Betting on the ballot: What's next for Louisiana, Maryland, and South Dakota?

Some good news to come out of the 2020 US Presidential Election was the overwhelming public vote to legalize sports betting in Louisiana, Maryland, and South Dakota, bringing the total number of states with legal wagering to 25 plus Washington DC, which accounts for 45% of the country’s adult population. Each state presented voters with a slightly different wording in its ballot question, while lobbyists dedicated time and funds to the cause ahead of the vote. In Maryland, operators contributed more than $2.75m to support the measure, and in October Governor Larry Hogan announced he was backing the ‘Vote Yes to Question 2’ campaign. Ultimately, 66% voted in favor of wagering in the state, two weeks after a poll by public policy non-profit Our Voice Maryland estimated 52% of voters would support the initiative. Louisiana saw 55 of its 64 parishes (counties) support legal betting, including major metropolitan areas New Orleans and Baton Rouge. The yes vote accounted for 97% of the south-eastern state’s population. Both Louisiana and Maryland (populations of 4.6 million and six million respectively) approved state-wide mobile betting while South Dakota (population 885,000) has put in place more restrictive requirements. “I think what you see coming out of Louisiana and Maryland are pretty clear indications that people want this within their state,” sports betting consultant and MD at SeventySix Capital Sports Advisory Evan Davis explains. “They want to be able to bet through legal regulated channels and they want the tax revenue to go toward certain functions within their state, like education in Maryland.” None of the states have offered up a likely timeline for going live, and with regulations needing to be formalized by state legislators and applications to be submitted and reviewed, an optimistic estimation might be Q3 2022. “That timeline assumes that there are no delays in the legislature or with the regulatory bodies charged with implementing,” says senior analyst Rebecca Giden at boutique research firm Eilers & Krejcik Gaming. “That’s not a light assumption, given, for example, Louisiana lawmakers had a year-and-a-half struggle to enact DFS legislation after voters approved the activity in November 2018.” Giden notes that a mid-2023 launch “is not out of the question.” Maryland and South Dakota are likely to begin discussions in January as both states’ legislators will return to the House that month. Louisiana, however, will convene in April. Davis is leaning towards early 2022, although he warns it could take significantly longer if legislation becomes dragged out. Reflecting on the November 3 election, Giden says the simple wording of the question likely played a material role in the success of Louisiana and Maryland’s ballots. In November 2019, Colorado voted in a public referendum to legalize betting in the state by a slender 0.8% margin. At the time, industry stakeholders criticized the wording of the ballot which asked whether a betting industry should be established via a 10% tax rate on net revenue. Support for the proposition was somewhat below average when considering that the New Jersey ballot passed 64%-36% and 73% of Louisiana’s parishes voted in favor of DFS. “We think the questions fared well because they were phrased simply and concisely and asked voters to respond to sports betting alone, rather than multiple gaming expansions in a single question,” says Giden. “The pre-vote campaigns, which framed the activity as an incremental revenue opportunity for education in both states, also likely had a positive impact on the measures’ success.”

The biggest winner

Both Giden and Davis agree that Maryland is primed to be the biggest betting market of the three states when considering how much of the state’s population currently travels across state lines to Pennsylvania and New Jersey to gamble. Davis says: “Keep in mind that right now a lot of people who live in Maryland or Virginia and work in Washington DC are not making that commute because they’re working from home. Once people go back to commuting, they’re going to be in multiple jurisdictions within the same day, five days a week, so their ability to pick which jurisdiction is more appealing will become a lot easier. “Betting is also coming on board in Virginia pretty soon, so for Maryland to be able to join in really connects the dots along the Mid-Atlantic seaboard in the United States. I think it is a really important outcome for the industry,” he adds. Factors like population size, wealth, internet penetration, and sports community also place Maryland in the running for the leading wagering state of the three, according to Eilers & Krejcik Gaming data. Louisiana is an interesting prospect with New Orleans’ casino scene already a key holiday location for Americans. Bordering state Georgia this year shut down any hopes of legalizing betting after bills presented in the summer failed to transition past early-stage committee discussions. Neighbor Mississippi launched betting in 2018, although it is limited to in-person wagering and mobile apps within casinos. “When you look at some of the nearby states like Georgia and Florida, it’s great that this is going to help make the case why states like that should be legalizing sports betting as well,” Davis notes.

We think the questions fared well because they were phrased simply and concisely and asked voters to respond to sports betting alone, rather than multiple gaming expansions in a single question – Rebecca Giden, Eilers & Krejcik Gaming

South Dakota presents the most restrictive framework of the three as only commercial casinos based in its capital city of Deadwood, along with state-wide tribal venues, will be able to apply for licenses. The legislation in South Dakota does not offer any specific wording for mobile betting but also does not strictly outlaw it. Betfred Sports COO Bryan Bennett says the operator is particularly excited about opportunities in the midwestern state as 85% of its Iowa retail betting player base comes from South Dakota. “It’s a great way to merge those two businesses,” Bennett comments. “Right off the bat it’s going to be retail only and my guess is it’s probably not [launching] until next football season. But if it ever legalizes online, we know we need to have a partnership there or our retail business could be in a tough spot. We think it can be a decent-sized state and we really think it will complement our business.” With Iowa’s 18-month in-person registration requirement set to expire in January, bettors in South Dakota will likely be further enticed across the border. Otherwise, Montana is the only other betting state bordering the Mount Rushmore State. Montana’s state lottery-operated product has faced some criticism from the industry as mobile bets are only allowed in specifically licensed venues, and the uncompetitive odds served up do little to encourage bettors to use the legal option. Players are also unable to place bets higher than $1,000 on the app and $200 at a betting kiosk. Elsewhere in the Midwest, there are rumors swirling that an igaming bill could be proposed in Indiana next year after the state regulator’s highly regarded treatment of sports betting license holders. Movements in Maryland, Louisiana, and South Dakota shine a hugely positive light on nationwide sports betting in the States. The overwhelming support from voters gives hope that a similar response could be had in some of the largest states left on the map, including California, Georgia, and Texas, all of which will likely have to put betting to a public vote. “All three of these states [that voted for sports betting] contribute to the rapid normalization and expansion of sports wagering. That normalization and expansion, in turn, increases the odds that pre-legal states seriously consider legalizing and regulating the activity,” Giden concludes.