The Top 3 Items To Follow In The New Ohio Sports Betting Bill

Posted By Nicholaus Garcia on May 24, 2021

There are the “maybe” states and the “maybe not this year” states in the ever-expanding world of legal sports betting. This simplistic formula categorizes states like Texas and California into the “maybe not this year” section while states like Ohio and Florida squeak into the “maybe” column.

We know Florida sports betting is a Department of the Interior stamp of approval away from legalization, but what about Ohio?

On May 6, the state unveiled the first OH sports betting bill to lackluster applause. Days later, the Senate said it would introduce a substitute bill to fix some of the issues with the original draft.

Now that Ohio is officially in the mix to legalize sports betting, it’s only right to break down key line items to watch moving forward.

For this, PlayUSA spoke with Michael Zatezalo, a Pittsburg sports fan and gaming attorney with Kegler, Brown, Hill & Ritter in Columbus. Zatezalo has over three decades of experience and is also head of the firm’s Gaming Law practice.

Here are our top-three sports betting items to watch in Ohio.

#1 Physical connections and hefty fees

One of the standout line items in S 176 is the need for companies to be tethered to Ohio.

Right out the gate — 20 mobile licenses (Type A), 20 retail sportsbooks (Type B), and a limited form of wagering for the state lottery. And the price tag for these coveted vouchers, $1 million for three years.

As PlayOhio writer Matthew Kredell pointed out, does a company like Penn National Gaming, which has four properties in Ohio, have to pay $1 million for each location? If so, the company could be paying $5 million every three years.

During a committee hearing, bill sponsor Senator Niraj Antani said, “It can’t be an untethered online mobile application that has no presence in Ohio.”

“You can tell the casinos and racinos had a lot of input on the substitute bill,” Zatezalo said in an interview. “But I don’t think companies are going to come in here and build a $200-300 million facility just to have mobile sports betting.”

The bill specifies that companies must have a “physical connection” in the state to acquire a betting license. Breaking this down into basic terms means a company must have a physical location in the state in order to offer sports betting.

“Casinos will make it hard for someone to get a mobile license unless they have a brick-and-mortar facility,” Zatezalo said. “It’s going to be a fight.”

#2 An extended timeline for the start of Ohio sports betting

The bill states sports betting cannot begin until January 2022, which leaves Ohio unable to cash in on the most lucrative betting season each year.

“I think sports betting can be done quicker,” Zatezalo said. “But lawmakers are probably thinking, let’s get this right. That’s probably the theory.”

It’s known throughout the industry that betting on the NFL is where the action lives. By sticking with this timeline, it ensures that neighboring states will collect tax revenue from Ohio residents for at least one more year.

Indiana, Michigan, and Pennsylvania have enjoyed lucrative returns from online sports betting and online casino games.

The state is skipping over football season like a team tanking for next season. Sure, people still bet on things like the NBA playoffs, NHL playoffs, and Major League Baseball but not in the volume as the NFL.

If the timeline stays, Ohio guests and residents will at least have the opportunity to bet on the 2022 Super Bowl.

#3 Questions surrounding the lottery and small businesses

Lastly, according to Zatezalo, one of the impending issues with the sports betting bill will be what to do with the lottery and small businesses.

When it comes to inclusivity, Maryland sports betting and Washington, DC are the only jurisdiction to allow for small and minority-owned businesses to offer sports betting.

Could Ohio be the third? Probably not, according to Zatezalo.

“Small businesses want a piece of the action also, and they are arguing they can do sports betting through the lottery via a kiosk or something like that. Right now, I don’t think they are going to win that fight,” Zatezalo said.

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Speaking of the lottery…

If the bill were passed in its current form, the lottery would only have the ability to sell “sports betting pool games.” These are the types of games where bets are pooled together then distributed amongst the winners after the lottery takes its cut.

The lottery would also not be able to take bets on single games or offer any sort of competitive odds. Besides, mobile apps like DraftKings Sportsbook and the FanDuel Sportsbook already offer sports betting pool games for free.

“Since it’s a pool system, (the lottery) is not going to be able to offer the same type of bets as a traditional sportsbook,” Zatezalo said. “That will be an area that could create a challenge to passing the bill.”

Perhaps the only thing the lottery would gain is convenience. Fill up a tank of gas, snag a morning coffee at your local gas station, and, by the way, tack on a sports betting pool game.

But being the wise man that he is, Zatezelo offered a potential fix.

“Allow the lottery to subcontract with a DraftKings or FanDuel so they can offer competitive odds,” he said. “That will be a challenge and discussed.”

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Nicholaus Garcia

Nick has had stints in Chicago and Washington, D.C., writing about politics, financial markets, and sports betting. He graduated from Texas Tech University and completed his master's degree in journalism at Columbia College Chicago.

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