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‘This could be a game-changer’: Minority businesses see opportunity in Maryland’s sports betting licenses

Winston DeLattiboudere and Tony Jones could see the opportunity coming as Maryland lawmakers and voters debated legalizing gambling on sports.

An increasing number of states had legalized sports betting and the odds were good that Maryland would be next with voter approval on the 2020 ballot and state lawmakers poised to iron out the details.

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So the Baltimore-based tech entrepreneurs searched for a way to get into the market and landed at a waterfront restaurant on the Potomac River that already offers lottery games and off-track betting on horse races.

Their company, the IT firm Delmock Technologies, bought a 25% stake in Riverboat on the Potomac last year. They spent the first several months of this year talking to lawmakers about their plans in virtual meetings.

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“This is one of those opportunities, almost of a lifetime, to get in and grow and leave it to the next generation,” said Jones, Delmock’s chief strategy officer.

DeLattiboudere and Jones, who are Black, are among a legion of minority investors and business owners who are lining up partners, scouting locations and planning for when they’ll be able to apply for dozens of licenses available for in-person and online sports gambling.

Maryland’s foray into sports gambling is the rare opportunity where a state has legalized an emerging industry and crafted the rules with a specific focus on incorporating meaningful minority participation from the start.

“Minority entrepreneurs want opportunities to get into new industries,” said Ali Emdad, associate dean of business at Morgan State University. “Are we going to prevent them from new opportunities? Or will we make it easier for them to understand, to learn, to have access to resources to be able to make a decision on what aspect of the industry they want to enter?”

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Once the sports gambling industry is up and running, according to a nonpartisan state analysis, it’s predicted to generate about $100 million in revenue annually. The state will take a 15% cut. Most of the money is dedicated to help fund an ambitious and expensive plan to improve public schools.

Maryland’s new sports betting law includes an abundance of licenses and a grant program for minority entrepreneurs funded by application fees from the big players in the industry. The goal, lawmakers stressed, was to make sure that minority investors and entrepreneurs aren’t shut out as they have been before.

Lawmakers approved language that says the law should be implemented so it “maximizes the ability” of minorities and women to participate in the industry, including through owning companies that win licenses.

When the state legalized slot machines and then table games years ago, only a few licenses were available and they were issued to existing race tracks and big casino companies.

Later, when medical cannabis was legalized, the licenses all went to white-owned firms — which concerned lawmakers so much that they created a second round of licenses with the goal of getting more women- and minority-owned companies into the industry.

This time around, lawmakers sought to incorporate diversity from the beginning. Legally, the state can make considerations for minority businesses if it can be established that they’ve previously been disadvantaged in an industry. Lawmakers use a report called a disparity study that determined that there have been barriers to minority participation in the gambling industry.

By creating 90 licenses that will be up for grabs — up to 30 for in-person betting and 60 for mobile and online betting — lawmakers hope there’s ample opportunity for many businesses, including ones with diverse ownership, to get into the industry. (There also are licenses set aside for in-person betting at the state’s six casinos, at the thoroughbred horse racing tracks in Laurel and Baltimore and at NFL and Major League Baseball stadiums.)

An application review commission will be tasked with studying whether there need to be more measures to combat the historic lack of minority participation in the industry — such as allowing companies with “meaningful partnerships” with minority- and women-owned businesses to get their licenses before others.

The sports betting legislation also sets aside money to create sports gambling and analytics research centers at Morgan State and Bowie State University, both historically Black universities. The centers can both train students to work in the industry and provide data, said Emdad, who is working on Morgan State’s program.

“Maryland is in the forefront — with this kind of bill that was passed — of sports gaming,” Emdad said. “We need to be vigilant about focusing on the minorities that want to get into this industry and provide the assistance any way we can.”

Gwen McCall, who describes herself as African American, co-owns a construction company and previously ran economic development programs for Prince George’s County. She was unsuccessful in getting into the medical cannabis industry and hopes that sports betting will offer her a better opportunity.

“Sports betting is an area where minorities and people of color contribute a lot to it, but there’s no real ownership among African Americans,” she said.

In the past, casinos and other companies in the gambling industry may have hired minority companies as contractors, but few have minority investors — and investors reap the biggest rewards from the industry, McCall and others say.

“This, without a doubt, could be a game-changer,” she said.

DeLattiboudere and Jones have one of the quirkiest potential sports betting operations. The Riverboat on the Potomac isn’t really a riverboat — it’s a large restaurant and catering hall that’s partly on the shore in Colonial Beach, Virginia; in fact, it’s across the Potomac from Charles County and a 30-minute drive from the Nice-Middleton Bridge that spans the river from Maryland to Virginia.

But most of the operation juts out over the Potomac on pilings, putting the majority of it legally in Maryland.

For generations, establishments over the water off Virginia’s Northern Neck peninsula have taken advantage of legal and geographic quirks that have allowed them to offer forms of gambling that are legal in Maryland but illegal in Virginia. That’s because the entire Potomac River is in Maryland.

“Once the sportsbook comes into play, this place should be packed,” said DeLattiboudere, gesturing at the wide windows that offer an expansive view from a nearly empty dining room.

DeLattiboudere and his partners hope to land licenses for in-person betting and for a mobile app.

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The Riverboat team thinks it is well positioned to win a license because it has full minority ownership — the other partners, Maruthi Prasad Veeramarchnani and Suri Gagandeep, are South Asian — with extensive experience in gambling.

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Other potential sports gambling entrepreneurs are not as far along.

Michael Arrington is a lobbyist advising multiple clients interested in the industry. He’s working on a partnership for a potential application with Bingo World, a Brooklyn Park establishment that bills itself as the state’s largest bingo hall.

Arrington, who is Black, thinks adding a lounge with sports betting could be an extra draw, perhaps catering to the significant others of regular bingo players.

Arrington said he thought the legislation attempted to strike a balance between the “big boys and girls” — the casinos, stadiums and tracks — and the small and minority businesses. He expects owners of sports bars, restaurants and gentlemen’s clubs might apply for licenses.

“The leadership of our General Assembly has made it very, very clear that this will be an opportunity — make no mistake about it — for small and minority businesses,” Arrington said.

More than 100 aspiring licensees, many of them representing minority businesses, gathered at the Live! Casino and Hotel in Hanover recently for a “Sports Betting 101” event to learn the ins and outs of the new gambling law.

“I want to see minority participation. That is a big sticking point for me,” Del. Darryl Barnes, head of the Legislative Black Caucus of Maryland, told the group.

Barnes acknowledged that Maryland has been slow to get into sports betting since a U.S. Supreme Court ruling made it possible in 2018 and state voters gave their blessing in 2020. More than 20 states already have sports betting, including Delaware, Pennsylvania, West Virginia, Virginia, New Jersey and the District of Columbia.

But Barnes said the deliberate pace in Maryland has paid off, with a robust focus on ensuring diversity in the new industry.

“Even though we’re the last to get in, I do think every other state is going to adjust how they are doing business … and look at diversity and inclusion,” said Barnes, a Prince George’s County Democrat.

Even as businesses prepare, there are still many unknowns about the application process.

License applications will be reviewed by a Sports Wagering Application Review Commission. While the members of the commission have been named, the group hasn’t gotten up and running. The application process hasn’t yet been developed or opened up to prospective sports betting companies.

And it’s not clear when bettors will start laying down money on games. Some lawmakers had expressed hope that perhaps the stadiums and casinos might offer betting during the fall professional football season, but no firm time frame for application and licensing has been established.

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