In a bid to breathe new life into Maryland’s off-track betting (OTB) industry, legislators are considering a proposal that could introduce up to 4,000 historical horse racing terminals across the state. Spearheaded by Senator Paul Corderman, this initiative aims to bolster OTBs' revenue streams while navigating complex economic and regulatory challenges.

Empower Maryland's OTBs with Innovative Gaming Solutions

The push for historical horse racing machines (HHR) represents a pivotal moment for Maryland’s OTBs. These facilities have long faced financial struggles, exacerbated by declining interest in traditional horse racing and the dominance of online sports betting. With retail sports betting failing to meet expectations, OTBs now look to HHR as a potential lifeline. However, the path forward is fraught with controversy and competing interests from various stakeholders.

Addressing Economic Realities and Legislative Challenges

The Department of Legislative Services projects that HHR could generate over $188 million annually, taxed at a significantly lower rate compared to slot machines. This presents a tantalizing opportunity for OTBs but also raises concerns about potential revenue cannibalization from existing gaming sources. While the legislation seeks to circumvent the need for a constitutional referendum, it remains uncertain how this shift might impact the broader gaming landscape.Supporters argue that without such innovations, OTBs risk becoming obsolete. Alyse Cohen, owner of Long Shot’s in Frederick, emphasized the failure of retail sports betting to revitalize OTBs. She noted that in January 2025, nearly 97% of sports wagers in Maryland were placed online, underscoring the urgent need for alternative revenue streams. The decline in horse racing wagers further compounds these challenges, with standalone OTBs experiencing a 3% drop in bets between 2019 and 2023.

Exploring the Mechanics and Market Dynamics of HHR

Historical horse racing terminals operate using parimutuel wagering on past races, offering players an experience similar to slot machines. This operational similarity has sparked opposition from the casino industry, which views HHR as a direct competitor. Marta Harding, representing MGM National Harbor, highlighted that the proposed 4,000 machines would represent a 40% increase in slot machine numbers and more than double the authorized locations.Moreover, the tax implications are significant. Slot machine revenue is taxed at rates ranging from 42% to 58%, whereas sports betting, including HHR under this bill, faces a mere 15% tax. This disparity could lead to substantial financial repercussions for local communities and small businesses that benefit from existing gaming revenues. The absence of a carve-out for racing purse funds adds another layer of complexity, potentially undermining the industry’s financial stability.

Navigating the Path Forward

As lawmakers deliberate on SB 982 and its House counterpart HB 1048, the stakes are high for all involved parties. For OTBs, the introduction of HHR offers a chance to reclaim lost ground and secure their future. Yet, this move must be carefully balanced against the potential risks to other sectors of the gaming industry. The success of this initiative will hinge on finding a viable middle ground that promotes growth without causing undue harm to existing frameworks.In the end, the debate surrounding HHR reflects broader discussions about the evolving nature of gaming and entertainment in Maryland. As technology continues to reshape consumer preferences, the ability to adapt and innovate will be crucial for the survival and prosperity of OTBs and the broader gaming ecosystem.