Legislators in the Buckeye State are wrestling with a new revenue source, online casino gambling, and it could be passed during this session.
iGaming Legislation
One of the quickest ways for a state to generate fast and substantial income is to legalize online casino gambling. The tax collections dwarf those of mobile sports betting, and it is an excellent way to raise revenue for state and local governments. However, it is also one of the most controversial topics, as iGaming puts a 24-hour casino in everyone’s mobile device and PC with just the download of an app.
Fears of addictive gambling behavior and cannibalization of business from land-based casinos have been the two biggest obstacles in getting iGaming passed in all but seven states, including:
To put that in context, 39 states have legalized sports betting, and the numbers continue to grow.
Senator Ethan Manning’s Senate Bill 197 is one of two iGaming bills being discussed, with Representative Brian Stewart’s House Bill 298 being the other. The two bills are similar, with both asking for a $50 million license fee while allowing up to 11 licenses for the state’s casinos and racinos. Manning’s bill calls for a 36%-40% tax on revenues, while Stewart’s bill imposes a 28% tax on revenues.
People Are Talking
Brian Stewart’s House Bill 298 was heard by lawmakers last week following a second hearing in the Senate of his colleague’s iGaming measure, SB 197, sponsored by Ethan Manning. Not surprisingly, the gaming companies were out in force, pledging support for the bill and making encouraging pronouncements.
“With Ohio’s large, growing market, we believe that iGaming can contribute more than $600 million in annual tax revenue,” said FanDuel’s head of government relations, Cesar Fernandez. “And that’s net new tax revenue for the state.”
There was also the argument that Ohioans are already betting through offshore iGaming apps, but that money could be kept inside Ohio should they decide to legalize and tax it.
“The vast majority of the people that are going to do this are currently doing it,” said Scott Ward of the Sports Betting Alliance. “$5 billion being bet currently in the state of Ohio today in illegal online casino gaming.”
According to Stewart’s legislation, iGaming would be taxed at just 28%, which is 5% lower than land-based casinos that are currently taxed at 33% on their revenues. However, this reduced rate is justified, said Ward, as there is no ancillary business in iGaming like retail shops and restaurants that are available to casino resorts.
“iGaming is different from brick-and-mortar casinos. Brick-and-mortar casinos have other revenue streams; iGaming is simply gambling,” Ward stated.
“A casino is going to have hotel revenue, food revenue, entertainment revenue, all of those things which are taxed at much lower rates, by the way, than 33%, and iGaming simply doesn’t have that,” he added.
The sponsor of HB 298, Representative Brian Stewart, contended that parts of his bill would even help bolster business at land-based casinos.
“Internet gambling apps under this bill would only be permitted to offer promotions that can be redeemed at existing brick-and-mortar sites across Ohio,” said Stewart. “Such as free bets in person, meals, hotels, and other perks at those facilities.”
