Things escalated quickly in the Buckeye State. After launching sports betting just seven short months ago, the state increased the tax burden on operators from 10% to 20%.
The new tax rate went into effect on July 1st. It applies to all the money earned from sports betting in Ohio, whether it’s from physical locations or online sportsbooks. However, this change doesn’t impact the revenue generated by Class C operators who accept sports bets through the Ohio Lottery.
Critics are expressing their dissatisfaction, pointing out that operators signed up and paid for a sports betting license with the understanding that they would be taxed at 10%. With Ohio doubling the tax rate, some of these operators might be forced to reconsider their decisions or reevaluate their marketing strategies.
Ohio didn’t surprise operators with the new tax rate. It was part of the budget proposal presented by Gov. Mike DeWine in February. Operators had several months to convince lawmakers to keep the tax rate unchanged, but their efforts were unsuccessful.
Operators strongly advocated for a lower tax rate in New York this year and even chose not to bid for a license there due to the high tax rate of 51%.
Ohio Rep. Bill Seitz expressed his disagreement with the rationale provided by Gov. DeWine for the need to increase the tax rate.
“The governor’s argument, which I didn’t buy for a minute, is ‘Look at how much money these folks are spending on advertising. They’re trying to get people hooked on sports gaming and mobile apps. We need to curb the excessive advertising by the mobile app licensees, and how better to do that than double the tax rate.’”
Seitz stated that a committee will be formed to reexamine the tax rate as part of a future study commission on gaming in Ohio. The group is expected to evaluate the decision from all sides, including:
The Commission must present its recommendations by June 30, 2024.
As Ohio doubles its tax rate, states with minimal tax burdens (either due to low rates or promotional deductions) may consider following suit. At the same time, operators might intensify their lobbying efforts to oppose any increases in tax rates.
*Bookmakers Review will keep an eye on the situation.