Ohio Governor Wants to Double the State’s Sports Betting Tax
Legal sports betting is popular in Ohio. So popular that Gov. Mike DeWine has taken aim at it in his proposed budget for the next two fiscal years.
One of DeWine’s proposals is to double the state’s sports betting tax rate for operators of retail and online betting sites from 10% to 20% of net revenue. On the surface, this doesn’t appear to be out of line. Investment bank Morgan Stanley has calculated that the average sports betting tax rate of states that allow sports betting is 19%.
But sports betting operators in Ohio are not allowed to deduct the value of free bets and other promotions from their taxable revenue until 2027. After that, the limit will be 10% of taxable revenue from 2027-31 and the limit will go up to 20% of taxable revenue after 2032. Other states have allowed the deduction practice from the start of sports betting.
$10 Million for Ohio
The Ohio Casino Control Commission, which regulates legal sports betting in the state, hasn’t reported any revenue numbers for legal sports betting in Ohio since legal sports betting began Jan. 1. It has been projected that legal sports betting in Ohio will generate about $10 billion in revenue for operators this year. That would give Ohio about $10 million in tax revenue. Compare that to New York, which has a 51% sports betting tax rate and collected more than $700 million in taxes during the first year of legal sports betting there.
DeWine also wants to prohibit using the words “free” or “risk-free” in promotional wagers. If those words are used, a sports betting operator would be prohibited from using promos. Another of DeWine’s proposals is to ban people from betting if they threaten violence against athletes, and make “betting-related threats” against athletes a crime.
The state is ‘serious’
“Better compliance with the rules,” is how Dan Tierney, DeWine’s press secretary, explained DeWine’s proposals in an interview with PlayUSA. “Ohio is serious about enforcing the regulations passed by the Ohio General Assembly.”
Both legislative bodies in Ohio would have to approve the sports betting tax increase. Rep. Bill Seltz (R-Cincinnati) told PlayUSA he’s against the increase,
“A low tax rate encourages legal play through regulated entities, which we prefer compared to illegal bookmaking outfits,” he said. “Moreover, (sports) betting has only been legal for a little over a month (it started shortly after DeWine signed a sports betting bill in December). So we don’t know what kind of money the regulated entities are making.”
Back in May 2021, Sen. Kirk Schuring (R-Canton), one of the main backers of the legal sports betting legislation in Ohio, called the 10% sports betting tax rate a moderate amount.
The Ohio Casino Control Commission has cracked down on sports betting operators that have violated state rules. DraftKings was fined $350,000 for mailing ads to persons under the legal sports betting age of 21. Barstool was fined $250,000 for targeting underage people during a college football game at the University of Toledo. BetGM, Caesars and DraftKings each was fined $150,000 for advertising violations.