Maryland Regulators Shifting Focus to Online Sports Betting Startups and Small Businesses

With basically all of the big names in the industry now live in the state — companies that have experience filing for licenses — regulators are beginning to address the applications of smaller entities.

Feb 15, 2023 • 10:10 ET • 2 min read
Donta Scott Maryland Terrapins NCAAB
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Regulators in the Old Line State have already given the go-ahead to the biggest online sports betting sites in the U.S., but are now turning their attention to smaller and scrappier applicants. 

Maryland’s Sports Wagering Application Review Commission (SWARC) awarded a mobile sports betting license to SuperBook on Wednesday, in addition to approving permits for four other businesses, including online-wagering startup Crab Sports.

“This is the first of the relatively small, mobile sports wagering license applicants,” SWARC Chairman Tom Brandt noted during Wednesday’s meeting. 

The other guys

The law outlining sports betting in Maryland is unique because it encourages participation from small, minority, and women-owned businesses. With basically all of the big names in the industry now live in the state — companies that have experience filing for licenses — regulators are beginning to address the applications of smaller entities. 

As many as 60 licenses can be awarded in Maryland for mobile sports betting. However, only 21 applications for mobile wagering permits were filed before the SWARC's deadline in October, and just eight operators are actively taking bets in the state. That leaves room for future entrants. 

Crab Sports fits the bill of a smaller sports-betting business. It is a privately-held company that was only relatively recently incorporated and is targeting the Maryland market exclusively. 

Moreover, in a November letter, Crab Sports said it is more than 50% owned by individuals who identify as women and minorities. It is working with Malta-based Gaming Innovation Group for its online sportsbook. 

“Applicant is a new, start-up venture focused solely on the Maryland market whose primary objective is to create a ‘locals’ sports betting app,” a presentation to the SWARC said. “Crab Sports will focus on engaging local Maryland businesses to build market share through performance driven partnerships ensuring that all proceeds from sports wagering activities stay within the local community.” 

Still, licensing smaller entities is not without its issues. The SWARC heard Wednesday that there is local pushback to a retail sports betting license for Kathe P. Hospitality, one of the five businesses awarded permits during the meeting.

The sportsbook would be adjacent to Mike’s Restaurant and Crabhouse in Riva, but it requires a change to the zoning law before opening. However, the commission told residents concerned about the proposed location that zoning was a local government matter, not a SWARC consideration. 

"SWARC's public-interest considerations regarding applicants are limited to the criteria that are within our purview," Brandt said. "That is, the applicant's business plan, its ability to generate revenue for the state of Maryland, and its ability to create jobs." 

SuperBook, meanwhile, plans on making Maryland part of its ongoing expansion in the U.S. The Westgate-owned brand is partners with the Baltimore Orioles and will help operate a sports-betting lounge at the MLB team’s home ballpark, Camden Yards.

Crab Sports and SuperBook will still need to conduct a controlled demonstration of their mobile-wagering operations for regulators before can start taking bets in Maryland. Once that and other regulatory requirements are met, the two operators can be issued their licenses and begin accepting action. 

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