The Maryland online sports betting launch has been a terrific success, but at its Dec. 15 monthly meeting, the Maryland Lottery and Gaming Commission levied a fine on BetMGM Sportsbook for taking more than 100 wagers prior to the official statewide launch date.
Maryland held a soft launch on Nov. 21, but officials learned that BetMGM inadvertently processed at least 140 betting slips as early as Nov. 16 from customers who had registered early. According to BetMGM, a mistake during its controlled demo sent some users to the actual sportsbook app where they were allowed to submit bets for a limited amount of time.
BetMGM negotiated a settlement that does not require the sports betting operator to admit to violating state rules but still received the largest fine in the nearly five decades that Maryland has regulated gaming.
What did BetMGM Sportsbook do Wrong?
According to the MLGC, BetMGM technically did not have an active license on Nov. 16 when the bets in question were accepted that violated state law. Later that day, Maryland’s Sports Wagering Application Review Commission officially issued a license to BetMGM. A consent agreement between the MLGC and BetMGM indicates that the operator “violated multiple provisions of the Sports Wagering Law and regulations” which were potentially punishable by “up to $5,000.00 for each day and each violation.”
Commissioner Harold Hodges voted to reject the settlement with BetMGM on the violation, feeling the penalty could have been harsher.
Sports betting in Maryland has been extremely popular. Last week, the MLGC announced that $186,084,496 in bets were accepted in the first nine days the market was open, through Nov. 30. Data from GeoComply showed that 16.5 million transactions were handled in the first few days of online sports wagering in Maryland, which eclipsed the figures for the launch in Virginia, and was near the 17.1 million recorded when New Jersey opened its market in 2018.
Regulators Take Gaming Violations Seriously for Public Safety
The reaction of Hodges and the heft of the fine indicates that Maryland will take serious action against violators of state guidelines for gaming. Rhea P. Loney, the spokesperson for BetMGM whose signature is on the consent agreement, told commissioners in the Dec. 15 MLGC meeting that the company had “learned its lesson” following the misstep.
States set stringent guidelines for sportsbooks because there exists a potential for serious financial harm to consumers. Betting operators must adhere to the letter of the law, even before a market has opened when many consumers are making their first contact with sportsbooks. Confusion can lead to claims against sports betting apps, or misunderstandings about how sports wagering works. Also confusing the issue are illegal offshore sportsbooks that frequently target new markets with ads that appear legitimate.
Following a great start in only a handful of days in November, and the large total handle expected in December and January from college and professional football, Maryland regulators and members of the commission must feel an obligation to ensure processes are followed meticulously.
Another state that will soon launch sports betting recently made a violation claim against a sportsbook. In Ohio, which will open its market on Jan. 1, 2023, regulators have charged Penn Entertainment and its brand sportsbook Barstool Sports, with promoting on a college campus and targeting consumers under the age of 21. A potential $250,000 fine is hanging over Penn, pending a hearing on the matter.
Lawmakers and state officials across the country have consistently stressed that one of the primary reasons they support legalized sports betting is to protect consumers from illegal operators. In Michigan, former state representative Brandt Iden, who championed laws to legalize the activity in his state, explained the goal of regulation.
“The intent here is to regulate the illegal market,” Iden told MichiganSharp.com’s Christopher Gerlacher in a 2020 interview. “Bring this out of the shadows, put these bookies out of business, and make sure people are using regulated sites where they can get paid and they can be protected.”
The move in Maryland to quickly and forcefully hold BetMGM accountable is an indication that state agencies are looking out for the public by carefully eying a market that sees hundreds of millions of dollars in transactions monthly.