.1

$2,655.9

4.7%

8.3%

-3.6%

Ohio

$1,941.5

$2,332.8

20.2%

6.8%

13.4%

Rhode Island

$504.8

$508.8

0.8%

8.8%

-8.1%

Sources: Various State Gaming Regulatory Bodies, US Bureau of Labor Statistics, US Census

Table 18: Non-iGaming State Brick & Mortar GGR Growth Summary

2019

2022

Growth

Brick & Mortar GGR

$13,563,835,022

$14,997,532,676

10.6%

GDP ($MM)

$5,289,229

$5,572,528

5.4%

Population

68,971,306

71,081,611

3.1%

Casino GGR Growth

Net of Population and GDP Growth

2.0%

Source: The Innovation Group, ESRI, US Bureau of Labor Statistics

The Innovation Group November 15, 2023 Page 24

The charts below contain brick-and-mortar gaming revenue performance data for states with

iGaming. Among these states, brick-and-mortar gross gaming revenue in 2022 is slightly lower

than 2019 levels, or -2.4%. After accounting for baseline growth in population (3.1%) and GDP

(2.7%), we find a net brick-and-mortar gaming revenue growth of -8.2%.

Table 19: Commercial Brick & Mortar Gaming Revenue ($ millions): iGaming States

State

2019 GGR

2022 GGR

GGR Growth

Baseline Growth

Net GGR Growth

Connecticut

$982.3

$843.0

-14.2%

2.1%

-16.3%

Delaware

$366.0

$405.3

10.7%

7.1%

3.7%

Michigan

$1,454.3

$1,257.0

-13.6%

6.9%

-20.5%

New Jersey

$2,686.6

$2,775.5

3.3%

9.9%

-6.6%

Pennsylvania

$2,363.1

$2,390.8

1.2%

4.4%

-3.2%

West Virginia

$604.6

$585.8

-3.1%

-0.7%

-2.4%

Sources: Various State Gaming Regulatory Bodies, ESRI, US Bureau of Labor Statistics

Table 20: iGaming State Brick & Mortar GGR Growth Summary

2019

2022

Growth

Brick & Mortar GGR

$8,456,791,889

$8,257,307,281

-2.4%

GDP ($MM)

$2,130,162

$2,187,998

2.7%

Population

28,492,507

29,368,993

3.1%

Casino GGR Growth

Net of Population and GDP Growth

-8.2%

Source: The Innovation Group, ESRI, US Bureau of Labor Statistics

For the period between 2019 and 2022, non-iGaming states grew at 2% relative to baseline, while

iGaming states grew at -8.2% relative to baseline, implying an impact of -10.2% on brick-and-

mortar gross gaming revenue from iGaming.

Table 21: iGaming Impact on Brick & Mortar GGR

Growth

Net GGR Growth, iGaming States

-8.2%

Net GGR Growth, Non-iGaming States

2.0%

Impact of iGaming on B&M GGR

-10.2%

Source: The Innovation Group

In 2022, brick-and-mortar casinos in Maryland earned a total of approximately $2.05 billion in

GGR. Assuming Maryland population and GDP continue to grow at their recent pace, Maryland

brick-and-mortar gaming revenues would be expected to reach approximately $2.14 billion by

2029 in the absence of iGaming.

With a fully ramped iGaming market, a -10.2% impact means that brick-and-mortar gross gaming

revenue would be expected to drop to approximately $1.92 billion in 2029, or a loss of

approximately $218.5 million dollars. This $218.5 million dollars of brick-and-mortar GGR loss

is approximately 24.2% of expected 2029 iGaming revenues of $904.9 million, implying

The Innovation Group November 15, 2023 Page 25

approximately 75.8% of iGaming revenue, or $686.3 million, is incremental to the overall gaming

market.

Table 22: Maryland iGaming Cannibalization and Market Growth

Year

B&M GGR,

Expected with

No iGaming

B&M GGR,

Impacted by

iGaming

B&M GGR Loss

Due to iGaming

iGaming GGR

Overall Increase in

Gaming Revenue

(All Channels)

2029

$2,137.6

$1,919.0

$218.5

$904.9

$686.3

2030

$2,150.2

$1,930.4

$219.8

$910.2

$690.4

2031

$2,163.0

$1,941.9

$221.1

$915.6

$694.5

2032

$2,175.8

$1,953.4

$222.5

$921.1

$698.6

Source: The Innovation Group

During the time period being studied, there were expansions of land-based gaming in both West

Virginia and Pennsylvania. With only six iGaming states to study, and with Pennsylvania and West

Virginia being Maryland’s neighbors, we completed the analysis including those states. However,

we note that both states had an expansion of distributed forms of land-based gaming – taverns in

West Virginia and truck stops in Pennsylvania – and that Pennsylvania issued Category 4 casino

licenses for facilities to operate up to 750 slot machines. Since this gaming expansion surely had

some adverse impact on the existing land-based casinos, we believe that the 10.2% impact is

slightly overstated, and that the actual effect is more likely between 8% and 9%.

iGaming Impact on Lottery Sales

We also ask the question of whether iGaming will impact the sale of lottery products within the

state. We take the same approach in our analysis of iGaming’s impact on lottery sales as we do in

our brick-and-mortar impact analysis. We compared lottery sales data in 2019 and 2022 between

states with and without iGaming, adjusting for baseline growth in population and GDP. For this

analysis, we used data from all states that offered lottery products except Mississippi, which

launched its lottery in 2019 (Alabama, Alaska, Hawaii, Nevada, and Utah are the remaining US

states without lotteries).

The following tables summarize GDP, population, and lottery sales growth for iGaming and non-

iGaming states between 2019 and 2022. Lottery sales growth net of baseline in non-Casino states

was approximately 12.0%, while the same metric in iGaming states was approximately 11.9%.

Table 23: iGaming State Lottery Sales Growth

2019

2022

Growth

Lottery Sales ($MM)

$13,598

$16,016

17.8%

GDP ($MM)

$2,130,162

$2,187,998

2.7%

Population

28,492,507

29,368,993

3.1%

Lottery Sales Growth Net of Population and GDP Growth

11.9%

Source: The Innovation Group, ESRI, US Bureau of Labor Statistics, Various State Lottery Organizations

The Innovation Group November 15, 2023 Page 26

Table 24: Non-iGaming State Lottery Sales Growth

2019

2022

Growth

Lottery Sales ($MM)

$62,756

$75,716

20.7%

GDP ($MM)

$15,778,179

$16,617,680

5.3%

Population

199,560,561

205,965,628

3.2%

Lottery Sales Growth Net of Population and GDP Growth

12.0%

Source: The Innovation Group, ESRI, US Bureau of Labor Statistics, Various State Lottery Organizations

The above growth rates in states with and without iGaming are nearly equal, as shown in the

following table. This implies that there is little-to-no impact of iGaming on lottery, i.e., that lottery

players are unlikely to change their lottery behavior as a result of the introduction of online casinos.

Table 25: iGaming Impact on Lottery Sales (Approach #1, using all Lottery States)

Growth

Net Lottery Growth, iGaming States

11.9%

Net Lottery Growth, Non-iGaming States

12.0%

Impact of iGaming on Lottery Sales

-0.04%

Source: The Innovation Group

We understand that the choice of comparative states could plausibly impact the magnitude and

directionality of this result. In particular, this analysis includes in lottery sales those states that

offer iLottery products, which may more plausibly be cannibalized by competing online gaming

offerings. Given the state of Maryland does not offer iLottery products, we repeat our analysis,

this time excluding states from the non-iGaming group that offer iLottery (Georgia, Illinois,

Kentucky, New Hampshire, North Carolina, North Dakota, Rhode Island, and Virginia). Since

iLottery states have grown lottery revenue faster than non-iLottery states, by removing the former

from the analysis, we actually see stronger retail lottery growth in states with iGaming than we do

in states without iGaming and without iLottery.

