According to the Maryland code listed at
gambling-law-us.com if your friends are part of a qualified organization, they may be good to go.
But it really all depends on the county. This past winter Baltimore City warned bars off holding tourneys,
see this City Paper article for more.
The article mentions Fundraisers Unlimited. They are listed in the phonebook as being in Timonium. Your pals may want to call them, or any of the other fund raising organizations listed, if they are really interested in promoting their event and remaining legitimate.
Edit -- I just saw Slamdunkpro's response. Past posts show he has been around plenty of tournaments in the area. If he says this is tough to do, I believe him. --SG