Maryland Eyes 5% Cap on Sportsbook Free Bet Promotions

The Maryland Lottery and Gaming Control Agency (MLGCA) has proposed a measure aimed at limiting the amount online sportsbooks can offer as free bet promotions. 

Reducing the Current Rate From 20% Down to 5% 

At present, sportsbooks operating in the state can offer free bets equal to as much as 20% of their online sports betting revenue after completing their first full year. The most recent proposal from the agency operated by the Maryland Lottery and Gaming Control Agency would considerably lower the rate to 5%.

According to the revised Chapter 13 of the Sports Wagering Licensee Minimum Internal Control Standards in the state, “After the first full fiscal year of a mobile sports wagering licensee’s operations, the amount of money given away as free promotional play in a fiscal year may not exceed 5 percent of total sports wagering proceeds that the mobile sports wagering licensee generated in the prior fiscal year. 

The same chapter now mentions that, after the first fiscal year of sports wagering activity, the 5% limit mentioned under section §F(4) of the regulation “includes only mobile sports wagering revenues generated by the licensee.” 

Within 90 days after the close of each fiscal year, all sports wagering licensees are required to submit a written report to the Commission. 

The report must include details on the licensee’s use of free promotional play during the previous fiscal year, along with any recommendations for adjusting the current limits on free promotional play.

By capping promotional giveaways even more, the state is trying to attract a larger portion of sportsbook earnings, which will then be subject to tax. 

These regulatory changes require approval from the Maryland Lottery and Gaming Control Agency as well as from the state legislature’s Joint Committee on Administrative, Executive, and Legislative Review.

Attempts to Close the $2.7B Budget Gap

Maryland’s latest push for higher sports betting revenue follows a similar effort earlier this year. Back in May, Governor Wes Moore signed a bill that bumped up the tax rate on sportsbooks from 15% to 20%. 

He had hoped to raise it even higher, to 30%, but the final number still marks a big increase. This move comes as Maryland looks for ways to close a $2.7 billion budget gap.

Maryland isn’t the only state tightening the reins on sports betting to boost revenue. Across the country, many states are either raising taxes on sportsbooks or cutting back on how much they can deduct for promotional offers. 

For example, at the start of the year, Colorado passed a law that will slowly phase out the promotional deduction from 2% of revenue down to zero by mid-2026.