Table 26: Non-iGaming State Lottery Sales Growth – iLottery States Excluded

2019

2022

Growth

Lottery Sales ($MM)

$49,255

$58,820

19.4%

GDP ($MM)

$13,063,194

$13,763,079

5.4%

Population

163,002,408

168,218,738

3.2%

Lottery Sales Growth

Net of Population and GDP Growth

10.7%

Source: The Innovation Group, ESRI, US Bureau of Labor Statistics, Various State Lottery Organizations

The Innovation Group November 15, 2023 Page 27

Table 27: iGaming Impact on Lottery Sales – iLottery States Excluded

Growth

Net Lottery Growth, iGaming States

11.9%

Net Lottery Growth, Non-iGaming States

10.7%

Impact of iGaming on Lottery Sales (Approach #2, Excluding iLottery States)

+1.2%

Source: The Innovation Group

However, we believe that it is unlikely that iGaming would bolster lottery sales. We interpret this

figure, in combination with our assessment above, to suggest that iGaming has no material impact

on lottery.

iGaming Impact on Bingo, OTB Facilities, and Racetracks

We rely on the forecasted impacts of iGaming on land-based casino and lottery to drive our

forecasted impacts on bingo and off-track betting (“OTB”).

Recalling that our approach has been to measure gaming growth in iGaming states versus growth

in non-iGaming states, a problem with a bingo analysis is that electronic/video bingo games are

not permitted in most states. In reading online reviews of the bingo halls in Maryland, we find

many references to the “slots” at these facilities. As a result, regardless of the technical

differences between electronic instant bingo machines and slot machines, players appear to be

generally unaware that bingo machines are not slot machines. As such, we anticipate the impact

of iGaming on electronic bingo machines to be approximately 10%, just as with the impact on

land-based casino gaming. This also may be overstating the impact for three reasons. First, bingo

halls tend to be smaller, community-oriented facilities, and the high levels of engagement that

come along with community-building may garner additional loyalty. Second, the bingo facilities

have a paper-card bingo business to go along with their electronic bingo, and we anticipate that

the electronic instant bingo machines would be much more heavily impacted than the paper-card

bingo side of the business. Lastly, as we’ve already noted, the 10.2% impact for casinos may be

slightly overstated to begin with.

A similar problem exists in trying to measure the impact that iGaming has on OTBs and

racetracks. Surveying the six states with iGaming, we see a variety of scenarios, as follows.

• Pennsylvania: Migrated all of its race wagering into casinos or mini-casinos

• New Jersey: Saw large increases in visitation at racetracks due to sports betting licenses

being granted to racetracks

• Delaware: All race wagering is at casinos

• West Virginia: All race wagering is at casinos

• Michigan: Only offers race wagering at one track, others had closed by 2018/2019

This would leave us with Connecticut as a potential comparable, but it only introduced iGaming

very recently.

Having studied horse racing and casino databases for decades, we would categorize the horse

betting fans as not having strong overlap with casino clientele, which will skew younger and

The Innovation Group November 15, 2023 Page 28

more female (even in the online realm) than typically older male racing enthusiasts. With OTBs

offering a very specific product and with limited overlap in database, we believe that the impact

of iGaming on OTBs will be near zero, similar to lottery.

The Innovation Group November 15, 2023 Page 29

EST

RACTICES

To uncover best practices enacted in other states, The Innovation Group conducted a series of

interviews. We discussed a range of topics related to iGaming legislation with current and former

legislators, regulators, land-based casino operators inside and outside of Maryland, and online

gaming operators. In all, we interviewed at least 32 individuals representing at least 17

organizations. We provide a topical review of key considerations below.

Discussion of Other States and Legislative Models

Should passage of iGaming become a priority for Maryland, it is possible that the bill will take

inspiration from aspects of other states’ existing iGaming bills. Interviewees generally suggest that

Maryland should consider the New Jersey and Michigan legislation, as those states have fostered

healthy and burgeoning iGaming markets that produce economic benefit for both the state and the

state’s existing casinos. Key aspects of the bills in those states include, but are not limited to: (1)

licenses tethered to existing brick-and-mortar casino licenses, (2) a reasonable tax rate, (3) gaming

board oversight, and (4) reasonable responsible gaming requirements.

As discussed earlier in the report, the iGaming environments in West Virginia and Delaware are

challenged, and Connecticut is small, new, and only has two casinos/licenses. One interviewee

commented that “no one really tried” to create a market in Delaware and that the economics of the

deal for the casinos were such that a substantial investment in operations and marketing would not

be worthwhile (though, overall, there was some optimism about the pending transition of vendor

to Rush Street Interactive). It was also pointed out that the three states with lottery oversight of

iGaming – West Virginia, Delaware, and Connecticut – are the worst performing. Though most

interviewees believed that it was appropriate for iGaming to fall under the oversight of a gaming

commission, some believed that governance could successfully fall to the lottery so long as the

staff charged with that responsibility was dedicated to and experienced with iGaming. We note

that Maryland has a joint Lottery and Gaming Commission that has experience in both lottery and

gaming operations.

Despite a growing market, when asked why Pennsylvania shouldn’t be the model for Maryland,

the typical concerns cited by interviewees were its high tax rate and split tax structure between

slots and tables. These will be discussed further in the subsection on tax.

Lastly, there were strong suggestions to “future-proof” the market by setting broad frameworks in

legislation and allowing the regulators to make adaptable rules.

Cannibalization of Brick-and-Mortar Gaming

In this report, we have provided our forecasts of cannibalization of brick-and-mortar gaming.

While some interviewees held similar views as to the magnitude of such cannibalization, some

others believed that there was little-to-no cannibalization of the brick-and-mortar casino. Among

the interviewees, a common theme was, “we believe there will be a small amount of

cannibalization eventually, but we don’t see too much in the data yet.” One interviewee said that

in other states that offer iGaming, they don’t feel that there was cannibalization at their property.

The Innovation Group November 15, 2023 Page 30

Another made the case that operators that have both brick-and-mortar and online offerings see

mostly new-to-brand consumers on the online side, citing 2017 testimony

by David Satz of

Caesars Entertainment to the Pennsylvania legislature where he mentioned that in New Jersey,

80% of their online consumers were new-to-brand, i.e., not already in the Caesars database. And

of the remaining 20%, nearly half (46%, or 9.2% of the total) were inactive players that Caesars

was able to get to return to one of its brick-and-mortar properties by utilizing the online platform

and associated cross-marketing opportunities to reengage those customers. To this end, many

casino operators with brick-and-mortar and online presences also utilize the casino cage as a

deposit and withdrawal point. Unsurprisingly, as one operator mentioned, consumers who

withdraw at the casino cage are likely to have casino play on the same day. Many also mentioned

that even if there is modest cannibalization, the aggregate of online casino and land-based casino

is substantially larger than land-based casino alone, benefitting both the operators (under a model

where online licenses are tethered to land-based licenses) and the state.

