The governor of Ohio is proposing to hike the tax rate for operators of retail and online sports betting sites in the Buckeye State following some early missteps by bookmakers.
Gov. Mike DeWine’s recently revealed budget plan would require sportsbook operators to fork over 20% of their revenue, instead of the current 10%.
The same proposal would explicitly make “betting-related threats” against athletes a crime, a spokesperson for the governor said, and allow the Ohio Casino Control Commission to ban an operator from offering free bets and other promotions over bad behavior.
“Governor DeWine has made several well-reported comments regarding some sports betting proprietors and customers who have not followed the rules during the first month of sports betting in Ohio,” Press Secretary Dan Tierney said in an email. “The Governor’s budget included a package of reforms to encourage a marketplace where the rules and the spirit of the law are better followed.”
A few fast follies
While there is no guarantee the proposals make it into the final product, that they are being floated at all is a sign of the early issues Ohio has had with sports betting and the eagerness state lawmakers and watchdogs have shown in intervening. Fines have already been suggested for several operators over advertising issues, and regulators have warned about the consequences bettors may face for making violent comments to athletes.
Legal sports betting in Ohio began on January 1, with lottery, retail, and online sites authorized to commence operations simultaneously. The launch followed DeWine signing a sports-betting bill into law in December 2021.
But the tax tweaks proposed in Ohio also come as other U.S. states have considered changes of their own following the early years of authorized event wagering. On the other hand, in New York, lawmakers are being lobbied to lower the state’s 51% tax rate for online sports betting, with operators warning players could face worse odds if the status quo persists.
What it's all about
Ohio's current tax rate of 10% of an online or retail proprietor's net revenue is lower than the U.S. average of around 19% calculated by investment bank Morgan Stanley. Operators are not allowed to deduct the value of free bets and other promotional play from their taxable revenue until 2027, unlike in some other states where they can do so from the outset.
Again, though, it’s unclear if the legislature will accept DeWine’s proposals. Sports betting only very recently began in the Buckeye State and the official financial windfall has yet to be determined.
Moreover, when the process that eventually legalized sports betting in Ohio began, the 10% rate was viewed as reasonable, although the conduct of operators in the early day of the legal market could sway the opinions of lawmakers.
“We think that's a moderate amount, about the same as most other states that border Ohio,” said Sen. Kirk Schuring, one of the chief backers of the legalization legislation, back in May 2021. “But also, I will tell you, it's not about revenue generation. The revenue generated will go to education, both private and public, and also… gambling addiction in general.”
