Ohio lawmakers are being warned that “Bob and Betty Buckeye” will also feel the pain of another doubling of the state’s tax rate for sportsbook operators, not just gambling companies.
Ratcheting up Ohio’s sportsbook tax rate to a proposed 40% of revenue from its current 20%, “would jump Ohio into rarified anti-business air,” testified Scott Ward, an attorney appearing on behalf of the Sports Betting Alliance, to the Ohio House of Representatives’ Ways and Means Committee Wednesday.
The Sports Betting Alliance’s members are BetMGM, DraftKings, Fanatics, and FanDuel. All are active in Ohio and all oppose Gov. Mike DeWine's latest tax hike proposal for sportsbook operators.
Meet the Buckeyes
According to the alliance, no business can just absorb a 300% tax increase, which is what Ohio's budget bill proposes to do given the state started at a 10% tax rate for legal sports betting in 2023.
“Bob and Betty Buckeye will pay for this tax increase in three tangible ways,” Ward told the committee.
The first would be lower or no promotions, odds boosts, or free bets. There'd also be worse odds and weaker payouts for bettors, Ward warned, such as -120 in Ohio for an Ohio State moneyline and -110 in other states.
The third way bettors would feel the pain is less choice, Ward said, as the number of Ohio sportsbook operators took a hit following the first tax hike in 2023 to 20%. Brands such as Betfred and SuperBook have indeed already come and gone in Ohio.
“A 300% increase in the tax will accelerate a tightening market and leave consumers with fewer choices,” Ward told committee members.
The warning from Ohio sports betting sites comes as they're staring down the barrel of a tax hike in both the Buckeye State and beyond. Maryland and New Jersey lawmakers are likewise proposing to increase the cost of doing business for mobile bookmakers.
DraftKings CEO Jason Robins didn’t sound too concerned about possible tax hikes when speaking at an investing conference Tuesday. Ohio, however, has already hit sportsbook operators with a tax increase since launching legal sports betting market at the start of 2023, doubling it later that same year to 20% from its initial 10%.
That hike followed several marketing missteps by bookmakers, which evidently irritated some in the governor’s office. DeWine, a Republican, is again recommending a tax hike for a different reason this year, to help fund professional sports facilities and youth sports.
Do you really want to be like... New York???
The budget bill the Ways and Means Committee considered Wednesday (the reason for Ward’s testimony) says revenue raised from increasing the sports betting tax to 40% would help with "supporting sports development and sports education."
However, the SBA argues Ohio’s 20% tax rate is already relatively higher for the U.S., tied with Massachusetts and D.C. Going to 40% would put Ohio in the range of Illinois and New York, with the latter imposing a 51% tax rate on online sportsbook operators.
“The primary argument for a 300% tax increase is that most sports betting operators are located out of state,” Ward said in written testimony to the committee. “But sportsbooks in Ohio are required to partner with in-state Ohio businesses such as Ohio professional sports teams, casinos and racinos or other businesses like the Hall of Fame Village. As the state increases its tax on sports betting, it is taking that money out of those brick-and-mortar Ohio businesses.”
Other concerns the SBA has include potential hits to ad revenue for Ohio businesses sportsbooks use for marketing, as well as a blow to the competitiveness of regulated operators versus their unregulated rivals.
Gov. Mike DeWine’s budget plan to help pay for a new Cleveland Browns’ stadium and other stadium projects by doubling the state’s sports-gambling tax could be sacked just after kickoff. https://t.co/2IlVMCxija
— clevelanddotcom (@clevelanddotcom) February 6, 2025
“No promotions, worse odds and fewer local sponsorships will hurt Ohio consumers and businesses,” Ward wrote. “But illegal and unregulated online sports betting operators are celebrating this proposal. Ohio consumers for sports betting don’t simply have to put up with unfair treatment from the State. There are many options for their sports betting dollar, where they can get promotions and better odds, that aren’t regulated and pay zero taxes in Ohio.”
Those options, the SBA warns, include traveling across state lines to use regulated operators in other jurisdictions and offshore sportsbooks. While tackling unregulated entities is something the Ohio Casino Control Commission has done, Ward told the committee it's something of a "whack-a-mole" project, as other sites can just pop up to take the place of others that stop taking bets in Ohio.
Still, there's no guarantee Ohio goes through with the proposed tax hike. There is reportedly some concern in the legislature about the idea. Republican members of a gaming study commission last year also called the first tax hike in Ohio "premature" and harmful to the industry's growth in the state.
It sounded like some members of the Ways and Means Committee have their fair share of concerns, too.
"Your testimony kind of counters what we were told, that the increase in this tax would not hurt the consumers, this would basically be paid by the industry," Democratic Rep. Daniel Troy said on Wednesday.
Troy added he's received "numerous emails, numerous phone calls" opposing the tax hike.
"The proposal to increase the sports betting [tax rate] is to fund what I don't consider a worthy cause, which is basically using these dollars to subsidize multimillion-dollar sports owners for their professional sports facilities," Troy said. "I just think that, to me, that's not an issue that my constituents have brought to my attention."
Have you thought about iGaming?
Ward also noted there is “another way” lawmakers could go in Ohio. If they truly desire new gaming revenue, they could legalize online casino gambling, he told the committee, as nearby states such as Michigan and Pennsylvania have done.
“Online casino, typically taxed at a higher rate than sportsbooks, results in tax revenue 6-10 times that of sports betting,” Ward wrote. “Here in Ohio, the state could conservatively see at least $400 million in new tax revenue in the first year – without raising taxes.”