Others strongly believe that cannibalization of land-based casinos is evident in existing markets

and that there will be cannibalization of land-based gaming in Maryland. Some provided

arguments that were variations of the approach that we provided above in our assessment of

cannibalization. Others argued philosophically that we’ve seen online business disrupt land-based

business in nearly every retail sector, so clearly online gaming will pull some fraction of players

out of casinos. Some discussed staffing declines at their properties, though this is an industry-wide

phenomenon at present and may not be attributable to the rise of online gaming.

Several interviewees pointed to individual state performances to underscore their views on

cannibalization. Among those claiming that there is no cannibalization, New Jersey was generally

cited. However, in the early days of online gaming in New Jersey, Atlantic City was in decline due

to Pennsylvania’s emerging land-based gaming industry. In more recent years, Atlantic City has

benefitted from the opening and subsequent stabilization of new casinos, particularly Ocean and

Hard Rock. Similarly, one interviewee argued that West Virginia casinos have declined in slot

revenue from 2018 to 2022 due primarily to expansion in “LVLs” or Limited Video Lottery

machines at bars and taverns, as the expansion of land-based gaming through LVLs provides

would-be casino goers an alternative form of physical gaming. We provide these examples to

caution that individual state performance figures always require the context of the regional land-

based gaming market dynamics and legislative changes.

Tax Rates and Structure

If an online gaming bill were to be drafted in Maryland, the proposed tax rate is certain to be a

topic of discussion. Many experts, including ourselves, have generally argued that philosophically,

online tax rates should be higher than land-based tax rates based on the land-based operations

incurring labor costs and physical development costs that exceed those of online gaming.

Moreover, those land-based gaming jobs are within the state, and the development produces

construction jobs in the state, so there is more labor-based economic impact in the state from land-

https://www.legis.state.pa.us/WU01/LI/TR/Transcripts/2017_0032T.pdf

The Innovation Group November 15, 2023 Page 31

based gaming than from online gaming. With online gaming, there is land-based job creation (e.g.,

head of interactive gaming, studios for live dealer online games), but job creation may be

substantially lower than the reduction of variable labor (e.g., table games dealers or slot machine

attendants) coming from cannibalization of land-based gaming.

However, online gaming requires customer acquisition, and this is expensive. Operators need

operating capital to market to consumers who are new to online casino, but also those who are

currently playing on sites that are illegal and unregulated in Maryland. Moreover, operators need

to constantly reinvest in their technology so that they can bring a product offering and customer

experience that is a competitive option versus unregulated sites that pay no tax and offer no

consumer protection.

With Maryland’s existing land-based gaming tax at current levels, the general view from operators

has been that an online gaming tax in excess of land-based gaming tax would force operators to

reduce marketing or reduce the competitiveness of their intended product, causing them to

underperform market size estimates and to be less competitive versus the black market. Those

interviewees willing to suggest tax rates for the state’s consideration offered 10%-20%, 20%-25%,

and 25%-30% as options, and another simply said that taxes have to be higher than the brick-and-

mortar rates.

The following table presents an illustrative view of net taxes to the state of Maryland at different

tax rates assuming iGaming GGR is held constant. We acknowledge that tax rate is not independent

of market size, though we present it as such for illustrative purposes in the table below. Indeed, in

several European sports betting markets with exorbitant taxes, operators abandoned the market

altogether. We use an estimated brick-and-mortar tax rate of 45%, taking into account the different

tax rates imposed on VLTs at each of the state’s casinos and the 20% tax rate imposed on table

games in the state.

Notably, a 10% tax rate results in a forecasted overall reduction in net taxes to the state, while

other tax rates result in net gaming tax increases to the state.

Table 28: Forecasted Net Taxes by Tax Rate for 2029

10%

15%

20%

25%

30%

35%

40%

45%

iGaming GGR (Total)

$904.9

iGaming Tax

$90.5

$135.7

$181.0

$226.2

$271.5

$316.7

$362.0

$407.2

Brick & Mortar GGR (w/o iGaming)

$2,137.6

Brick & Mortar Cannibalization

$218.5

Lost Brick & Mortar Tax (at 45%)

$98.3

Net Gaming Taxes

-$7.8

$37.4

$82.7

$127.9

$173.1

$218.4

$263.6

$308.9

Source: The Innovation Group

Licenses and Distribution

Probably the most contentious question in the bill-drafting process will be who should receive

online gaming licenses.

The Innovation Group November 15, 2023 Page 32

The casinos we spoke with believe that licenses should be tethered to land-based casino licenses,

and there was a divide between those who believe that each casino should get one “skin” –

technically a sublicense, but in practice a brand associated with the license – and those who believe

that two skins are more appropriate to create 12 online gaming options for consumers. We see 8-

10 companies generating nearly all of the revenue in states with “open” markets (this is particularly

evident in sports betting), so having this many allows for a combination of industry powerhouses

and a (possibly) rotating array of smaller operators that may have niche product or niche audience,

ensuring that emerging technology and approaches can be market tested.

Casinos argue that it is crucial that licenses go to land-based casinos for several reasons, including:

o Casino gaming is their core business and expertise – they deeply understand slot

and table games product, consumers, and the general market;

o Extensive licensure process that key casino employees undergo – they are trusted

operators and satisfy the strictest suitability requirements;

o Experience and mandatory training with AML and KYC issues;

o Substantial investment that casinos have made in the communities, both in terms of

jobs and physical development;

o Host communities are reliant on revenue from revenue share agreements, and the

casinos need to be able to fulfill those commitments; and

o Planning for major capital decisions and reinvestment in infrastructure is difficult

if operators cannot predict what the gaming landscape will look like over the next

5-10 years.

Note that all states thus far have tethered licenses to casinos, so this approach is the only real

precedent.

In our interviews, we also spoke with a bingo hall that believed that the bingos should receive

licenses. Their arguments primarily were that (1) casinos had nearly decimated visitation to bingo

halls, and (2) online sports betting substantially cannibalized retail sports betting, so they are

expecting substantial cannibalization of electronic bingo if online slots come available. They

pointed out their large minority workforce and cited the state’s significant Diversity, Equity and

Inclusion (DEI) efforts.

Demographics and Player Profile

From the interviewees we spoke with, we understand that online gaming personas tend to look

very much like the casino database, with a slightly younger skew attributed to their willingness to

adopt technology. Some anecdotes we were told include: “we see more participation by 30-to-50-

year old women than we do in the casino” and “our online database used to skew younger and

more male than casino, since we were migrating them from sports, and our lookalike models for

customer acquisition programs made this a self-fulfilling prophecy. But more recently, as we’ve

evolved, our online casino database looks more like a traditional land-based database, particularly

in the male-female mix, even if we skew a little younger.”

We also understand that companies that dominate the sports betting space will have easier access

to the younger male population and therefore their gaming database will have more contribution

from table games than an online casino that launches under a casino brand and is more slot

The Innovation Group November 15, 2023 Page 33

dominant. Incidentally, this suggests that a split tax rate between online tables and online slots may

disproportionately benefit the strongest sports betting operators if table games tax is lower and

may disproportionately harm the strongest sports betting operators if the slot tax is lower.

Attracting a younger set of consumers is a large benefit of iGaming. For decades, the gaming

industry has struggled to attract young people, and casinos have seen aging databases. Online

casino and sports betting have brought about a resurgence of interest in gambling, and particularly

with sports, have brought gambling into the media and popular culture.

