Sports betting in the Buckeye State has yet to reach the six-month mark, and already, Gov. Mike DeWine wants to double the tax rate. As a result, lawmakers in Columbus are currently picking apart the Ohio sports betting tax rate and other aspects of revenue distribution.
The state legislature has until Friday, June 30, to change the rules for fiscal year 2023-2024.
Ohio sports betting tax hike could be coming
In February, DeWine proposed increasing the tax rate from 10% to 20%. Through April, the state has generated over $44 million in tax revenue, which is impressive given its short lifespan. Even so, lawmakers are split on whether to increase the tax rate or not.
At 10%, the tax rate for Ohio sports betting is on the lower end compared to other legal jurisdictions in the US.
In February, State Rep. Bill Seitz, one of the law’s sponsors, said:
“I do not agree with this idea. A low tax rate encourages legal play through regulated entities, which we prefer compared to illegal bookmaking outfits. Moreover, the betting has only been legal for a little over a month. So we don’t even know what kind of money the regulated entities are making.”
Revenue distribution is also under the microscope
In addition to a potential tax rate change, lawmakers are also trying to change how to disperse sports betting revenue. One area on the chopping block is revenue for youth sports.
A majority of the sports betting revenue (98%) goes into the Sports Gaming Revenue Fund. The remaining 2% goes to problem gambling educational initiatives.
However, a revised budget proposal passed by the Senate places a $15 million cap on revenue going to schools in the state.
Speaking with WCPO-Cincinnati, Seitz said:
“We intend to fight the Senate on this issue. To my dismay, the Senate has chosen to eviscerate the original sports gaming bill in this regard by appropriating not a farthing for sports and extracurricular activities, but rather, putting it all in school funding.”
The Ohio House has two sessions scheduled for June 27 and 28. Lawmakers can convene on June 29 and 30 if need be.
Could online casinos be an option?
One potential way to combat a tax hike is to legalize online casinos.
In May, neighboring Pennsylvania generated $170.4 million in online gaming revenue, just the third time a state has eclipsed the $170 million mark.
According to data from the Pennsylvania Gaming Control Board, online casino revenue is up 24.6% year-over-year.
Moving over to the Wolverine State, with only four months under its belt, Michigan online casinos continue to post record-setting numbers.
Although down slightly from April, MI online casinos generated $150.6 million in May. Looking at the industry as a whole, Michigan has generated just under $3.5 billion in all-time revenue, translating to $900 million in lifetime tax revenue.