Maryland Targets Illegal Sweepstakes Gaming Amid Call for Increased Gaming Taxes
Maryland's gaming regulator has intensified efforts to combat illegal online gambling operations within the state. The Maryland Lottery and Gaming Control Agency (MLGCA) has issued cease and desist letters to 11 unauthorized sweepstakes gambling operators that continue to accept customers from Maryland.
LISTEN TO THIS ARTICLE:While six of these operators have acknowledged the letters, all 11 persist in their activities, prompting the regulator to consider additional measures. The MLGCA has stated its intention to follow up with these operators by sending additional demands to cease operations targeting Maryland residents.
Related: Big Tech, Including Google, Named in New Sweepstakes Casino LawsuitThese letters will also extend to illegal payment processors facilitating transactions for these unauthorized platforms. Among the operators that have responded to the initial requests are Fortune Coins, Golden Hearts Games, McLuck Casino, Rebet, Stake.US, and Zula Casino, a company that launched operations in 2024.
These platforms primarily offer sweepstakes-based gaming options to users. Conversely, operators such as BetAnySports, BetNow, BetUS, Everygame Sportsbook, and SlotsandCasino have not responded and continue to provide offshore wagering services without authorization.
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New Taxes Coming to Maryland Gaming Space
This enforcement action coincides with Maryland's recently released state budget, which includes significant changes to gaming tax rates. The proposed budget outlines an increase in the sports betting tax rate from 15% to 30%, alongside a hike in the tax rate for table games at casinos from 20% to 25%.
These adjustments reflect broader trends observed in other states, such as Ohio in 2023 and Illinois in 2024, where upward tax rate revisions have become more common as lawmakers reassess gaming revenue structures. The proposed changes in Maryland are expected to impact the profitability and operational strategies of gaming companies within the state.
The higher tax rates could challenge smaller gaming operators, which may struggle to adapt to the increased financial burden. Larger companies, including DraftKings, FanDuel, and BetMGM, are likely better positioned to absorb the impact due to their scale, market share, and ability to adjust operational costs such as marketing and promotions.
For example, companies operating in New York, which imposes a 51% tax rate on sports wagering, have successfully offset tax increases by reducing promotional spending as a percentage of gross gaming revenue. Similar adjustments in Maryland could minimize the impact of the proposed tax hikes.
Maryland's proposed changes also raise concerns about the potential for increased black market activity. As regulatory costs rise, some smaller operators may exit the market, and reduced investment in marketing and promotions could deter players from participating in legal options. This dynamic has implications for the broader gaming ecosystem, including data suppliers and other ancillary businesses, as the regulatory landscape evolves.
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