Responsible Gaming and Public Health

Nearly all interviewees expressed a need for robust responsible gaming measures. Two

interviewees expressed concern at the rise in gaming “helpline” calls in Pennsylvania and New

Jersey and suggesting new studies coming out of those states show significantly higher incidences

of problem gambling than nationwide averages that have remained stable for decades. These

higher incidences, if accurate, certainly make sense, since there are many decision points and

hurdles between going from a place of residence to a physical casino. There is considerably less

friction to open up an online casino on a mobile phone or tablet. Additionally, concerns were raised

about the access from underage persons, since player ID verification is typically only done at

account setup.

Others noted that there are many organizations dedicated to responsible gaming and that the

industry at large recognizes the possibility for harm and provides substantial support to these

programs, financially and otherwise. They also note that Maryland already has a strong responsible

gaming program that will be expanded with the introduction of online gaming in the state.

Capturing the Illegal Market

Discussion of the illegal market is difficult since there is not good public data about the operators,

their revenues, market participation, etc. However, we presented a 2022 estimate of illegal online

gaming revenue in Maryland of nearly $200 million. When asked about how best to capture the

illegal market, most interviewees suggested a two-pronged approach: first, operators need to be

taxed at a reasonable level to allow them the latitude for substantial marketing and

technology/product improvement to compete with illegally-operating, untaxed, and unregulated

operators that can reinvest heavily in players with marketing and bonusing programs. Second,

there needs to be alignment between the state officials, including the Attorney General, that make

a priority of bringing enforcement actions against illegally operating gambling sites. As one

interviewee described, “it takes an aggressive and willing attorney general and a good partnership

with the regulator.”

Partnerships

Casinos with Online Operators

As iGaming emerges, casinos are faced with the decision of whether to partner with large brands

like FanDuel or DraftKings, or create their own in-house solutions. Partnerships hold the promise

The Innovation Group November 15, 2023 Page 34

of leveraging the brand reach, advertising prowess, and buying power. This section briefly

discusses the pros and cons of such collaborations, including brand reach and advertising, third-

party operator benefits, customer experience, player marketing, and media

partnerships/sponsorships. It is important to note that while these partnerships offer significant

advantages, each also presents its own set of challenges.

Brand Reach and Advertising

Partnering with national iGaming brands instantly grants access to a vast audience. FanDuel and

DraftKings, for instance, have a significant online presence and extensive advertising budgets.

This reach allows casinos to tap into a broader market and attract a more diverse player base.

Indeed, several interviewees pointed out that their casinos had received visits from new land-based

consumers that had been acquired first through digital channels.

Product Innovation

Established iGaming brands leverage their suite of products across multiple markets. This allows

them to amortize the cost of product innovation across a range of jurisdictions, meaning that they

will be more efficient and tech-forward than an in-house brand in most cases.

Customer Experience

National brands often bring with them cutting-edge technology and a user-friendly interface. This

can enhance the overall customer experience, making it more attractive for players and increasing

retention rates.

Player Marketing

National iGaming brands are often more adept at data analytics and player profiling. This can lead

to more targeted marketing efforts, resulting in increased player engagement and loyalty.

Media Partnerships/Sponsorships

Collaboration with major brands can open doors to lucrative media partnerships and sponsorships.

This exposure can boost brand recognition and attract new customers. In sports betting, this effect

is most apparent in negotiations with sports teams in sponsorship deals.

Leveraging National Footprint for Buying Power and Brand Reach

Often large iGaming companies have preferred (lower) pricing for content, data, advertising, etc.

Some of these cost savings can be passed directly on to the casino partners.

Economic Leakage

A significant drawback of these partnerships is that not all economic benefits stay within the casino

or the state. A substantial portion of revenue generated through iGaming is likely to be channeled

to the national brand's headquarters or shareholders, reducing the overall economic impact on the

local community.

Reduced Control

Partnering with national brands means ceding some control over the iGaming operation. This can

limit the casino's ability to take quick action, such as cross-marketing some on-property

promotions.

The Innovation Group November 15, 2023 Page 35

Dependency

Reliance on a national brand may be risky. If the brand's reputation suffers or it faces regulatory

challenges, the casino could be adversely affected by extension.

Multijurisdictional Agreements

The Multi-State Internet Gaming Agreement (MSIGA) is the primary multijurisdictional

agreement of relevance to a legal iGaming market in Maryland.

The MSIGA was established to allow states in the U.S. to pool their online poker players. This is

to ensure that there are enough poker players online at any given time, which helps in sustaining

the games and making them more attractive for players. The initial states to sign onto the MSIGA

were Delaware and Nevada, joined later by New Jersey and Michigan.

Apart from poker, the MSIGA allows for other iGaming formats to be added to the agreement and

offered by Licensees in member states where such iGaming formats are permitted. For example,

the agreement permits Licensees to offer progressive slot jackpots that accumulate in size based

on play from multiple states (i.e., ‘wide-area progressives’). Even though Michigan and Nevada’s

participation in the MSIGA is limited to online poker by respective state laws, this does not

preclude the other member states (e.g., New Jersey, Delaware) from offering other gaming types

that share players from both states.

The MSIGA includes a board with representatives from each member state. This board is

responsible for overseeing collaborative efforts, handling disputes between states, and ensuring

that all member states comply with the agreement's rules. The member states have formed an

Association, which has the authority to amend the agreement, add new member states, and ensure

the overall integrity and success of multi-state online gaming.

Each state continues to regulate and oversee its operators. The MSIGA does not replace a state's

individual regulations but rather provides a framework for states to share players while maintaining

their regulatory autonomy. Operators must be licensed and regulated in each state they wish to

offer games. This means a poker site can't serve New Jersey players unless they're licensed in New

Jersey, even if they're licensed in Nevada or Delaware. Player protection, game integrity, and anti-

fraud measures are crucial components of the agreement. States work together to ensure these

standards are met across the board.

The MSIGA doesn't centralize taxation but rather leaves it to individual states. The agreement

ensures that the rake (the portion of a poker pot taken by the operator) from a hand involving

players from multiple states is allocated proportionally based on where the players are located.

This ensures that states get their appropriate tax revenue.

The success of the MSIGA provides a blueprint for other states that might be considering online

poker legalization. As more states see the benefits of shared liquidity and understand that it's

possible without sacrificing regulatory oversight, the MSIGA could expand further.

The Innovation Group November 15, 2023 Page 36

ONSUMER

ROTECTIONS

ESPONSIBLE

AMING

To address best practices for consumer protections and responsible gaming, the Maryland Center

of Excellence on Problem Gambling (“COE”) contributed the following memorandum

addressing two key areas:

(1) The consumer protections available for users of legal iGaming, including the verification

process for transactions and the ability to limit and monitor those transactions to ensure

responsible gaming, and

(2) The impact of iGaming on problem gambling and methods to encourage responsible

gaming and combat the growth of problem gambling.

The Innovation Group commentary follows their memorandum.

Feedback from Maryland Center of Excellence on Problem Gambling

The consumer protections available for users of legal iGaming, including the verification process

for transactions and the ability to limit and monitor those transactions to ensure responsible

gaming.

To date, six states (CT, DE, MI, NJ, PA, WV) have legalized iGaming while Nevada has

regulations specific only to online poker. Each of the seven states includes some or all of the

following consumer protection recommendations.

