State gaming regulators recommend that a popular online gaming company receive preliminary approval for a sports betting operator license.
The Maryland Lottery and Gaming Control Commission should qualify Crown Maryland Gaming LLC for licensing. The company is operated by Boston-based DraftKings Inc. The license would be used to operate a sports betting facility at the Maryland State Fairgrounds in Timonium.
“There are no matters of concern regarding the licensing of Crown MD Gaming, LLC as operator of sports betting facilities or with Crown Gaming Inc. as primary sports betting entity,” according to a public report provided to the commission.
A vote to qualify DraftKings for a sports betting operator license is only the first step to obtaining the license.
The application and grant of the license must be approved by the Sports Betting Application Review Commission. This panel usually ratifies the decision of the Lotteries and Gaming Control Commission. The review board is not expected to meet until next month, although it may schedule one earlier to award a license.
Gaming regulators will also need to approve the facility and its operations.
The fairgrounds is one of more than a dozen places guaranteed by a sports betting license under state law.
Sixteen were guaranteed to go to 17 locations, including all six state casinos, Laurel and Pimlico racetracks and Maryland State Fairgrounds, as well as select off-track betting venues, halls of licensed bingo and stadiums where the Orioles, Ravens and Commanders play.
Currently, there are 11 licenses assigned, including at five of the six casinos — Rocky Gap has so far decided not to apply for a license.
In December 2020, DraftKings and the fairground operator entered into a 10-year agreement to operate mobile and retail sports betting at the facility.
As part of the agreement, DraftKings and the fairgrounds will share the costs of renovating part of the stands at Timonium Racecourse. This facility will house the sports betting operation.
As the exclusive operator, DraftKings will provide all equipment and personnel required for the installation.
Fairground officials did not immediately respond to a request for comment.
The exhibition center is not the only group to have a partnership with the popular online betting company.
A year ago, the Baltimore Ravens announced DraftKings as their new fantasy sports partner. DraftKing officials at the time said the deal could “may soon” include sports betting.
Since 2018, DraftKings, a publicly traded company, has been experiencing a period of rapid expansion offering mobile and retail sports betting in 18 states. In 2021, the company bought the game Golden Nugget for nearly $1.6 billion.
This rapid expansion comes at a cost. National gaming agency investigators reported that DraftKings’ financial performance over a five-year period was “consistently poor”.
“Although the company’s revenue increased significantly with market expansion, increases in cost of revenue and operating expenses far outpaced revenue growth, resulting in net losses totaling $3.05 billion. dollars over the period under review,” according to the report to the committee. “These cost increases are largely due to significant advertising and player incentivization costs incurred each time the company enters a new market. Additionally, DraftKings continues to acquire new businesses and develop new products and technologies that are often very expensive. Due to its poor operating performance, the Company does not generate positive cash flow from its operations and must rely on other measures, such as the issuance of promissory notes, to fund its operations and meet its capital needs.
A number of analysts quoted in the report to the commission expect the company to become profitable by 2025.
Even then, investigators recommend that the company have an “annual review of its financial performance and adequacy.”
(This story can be updated.)