Legislative Developments in Gaming: Maryland, New Jersey, and Beyond

A recent surge of legislative proposals marks the beginning of a busy season for gaming regulations across the United States. Among the significant measures introduced are potential tax changes in Maryland and groundbreaking sweepstakes legislation in New Jersey. Other initiatives include the legalization of online casino gaming in Wyoming and Indiana, further diversifying the gambling landscape nationwide.

In Maryland, Governor Wes Moore presented his annual budget on January 15, 2025. His proposal notably includes raising the sports betting tax rate from 15% to 30% and increasing the tax on casino table games from 20% to 25%. These adjustments aim to elevate the state’s revenues in a manner inspired by New York, which achieved over $1 billion in taxes in 2024 from a 51% gambling tax rate. While Maryland is unlikely to replicate such figures due to its smaller gambling market, the proposed 30% sports betting tax exceeds national averages and reflects a push for higher contributions from gaming operators.

New Jersey Sweeps Bill Introduced

In New Jersey, Assemblyman Clinton Calabrese recently introduced a bill that seeks to classify sweepstakes casinos under the framework of regulated real-money online gaming. If enacted, this bill would position New Jersey as the first state to apply such oversight to sweepstakes casinos, which have largely operated in a legal gray area nationwide.

“This bill aims to establish clear regulatory requirements and create a level playing field for all operators, ensuring that sweepstakes casinos meet the same standards as other forms of internet gaming in New Jersey,” Calabrese stated.

Understanding Sweepstakes Casinos and Their Impact

Unlike traditional online casinos, sweepstakes platforms often provide free-to-play options, allowing s to purchase credits that are converted into gameplay tokens. These platforms also issue free sweepstakes coins with purchases, which can be redeemed for cash prizes. Despite their popularity, the lack of clear regulations has created inconsistencies and limited tax contributions to state revenues.

Over the past decade, consumers have spent over $40 billion on these platforms, as reported by the Social and Promotional Games Association (SPGA). The proposed legislation addresses these revenue gaps by placing sweepstakes operations under a structured framework akin to regulated online casinos. It requires audits before granting licenses and ongoing bi-annual audits for license retention. Additionally, licensed platforms would be taxed, contributing to New Jersey’s gaming revenue stream.

Addressing Partnership Requirements

New Jersey’s regulatory framework mandates partnerships between online gambling operators and land-based casinos. The same requirement would apply to sweepstakes casinos under Calabrese’s proposal, potentially fostering collaboration or prompting some platforms to exit the state. The dynamics between these sectors have been complicated, with the American Gaming Association previously opposing the sweepstakes model. Whether the two can find mutual benefits under the new law remains to be seen.

Industry and Advocacy Group Reactions

The SPGA welcomed the proposed legislation, citing its alignment with their objectives. “The SPGA and its are advocates for clear regulations that enable transparent, innovative, and responsible social and promotional gaming experiences,” the organization stated. They further emphasized that the bill reinforces the legitimacy and legality of sweepstakes casinos.

This bill follows New Jersey’s history as a trailblazer in gaming, being one of the first states to legalize sports betting and iGaming after PASPA’s repeal in 2018. While New York has sured New Jersey as the leader in sports wagering, this legislative move could reinvigorate the Garden State’s gaming industry.

Broader Implications

As states across the U.S. grapple with the evolving gaming landscape, New Jersey’s approach to regulating sweepstakes casinos could set a national precedent. Other states, including Maryland, are exploring ways to better manage emerging gaming trends, from tightening oversight to increasing taxation, ensuring the industry’s benefits are equitably distributed.

Source:

“ASSEMBLY, No. 5171; STATE OF NEW JERSEY; 221st LEGISLATURE”, pub.njleg.gov,January 14, 2025