Ohio Raises Tax on Sports Betting Companies

Ohio became the first in the country to raise a state’s tax on sports betting companies when Governor Mike DeWine signed into law the increase on Friday. DeWine first proposed the increase, from 10% to 20%, when he unveiled his budget proposal at the beginning of the year. DeWine signed into law the fiscal year 2024–2025 budget measure with the rise after a conference committee included it in its report and both chambers of the legislature approved it on Friday. The hike took effect on Saturday.

A line item in the bill states that the increased tax will bring in an extra $100 million in income, most of which will go to the Sports Gaming Profits Education Fund. The Problem Sports Gaming Fund will receive 2% of the additional tax money, as required under the original law.

On January 1st, 16 digital platforms and 13 retail sites were made available by the Ohio Casino Control Commission (OCCC), including those of the major national operators Barstool Sportsbook, BetMGM, Caesars, DraftKings, and FanDuel. 18 platforms are currently operational.

Some stakeholders are worried that the tax rise, which makes Ohio one of the 10 states with a tax rate of 20% or more among the 40 legal gaming jurisdictions, may drive some smaller platforms out of the state. Among those that went live on January 1st were Betly, which is affiliated with Miami Valley Gaming, betJACK, a local casino chain, and Betr, one of the newest players in the legal betting market in the country. In Massachusetts, where taxes are 20%, Betr is also in operation.

The rise is referred to as a “tax risk” by Americans for Tax Reform, who also noted that Ohio operators are “already on schedule to deliver the income that the Senate budget projects under the proposed tax hike” at the 10 percent rate.

Former state representative Dan Dodd, who supported legal gambling in the legislature, warned that the state might incur losses in licensing fees and possibly experience a drop in the number of operators.

After Ohio’s legalized sports betting for one month, DeWine initially proposed the increase. The tax increase was not included in the budget’s initial House version; however, the Senate altered the House version to include it in June, and a conference committee decided to keep it. The budget was approved by both chambers on Friday, with the House voting 67-30 and the Senate voting 25-6.

Two days after the OCCC announced its most recent tightening of advertising regulations, there was an uptick. The organization revised its frequently asked questions to reflect that sportsbook operators cannot directly market through non-sportsbook transactions. This means that apps for food delivery or other services cannot present pop-up promotional offers for wagering after an order has been placed, and businesses that sell other goods cannot promote play to customers after a purchase. Comments on the draft rules are welcome until July 12.

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