UNDERAGE GAMBLING

As with other forms of gambling in Maryland, the legal minimum age to play on an iGaming site,

whether free or paid, should be 21. Sites have an affirmative obligation to put in place technical

and operational measures to prevent access by those who are underage. The age verification

process should be required as a part of registration and prior to deposit of any funds. Such measures

include requiring the site to use a reputable independent third party that is commonly in the

business of verifying an individual’s personal identity information. When underage players are

identified, their play should be immediately stopped and their accounts closed. The site policy

should clearly describe any other consequences including how any winnings or funds in the

account are handled.

POLICY

Corporate policy makes a clear commitment to responsible gambling and identifies expectations

for corporate leadership ensuring that the prevention of gambling-related harm is included in all

The Innovation Group November 15, 2023 Page 37

strategic decisions. Example: Connecticut

regulations state “Patron protection information shall

be readily accessible to the patron. The patron protection information shall contain at a minimum:

(1) Information about potential risks associated with excessive participation in gaming, and where

to get help related to responsible gaming education and compulsive gaming support; (2) Self-

imposed limitations invoked by the patron; (3) A list of the available patron protection measures

that can be invoked by the patron, such as self-imposed limits and self-exclusion, and information

on how to invoke those measures; and (4) Mechanisms available to the patron to detect

unauthorized use of the patron’s account, such as reviewing credit card statements against known

deposits and for unknown charges.”

The operator has a responsible gambling strategy with defined goals and a clear plan of action that

is evaluated annually for progress and a report made publicly available. Example: Nevada

law

requires operators to establish, maintain, implement, and comply with…minimum safety standards

that incorporate “robust and redundant identification methods and measures in order to manage

and mitigate the risks of non face-to-face transactions inherent in interactive gaming.”

A portion of the organization’s internet gambling revenue should be dedicated to reducing the

social costs of gambling addiction. Example: New Jersey

law requires a casino licensee with an

internet gaming permit to pay $250,000 each year to be deposited into the State General Fund for

appropriation by the Legislature to the Department of Human Services, $140,000 of which shall

be allocated to the Council on Compulsive Gambling of New Jersey and $110,000 of which shall

be used for compulsive gambling treatment programs in the State.

STAFF TRAINING

Name a person to be responsible for implementation of responsible gambling policies and regularly

remind staff about the organization’s responsible gambling policies and general updates on

industry best practices. Example: West Virginia

requires operators to employ an Interactive

Gaming Manager responsible for the operation and integrity of interactive gaming and for the

review of all reports of suspicious activity.

All staff should be trained every year on responsible gambling, including but not limited to,

definitions of key terms, myths and facts and where to get help, with content updated as necessary.

Customer-facing staff should have enhanced annual training in player protection and responsible

gambling interventions. These staff members are taught skills and procedures specific to their

Regulation of the Department of Consumer Protection Concerning Online Casino Gaming, Retail and Online

Sports Wagering, Fantasy Contests, Keno and Online Sales of Lottery Tickets. February 1, 2022.

https://eregulations.ct.gov/eRegsPortal/Search/getDocument?guid=%7bD0C8B67E-0000-CD11-9A92-

ED3A4245349E%7d

REGULATION 5A. OPERATION OF INTERACTIVE GAMING.

https://gaming.nv.gov/modules/showdocument.aspx?documentid=15427

ARTICLE 6C. INTERNET GAMING. https://www.nj.gov/casinos/law/act/docs_article06c/cca-article06C.pdf

West Virginia Interactive Wagering Rule. April 6, 2021.

https://apps.sos.wv.gov/adlaw/csr/readfile.aspx?DocId=54046&Format=PDF

The Innovation Group November 15, 2023 Page 38

position to respond to situations where a player is in distress. Staff knowledge of responsible

gambling should be tested as part of the training. Training should be developed or evaluated by an

unaffiliated third party with experience in gambling addiction and responsible gambling. Example:

West Virginia

requires a training that includes: how to recognize the nature and symptoms of

problem gambling behavior; How to assist players in obtaining information about help for a

gambling problem; How to provide information about individual interactive gaming operator self-

exclusion and Lottery statewide self-exclusion programs; How to respond to patrons who may

disclose that they have a gambling problem; and How to respond to reports from third parties, such

as family members, about patrons who may have a gambling problem.

SUPPORTING INFORMED DECISION MAKING BY PLAYERS

Players should be provided with highly visible and readily accessible tools and information to help

them make more informed decisions about their gambling. The information should be presented

in a way that can be clearly understood by a player with a sixth-grade reading level. The

responsible gambling information should include, but is not limited to, player-focused information

on practical tips on how to keep gambling within safe limits:

1. Common myths associated with the applicable games

2. How the site’s individual games work, including randomness, house edge, odds of

winning and payout ratios, where applicable

3. Preventing access to a player’s accounts by underage, unregistered, unauthorized or

excluded players

4. How to use the site’s responsible gambling tools and features

5. Risks associated with gambling

6. Signs of a potential gambling problem for themselves or their loved ones

7. How to access personal data on responsible gambling

8. Direct links to at least one organization dedicated to helping people with potential

gambling problems. Regular testing for functionality occurs for all links to help services.

Make readily accessible to players their gambling history including amounts wagered, won, and

lost; time and money spent; games played; net wins/losses as well as session information. Players

have access to their account details including all deposits, withdrawals, movement of funds

between products, bonus information, restrictions such as exclusion events and limits, and net

outcomes including total won or lost over a defined period. This information should be readily

available across all platforms (including web, desktop, app). Provide live updates during play

about time and money spent and account balances in cash, not credits. Example: Connecticut

law

Ibid.

Regulation of the Department of Consumer Protection Concerning Online Casino Gaming, Retail and Online

Sports Wagering, Fantasy Contests, Keno and Online Sales of Lottery Tickets. February 1, 2022.

https://eregulations.ct.gov/eRegsPortal/Search/getDocument?guid=%7bD0C8B67E-0000-CD11-9A92-

ED3A4245349E%7d

The Innovation Group November 15, 2023 Page 39

states, “Electronic wagering platforms shall provide an account statement with account details to

a patron immediately on demand, which shall include detailed account activity for at least the 12

months preceding the request unless the patron requests a shorter period. In addition, an electronic

wagering platform shall, upon request, be capable of providing a summary statement of all patron

activity since the internet gaming account was established. Information to be provided on the

summary statement shall include, at a minimum, the following: (1) Deposits to the internet gaming

account; (2) Withdrawals from the internet gaming account; (3) Win or loss statistics, including

monetary amount won or lost; (4) Beginning and ending account balances; and (5) Self-imposed

responsible gaming limit history, if applicable.”

Allow players to set a variety of limits and encourage/incentivize the player to do so. These limits

must be clearly signposted when a player joins the site. Example: New Jersey

requires that a

patron be allowed to establish: a deposit limit offered on a daily, weekly, and monthly basis that

specifies the maximum amount of money a patron may deposit into their internet gaming account

during a particular period of time; a spend limit shall be offered on a daily, weekly, and monthly

basis that specifies the maximum amount of patron deposits that may be put at risk during a

particular period of time; and a time-based limit offered on a daily basis that specifies the

maximum amount of time, measured hourly from the patron’s log in to log off, that a patron may

spend playing on an internet gaming system, provided, however, that if the time-based limit is

reached a patron will be permitted to complete any round of play, or active or prepaid tournament.

N.J.A.C. 13:69O-1.4.

