Ohio Governor Doubles Sports Betting Tax on Operators

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General view of fans before the Cincinnati Reds against the Pittsburgh Pirates at Great American Ball Park in Cincinnati, Ohio. Andy Lyons/Getty Images/AFP.

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.

Ohio Tax Rate Still Lower Than New York

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.’”

The Decision Will Be Reexamined By a Committee

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:

  1. Look at the current situation of the statewide lottery and the future of the lottery industry. They will provide recommendations to the General Assembly regarding the statewide lottery.
  2. Assess the implementation of sports gaming under House Bill 29 of the 134th General Assembly and examine the future of the sports gaming industry. They will then report their findings and recommendations, if any, to the General Assembly regarding sports gaming in the state.
  3. Analyze the current state of casino gaming in Ohio and explore the future of the casino gaming industry. They will make recommendations to the General Assembly concerning casino gaming in the state.
  4. Evaluate the current state of horse racing in Ohio and consider the future of the horse racing industry. They will provide recommendations to the General Assembly regarding horse racing in the state.

The Commission must present its recommendations by June 30, 2024.

Other States Could Follow Suit

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.