Only a month into Ohio sports betting, Gov. Mike DeWine wants to double the tax rate from 10% to 20%.
DeWine included the tax increase in his biennial executive budget proposal for the 2024-25 fiscal years.
Ohio sports betting just launched on Jan. 1. The Ohio Casino Control Commission said it will release revenue figures for the first month at the end of February.
A spokesman for DeWine told PlayUSA that the tax increase, as well as other sports betting reforms in the budget proposal related to promotional credits and threats against athletes, is related to some sports betting proprietors and customers who have not followed the rules during the first month of Ohio sports betting.
“It is part of the package designed to encourage better compliance with the rules,” said Dan Tierney, press secretary for the governor. “Ohio is serious about enforcing the regulations passed by the Ohio General Assembly.”
Other Ohio sports betting changes in executive budget
DeWine’s budget includes two additional elements relating to Ohio sports betting.
- It prohibits describing promotional gaming credits as “free” or “risk-free.”
- It instructs the Casino Control Commission to exclude bettors “who threaten violence or harm against persons who are involved in sporting events, where the threat is related to sports gaming.”
If a sports gaming proprietor does describe promotional credits as “free” or “risk-free,” the Commission may prohibit the proprietor from providing promo credits in the future.
Missteps by sportsbook operators spark proposed reforms
Tierney said the proposed sports betting changes in the budget are meant to “encourage a marketplace where the rules and the spirit of the law are better followed.”
Last month, the Ohio Casino Control Commissioned issued $150,00 fines to BetMGM, Caesars and DraftKings for advertising promotions or bonuses as “free” or “risk free” and failing to properly display problem gambling hotline information in ads.
DraftKings faces an additional $350,000 fine for sending mailers to people under age 21 in November.
And Penn Sports Interactive was slapped with a $250,000 fine for Barstool Sports encouraging college students to preregister for the Barstool Sportsbook in October.
The proposed tax rate increase appears to be akin to punitive damages for those offenses.
Lawmaker reaction to proposed Ohio sports betting tax increase
Both the House and Senate would have to agree with the governor for an Ohio sports betting tax increase.
The Ohio House Finance Committee began examining DeWine’s budget this week. The budgetary process will continue through June. Both chambers will work with each other and the governor to come to an agreement.
Rep. Bill Seitz told PlayUSA that he highly doubts the House will include the sports wagering tax increase in its budgetary bill.
“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.”
Eric Schippers, senior vice president for Penn National Gaming, agreed with Seitz. Penn National owns and operates two casinos and two racinos in Ohio.
“We believe a tax hike would have a negative impact on this nascent industry in Ohio,” Schippers said.
Could New York FOMO be part of tax increase?
DeWine worked closely with Senate President Matt Huffman and Sen. Kirk Schuring to develop sports betting legislation 2021. He signed the bill accepting a 10% tax rate in December 2021.
At the time, PlayOhio projected $90 million in annual tax revenue for Ohio sports betting at market maturity.
Since then, New York set a record by collecting $693 million in sports betting tax revenue during its first year. New York has the highest sports betting tax rate in the nation at 51%.
Ohio has a much different market than New York with a larger number of online operators and much bigger retail presence for sports betting. But perhaps also DeWine sees those New York numbers and thinks that Ohio is leaving some money on the table.