The Innovation Group November 15, 2023 Page 40

ASSISTING PLAYERS

Every state includes policies for assessing and handling situations where players indicate they are

in distress or experiencing problems. Such policies may monitor player activity for signs or triggers

of problem gambling and include a procedure to address third party (e.g., spouse, relative)

concerns about player’s gambling behavior. Example: Pennsylvania

law states “an interactive

gaming certificate or interactive gaming operator applicant shall submit a compulsive and problem

gambling plan for review at the time of submission of the application”. This plan must include

“procedures to identify registered players and employees with suspected or known compulsive and

problem gambling behavior.”

SELF-EXCLUSION

Called voluntary exclusion in Maryland, self-exclusion is a player-initiated restriction on the

player’s ability to play on the site. The self- exclusion functionality should be no more than three

clicks from any game. The ban length is variable, and players have options to select the length;

however, all bans, no matter what length, should be irrevocable until the expiration of the exclusion

term. Players who exclude also receive information about available help and prevention services.

Every state with legalized iGaming has a self-exclusion law but the recommendation would be to

include iGaming into Maryland’s existing Voluntary Exclusion Program.

ADVERTISING AND PROMOTION

The operator should have a clearly articulated commitment to advertising that does not mislead or

target people with gambling problems or vulnerable populations such as minors. Advertising and

promotions are not on any online pages that are geared towards responsible gambling. Advertising

is not misleading about outcomes of gambling and does not misrepresent the odds of

winning/losing. Example: Delaware

requires it’s regulatory agency to review advertising

materials to confirm they would not result in an appearance which reflects adversely on the agency,

would not reasonably be expected to offend a substantial number of people, does not contain

inaccurate or misleading information, or is otherwise inappropriate.

GAME AND SITE FEATURES

Games should always display bets, wins, losses, and account balances as cash, not credits or points.

No states with legal iGaming have this requirement but all states require these statistics to be made

available upon request and some states also require the statistics to be sent to players on a regular

basis.

Pennsylvania Code Title 58 Chapter 814a. Compulsive and Problem Gambling Requirements.

https://www.pacodeandbulletin.gov/Display/pacode?file=/secure/pacode/data/058/chapter814a/chap814atoc.html&d

=reduce

Internet Lottery Rules and Regulations. Delaware State Lottery Office.

https://www.delottery.com/More/iGaming#14

The Innovation Group November 15, 2023 Page 41

The site should not allow players to play games automatically using an auto play feature. Example:

New Jersey

law states that “game play shall be initiated only after a patron has affirmatively

placed a wager and activated play.”

Players should not be allowed to have multiple accounts on the same site and should be signed in

before free or demonstration games become available to play. Example: Pennsylvania

law states,

“a player shall have only one interactive gaming account for each interactive gaming certificate

holder or interactive gaming operator. Each interactive gaming account must be nontransferable,

unique to the player who establishes the account, and distinct from any other account number that

the player may have established with the interactive gaming certificate holder or interactive

gaming operator for noninteractive gaming activity.”

Players must not be encouraged to play with winnings rather than withdraw them.

Communications with players do not intentionally encourage players to: (a) increase the amount

they play with, (b) gamble continuously, (c) re-gamble winnings, and/or (d) chase losses. Example:

Connecticut

law states that “an electronic wagering platform shall not induce a patron to continue

placing wagers when play is in session, when the patron attempts to end a session, or when the

patron wins or loses a bet. If a patron has initiated a withdrawal request, the gaming entity licensee

may not offer anything of value to reverse the withdrawal request.” Also, “an electronic wagering

platform shall not induce a patron to continue placing wagers when play is in session, when the

patron attempts to end a session, or when the patron wins or loses a bet.”

PAYMENTS

Players should be able to set limits on their gambling-related financial transactions, including

amount and frequency of deposits. Example: West Virginia

allows player to set limits including

deposit and spending limits on a daily, weekly, and monthly basis.

Data on payments made by all players should be publicly available through the regulatory agency

to qualified researchers and to individual players seeking their own account information. Example:

New Jersey’s

Division of Gaming Enforcement distributes an annual report on the impact of

internet gaming on problem gamblers and gambling addiction in New Jersey.

N.J.A.C. 13:69O-1.5

Pennsylvania Code Title 58 Chapter 812a. Interactive Gaming Player Accounts.

https://www.pacodeandbulletin.gov/Display/pacode?file=/secure/pacode/data/058/chapter812a/chap812atoc.html&d

=reduce

Regulation of the Department of Consumer Protection Concerning Online Casino Gaming, Retail and Online

Sports Wagering, Fantasy Contests, Keno and Online Sales of Lottery Tickets. February 1, 2022.

https://eregulations.ct.gov/eRegsPortal/Search/getDocument?guid=%7bD0C8B67E-0000-CD11-9A92-

ED3A4245349E%7d

West Virginia Interactive Wagering Rule. April 6, 2021.

https://apps.sos.wv.gov/adlaw/csr/readfile.aspx?DocId=54046&Format=PDF

ARTICLE 6C. INTERNET GAMING. https://www.nj.gov/casinos/law/act/docs_article06c/cca-article06C.pdf

The Innovation Group November 15, 2023 Page 42

The impact of iGaming on problem gambling and methods to encourage responsible gaming and

combat the growth of problem gambling.

The impact of iGaming on problem gambling is the same as any form of internet gambling, "the

integration of online gambling in the home can more easily turn gambling behavior into a

component of a consumer's everyday life, like watching television," said Kathryn LaTour

associate professor at UNLV's William F. Harrah College of Hotel Administration. "When online

gambling becomes a routine daily behavior, it is easier for consumers to engage in mindless

consumption of that activity, ultimately resulting in addiction and resultant financial losses."

Internet gambling also has some unique features that may pose additional risks for harm,

particularly for vulnerable populations, including

• Constant availability

• Easy access

• Ability to bet for uninterrupted periods in private

• Interactive and immersive environment

• The use of digital forms of money like credit cards and e-wallets making it easier to

overspend

• Online problem gamblers are significantly less likely to seek formal help as compared to

land-based problem gamblers

In a recent study

, a team of researchers in Norway tracked and compared gambling behavior over

a six-year period from 2013-2019 between online and offline gambling. The team found an

increase in online gambling with the largest increase by those gambling on a cell phone. This is

consistent with other studies and with anecdotes from helplines across the country.

In truth, studies like these are still few in number but as research increases, there are common

themes to be found throughout. The vast majority of studies to date show that online gamblers

report more gambling problems than offline (physically entering a casino). The convenience factor

of online gambling cannot be overlooked as a reliable predictor of problem gambling. Strong

regulations as listed above can help to both encourage responsible gambling and combat the

growth of problem gambling.

New Study Shows Online Gambling More Addictive than Casino Gambling. UNLV Media Relations. July 16

2008. https://www.unlv.edu/news/release/new-study-shows-online-gambling-more-addictive-casino-gambling

Gainsbury S. M. (2015). Online Gambling Addiction: the Relationship Between Internet Gambling and

Disordered Gambling. Current addiction reports, 2(2), 185–193. https://doi.org/10.1007/s40429-015-0057-8

Pallesen, S., Mentzoni, R. A., Morken, A. M., Engebø, J., Kaur, P., & Erevik, E. K. (2021). Changes Over Time

and Predictors of Online Gambling in Three Norwegian Population Studies 2013-2019. Frontiers in psychiatry, 12,

597615. https://doi.org/10.3389/fpsyt.2021.597615

The Innovation Group November 15, 2023 Page 43

The Innovation Group Feedback

The Innovation Group has reviewed this memorandum and commends the COE on providing a

thorough review of the areas laid out. Our comments below serve simply to clarify points discussed

in the COE memorandum as well as offer context and our perspective from our experience and

stakeholder interviews.

