Much has been written about the Maryland General Assembly's April 12 passage of sports betting legislation that, upon signature of the governor, will authorize up to 60 mobile licenses and more than 40 retail licenses here. The fact that the same piece of legislation – House Bill 940 – will also legalize, regulate, and tax fantasy competitions seems to have gotten lost in all the excitement. Would-be fantasy operators should note the following features of the law.
HB 940 legalizes and expressly exempts fantasy competitions from criminal laws against betting, wagering and gambling. It is fair to glean from the carve-out from criminal law, the title of the act ("Regulation of Fantasy Gaming Competitions"), and the invitation to the Lottery and Gaming Control Commission to establish a voluntary exclusion list for fantasy players that the General Assembly considered fantasy competitions gambling.
The law allows fantasy competitions conducted by internet, smart
phone app or any other electronics, digital media, communication
technology or device. All prizes must be established and made known
to participants in advance. No kiosks or other machines may offer
fantasy competitions in a public place.
An operator of fantasy competitions must register with the State Lottery and Gaming Control Commission ("Commission"). The registration is good for one year and must be renewed annually. An operator who participates in the competition and receives no compensation for organizing it is exempt from the registration requirements. Use of the term "register" rather than "license," in gaming parlance, typically means a lower level of scrutiny in suitability investigations, but we will not know the requirements until the Commission promulgates regulations or releases an application form. The same is true for the dollar amount of registration and annual renewal fees, which the statute leaves to the discretion of the Commission.
Registered fantasy operators will retain 85% of Proceeds, which is defined as the total entry fees collected multiplied by the percentage of those entry fees paid by players within Maryland. The remaining 15% of Proceeds goes to the Blueprint for Maryland's Future Fund, which is established under the state's education statute.
Please check back for updates when the Commission establishes regulations, releases application forms, or otherwise provides guidance for the other new games permitted by HB 940.
Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.