(1) Responsible Gaming: Throughout the past two decades, publicly-funded problem

gambling services have received increasing support in the United States. The total number

of states that reported publicly-funded problem gambling services increased from 37 in

2010 to 41 in 2021, and the total amount of public funding allocated to problem gambling

services increased from $60.6 million in 2013 to over $93 million in 2021. Among the

states that provided funding, the most commonly supported services were problem

gambling awareness programs, counselor training, helplines, and problem gambling

treatment. Despite the continued growth of problem gambling efforts throughout the

United States, in 2016, only about one quarter of one percent of people who needed

problem gambling treatment received publicly-funded care from a gambling treatment

specialist.

Responsible gambling/gaming programs take several forms in an effort to combat and

prevent gambling-related harms. Instances of problem gambling manifest in two categories

of harm: (1) personal harm, including effects on health, well-being, and relationships,

and/or (2) economic harm. Research on responsible gaming falls short of the levels of

scientific analysis necessary to develop responsible gaming “best practices.” While various

publications have attempted to synthesize existing research on common responsible

gaming and harm minimization practices, the broader field of research often lacks peer-

reviewed scientific analyses.

In their current form, the most common responsible gaming practices reflected in the field

of research are self-exclusion programs, gambling help lines, tracking behavioral

characteristics, setting gambling limits, providing responsible gaming-oriented game

features, and employee training. Arguably, in the online gaming space, there is

considerably more opportunity for early intervention into problem gaming, rather than

solely treatment after the fact. Since all play can be tracked, and since rule-based and AI

tools are being improved upon continuously, the iGaming space offers a digital landscape

that allows for real-time analysis of player behavior and instant communication with

players.

As a condition of licensing, commercial casino states may mandate that casinos prepare

and submit for approval a wide-ranging plan for addressing responsible gaming issues.

Required elements of the plan often include employee training and public awareness efforts

along with other policies that various states have addressed specifically through standalone

statutes, or regulations, that address only a single subject. The required elements of these

plans vary by state.

The Innovation Group November 15, 2023 Page 44

In Maryland, for example, a responsible gambling program must consist of mechanisms

that both mitigate the effects of problem gambling in the State and maximize the access of

individuals with a gambling problem to problem gambling resources.

Massachusetts makes the issuance of gaming licenses contingent upon the submission of a

plan to “address lottery mitigation, compulsive gambling problems, workforce

development and community development [,] and host and surrounding community impact

and mitigation issues.”

The State intends for these requirements to advance its objective

of providing a gaming environment that is safe and productive for all stakeholders. In

furtherance of this objective, Massachusetts prompts gaming licensees to develop plans

that train employees to identify patrons exhibiting problems with gambling, and prevention

programs for vulnerable populations.

Other states, such as Ohio, connect their responsible gaming plans to other mitigation

mechanisms, such as voluntary exclusion programs, to better protect vulnerable groups.

Overall, the development of responsible gaming plans serves to establish concrete

frameworks to better promote safe gaming.

We reviewed the National Association of Administrators for Disordered Gambling

Services’ 2021 Survey of Publicly Funded Problem Gambling Services in the United

States

. In this, we found that Maryland already ranks 9

in the nation

for publicly

funded problem gambling services, with a per capita (21+) spend of $0.91 and $4.1 million

in total spend, versus a nationwide (population-weighted) average of $0.44 per adult 21+.

However, the nation-wide average rises to $0.70 (population-weighted) or $0.94

(unweighted) when considering only the states that have authorized online casino.

Maryland responsible gaming plan statute. COMAR 36.01.03.07(B).

Massachusetts responsible gaming statute. M.G.L. Ch. 23K, § 15(6).

M.G.L., Ch. 23K, § 18(6)

See e.g., Ohio Regulation 3772-12-06.

https://naadgs.org/wp-

content/uploads/2022/06/NAADGS_2021_Survey_of_Publicly_Funded_Problem_Gambling_Services_in_the_Unit

ed_States_v2.pdf

Our figures differ slightly from those provided in the report, since our calculations use 21+ population as the basis

for per capita calculations.

The Innovation Group November 15, 2023 Page 45

Table 29: Problem Gambling Services Budgets – iGaming States

State

Total Annual Funding

Per Capita Funding (21+)

Pennsylvania

$ 6,369,000

$ 0.65

Michigan

$ 5,515,300

$ 0.73

New Jersey

$ 3,150,000

$ 0.47

Connecticut

$ 2,609,799

$ 0.96

West Virginia

$ 1,453,840

$ 1.00

Delaware

$ 1,389,842

$ 1.84

iGaming State Average (pop-weighted)

$ 0.70

iGaming State Average (unweighted)

$ 0.94

Maryland

$ 4,132,375

$ 0.91

In context, the Maryland problem gambling services budget looks comparable to iGaming

states. However, Maryland problem gaming services funding is tied to the number of VLTs

and table games in the state, and recent post-COVID gaming position reductions have

resulted in a reduction of funding for problem gambling services of about $1 million.

Moreover, recent reports from New Jersey (see, for example, Nower, et. al. The Prevalence

of Online and Land-Based Gambling in New Jersey) suggest recent increases in self-

reported problem gambling. We do not know whether this is due to the prevalence of sports

wagering, COVID-led increases in online gaming, better publicity of problem gambling

resources, or other causes. Regardless, Maryland may consider a gaming expansion as an

opportunity to bolster the increasingly needed services. Massachusetts, with 5.3 million

adults, for example, has the nation’s largest problem gambling services budget at $10.2

million and has a strong problem gambling research program.

(2) Self-Exclusion: Voluntary self-exclusion programs, typically operated by casinos and

online gambling sites or gaming regulators, give individuals the ability to exclude

themselves from gambling activities. Many states require that patrons have the ability to

authorize a casino to refuse their right to gamble and to expel them if they are found

gambling or, in some cases, otherwise found on the premises. Program management

models vary. In some cases, they are run by the state or a state-appointed group, in others

they are managed directly by licensees. State statutes vary in the length of the self-

exclusion periods available – typically ranging from a six month ban to lifetime restriction

– and in the procedures for reversing self-exclusion. In some states, third parties can even

voluntarily exclude patrons exhibiting problem gambling behavior. Many state laws

specify that, in addition to banning play, the casino must also eliminate direct promotional

outreach to these individuals as well as exclude them from complimentary offerings

(“comps”) or access to credit. Such programs illustrate efforts to mitigate the potential

social harms of expanded gaming in a state, including mental health issues, relationship

The Innovation Group November 15, 2023 Page 46

concerns, and financial and work problems resulting from problem gambling.

As one of

the most investigated responsible gaming strategies, self-exclusion programs benefit from

a robust body of research conducted around the world.

Generally, the research on the effectiveness of self-exclusion programs concludes that this

method is a safe and, for some gamblers, effective form of intervention against problem

gambling. As one study suggests, self-exclusion may have similar outcomes to counseling

and may reduce harm in the short-term. Additional research has indicated that self-

excluded persons who also engage in treatment, self-help groups, or other forms of support

experience more positive outcome than those who do not. This research suggests that self-

exclusion programs that serve as a gateway to treatment are most successful for individuals

harmed by problem gambling. Research has also indicated that problem gamblers appear

to be more receptive to self-exclusion mitigation strategies when compared to self-led

efforts to seek professional help.

Ultimately, self-exclusion has transitioned from a

“punitive” enforcement model to one that aims to provide individual assistance in order to

connect vulnerable persons with counseling and other support services.

Challenges interfere with the effectiveness of self-exclusion. For example, the number of

gambling facilities within a jurisdiction may make the enforcement of self-exclusion

impractical; if alternative facilities can be easily accessed, the effectiveness of self-

exclusion may be compromised. This is especially true in online gaming settings. We

certainly believe that it is a best practice to provide a self-exclusion mechanism for players.

Where possible, we believe that it is best practice to have the ability to self-exclude from

all of the platforms at once, rather than having to go through a process for each online

gaming platform. While in many tribal jurisdictions the existence of tribal sovereignty and

disparate regulatory bodies can make the implementation of a centralized self-exclusion

system a logistical challenge, with a centralized regulator this becomes much easier. Even

in the heart of tribal country, Oklahoma has implemented a statewide self-exclusion

program and serves as a model for other tribal jurisdictions seeking to implement similar

programs.

Individual compliance poses another well-documented challenge to the effectiveness of

self-exclusion programs. For example, one study determined that more than half of the

participants for whom self-exclusion was still in effect had returned to a casino or breached

their contracts by the six-month follow-up interview. Additionally, a study of self-excluded

individuals in Missouri found similar breaches, indicating that the benefits of the program

were attributable more to the act of enrollment than to enforcement. This research has led

to the frequent conclusion that responsibility for self-exclusion lies with both the gaming

industry and the self-excluding individual. In online settings with centralized self-

Nerilee Hing, Barry Tolchard, Elaine Nuske & Louise Holdsworth, A Process Evaluation of a Self-Exclusion

Program: A Qualitative Investigation from the Perspective of Excluders and Non-Excluders, 12 INTERNATIONAL

JOURNAL OF MENTAL HEALTH AND ADDICTION 509, 510 (2014), 10.1007/s11469-014-9482-5.

Hing, supra note 5, at 510.

The Innovation Group November 15, 2023 Page 47

exclusion, however, self-excluded players will not be able to access online casino products

via their own accounts.

Maryland offers a voluntary exclusion program for land-based casinos that conforms to

most of these best practices: two-year or lifetime bans, applies across all casinos, marketing

to players on the list is restricted, names are not made public, and excluded players cannot

cash checks or use credit cards in the casino. Some Maryland casinos extend the ban to

their nationwide portfolio of properties. There is a similar sports betting voluntary

exclusion list that restricts excluded players from land-based or mobile sports betting.

Exclusion from sports betting is sufficient to exclude a player from casinos, as sports

betting is conducted in the casino. However, casino exclusion may not extend to online

sports wagering. New Jersey’s self-exclusion program allows players to select exclusion

from both physical and online casinos and sportsbooks or exclusion from online casinos

and sportsbooks only.

(3) Advertising and Promotions: Across gaming jurisdictions worldwide, governments and

gaming providers have recognized the importance of providing patrons sufficient

information to make informed decisions about their gambling. While individuals retain the

ultimate responsibility over their gambling choices and level of participation, optimal

decision-making depends significantly on the availability of reliable and comprehensive

information. This concept of the “informed decision” is pervasive in systems of law and

economics and remains an essential component of effective problem gambling mitigation

efforts.

Several environmental factors may influence gambling behavior simultaneously, making

it difficult to determine the local impact of any one factor. Advertising to promote problem

gambling awareness, for example, has attempted to influence gambling behavior and

reduce gambling-related harm. Various studies have concluded that the impact of

advertising is not likely to be overt, and it may be difficult to measure the impact of

advertising efforts to promote problem gambling awareness.

States may require that casinos post signs and/or offer brochures identifying the risks of

gambling, signs of gambling disorder, the odds of casino games and/or toll-free phone

numbers and other resources for assistance. Common practices among the states include

requirements that gambling facilities ensure their advertisements display problem

gambling help-line phone numbers. Additionally, some states, like Maryland, require that

radio, television, and video advertisements contain a gambling assistance message.

Some states provide regulations that specifically address risk-related advertisements for

internet and mobile gaming. Delaware, for example, mandates that internet lottery websites

include advertisements for and links to information for treatment, education, and assistance

Maryland advertising requirements. COMAR 36.03.06.03(B)(5).

The Innovation Group November 15, 2023 Page 48

of compulsive gamblers and their families.

Similarly, West Virginia requires online

sportsbooks and mobile gambling applications to display links to responsible gaming

resources.

Gaming jurisdictions have acknowledged that different messaging approaches may work

better for different groups. One Canadian study prospectively detailed the most effective

messaging approach for different styles of gaming. For casual gamblers (new and

occasional gamblers), programs that enhance gambling literacy, including key safeguards

and main risk factors, are essential. Frequent gamblers (i.e., those that gamble at least once

per month, but not weekly) need a deeper understanding of how gambling works, including

information on house edge, randomness, and independence of events. Finally, the study

concluded that intensive gamblers (i.e., those who gamble weekly or more often) need to

be informed of their play activity, offered self-assessment tools that draw attention to the

consequences of their gaming habits, and made aware of the options available for help in

addressing gambling-related problems.

The COE made a comment that “an electronic wagering platform shall not induce a patron

to continue placing wagers when play is in session, when the patron attempts to end a

session, or when the patron wins or loses a bet.” We caution about this type of restriction,

as it may inadvertently prohibit operators from offering marketing that would occur in the

normal course of casino operations. While we agree that offering promotions specifically

to discourage withdrawal is inappropriate, we do not believe that all mid-session

promotions/incentives are problematic. We would encourage a thorough review of

Maryland’s language by the regulator, taking to heart operator feedback as well. Moreover,

as with many decision points, we believe that it is a best practice to include such provisions

in regulation, rather than in legislation, since it is easier to adjust regulations that have

unintended outcomes (or become outdated or obsolete) than it is to re-legislate. “Future-

proofing” the industry is a best practice.

(4) Payments Data and the Public Domain: Lastly, regarding the availability of payments

data, we agree that consumers should have access to their own deposit and withdrawal

transaction histories. Casinos already typically provide annual win/loss statements

(aggregated gaming behavior) to players for tax purposes. We believe that it is the COE’s

intent that the “data on payments made by all players” that it suggests “should be publicly

available through the regulatory agency to qualified researchers…” be aggregated and/or

anonymized before being released to the public or to researchers. We believe providing

anonymized data is appropriate. Gaming and payments data are particularly sensitive, so

releasing player-level data for study should be done with the utmost care. Anonymized

player-level data, however, can help researchers shed light on behaviors related to, among

other things, problem gambling. Today, for example, researchers are utilizing anonymized

Delaware advertising requirements. 29 Del. C. § 4826.

West Virginia advertising requirements. WV CSR § 179-9-13.4.

The Innovation Group November 15, 2023 Page 49

payments data freely contributed by payment processing firms to explore uses of AI in

characterizing gambling behavior

Ghaharian, K., Abarbanel, B., Kraus, S. W., Singh, A., & Bernhard, B. (2023). Players gonna pay: Characterizing

gamblers and gambling-related harm with payments transaction data. Computers in Human Behavior, 143, 107717.

https://doi.org/10.1016/j.chb.2023.107717