The post As Sports Betting Debuts Go, Ohio’s First Year Was A News-Making Doozy appeared first on SportsHandle.

As of one year ago, not a single dollar had been bet legally in Ohio on the outcome of a sports event.

Since then, more than $7 billion has been wagered in the new Ohio sports betting industry. Operators of sports betting sites have claimed at least $800 million in revenue from it in the first 10 months, with reports for November and December yet to be released.

The already-impressive numbers result from Ohio having implemented the nation’s largest single-day launch of legal sports betting on Jan. 1.

There are now 20 digital and 15 retail sportsbooks available to take wagers within the Buckeye State, which have quickly put it among the highest-volume betting states within the country. In addition, sports betting kiosks in more than 850 bars and other small locations around the state make betting easily accessible to anyone who has never bothered to download a sports betting app.

The sheer quantity of new betting — though no one knows how much was taking place illegally before this year — was one very notable factor in 2023 for Ohio’s gambling industry.

“Ohioans are sports fans, and it’s shown up in the level of engagement they’ve had in this,” said Matt Schuler, executive director of the Ohio Casino Control Commission, which regulates sports betting.

But at the same time, in the span of just one year Ohio has stood out nationally for a number of other reasons, whether for quickly changing its tax rate, applying tough enforcement standards to sportsbook operators, looking to protect athletes from harassment by angry sports bettors, or in one unfortunate incident, being the location of a bet that highlighted how scandals can arise from bettors’ use of inside information.

Schuler was willing to discuss all aspects of this very interesting first year of Ohio sports betting — in which he frequently played a key role — in a recent interview with Sports Handle.

Prepared, but still surprised at outset

Schuler said that in regulatory and other aspects, Ohio was well-prepared for the launch of sports betting from the fact it came well after legalization in other states it could learn from.

“There was a long train ahead of us, and we were darned near the caboose in terms of states doing this and had the benefit of watching New Jersey and all the other states that did this,” he said. “I think we had a decent picture of what to expect.”

But even so, the numbers generated in the first month of betting in January were stunning — over $1.1 billion in volume with a national record of $209.6 million in revenue — and Schuler was among those surprised. In retrospect, he was able to ascribe such levels, which were massive for a state of nearly 12 million people,  to multiple factors. At launch, Ohio was the fourth-biggest state to go live behind New York, Pennsylvania, and Illinois.

• There was the novelty of people being able to do something in the open that they enjoyed but which had been outlawed for their entire lives.
• Digital sportsbooks offered gargantuan promotions, totaling $320 million in the opening month, in competition to attract bettors to their sites with hopes of retaining them thereafter.
• The timing of the launch came during a relatively busy time on the sports calendar, with winter’s overlap of football, basketball, and hockey and numerous Ohio sports teams in action and attracting wagers from their fans.

While betting has continued to be strong in subsequent months, there has been nothing to suggest January’s start will ever be replicated. The monthly betting levels seem to have found a place that fits with the state’s population — bigger than Michigan but less than Pennsylvania.

“Before we launched, a lot of industry operators were telling me they really thought that Ohio was going to be a billion-dollar [monthly] market, but I never thought that,” Schuler said. “Who knows what the future holds … but what we’re seeing now after that first big month with all the enthusiasm, the promotions, the sports calendar, and the innate interest, is I think we are starting now to see the normal.”

Tax rate doubled quickly

Ohio did something six months into operation of sports betting that no other state had previously done — it doubled its tax rate on operators. The legislature acted on a request from Gov. Mike DeWine to hike the rate on July 1 from 10%, which was on the low side among large states, to 20% — higher than in Illinois, New Jersey, and Michigan but still well below rates in New York and Pennsylvania.

The state received $102 million in tax revenue in the first 10 months — already more than triple what some official estimates had forecast for the first year. The figure is $24 million higher than it would have been without the tax bump since July.

Schuler said the tax increase was a policy decision in which he and the commission were not involved or consulted. But he is aware it caused consternation among operators, though none has been vocal in criticizing the state for changing the rate so early in the industry’s evolution.

“They didn’t say a lot publicly, but Capitol Square is a small place and it’s hard not to pick up on different individual grousings about one thing or another, including the tax rate,” Schuler said. “Where complaints are maybe the loudest is from the sector of the market struggling to capture maybe even half a percent [of overall market share]. We have seven companies in Ohio taking about 93 percent of the market and [the others] sharing that remaining 7 percent.”

Schuler said the question already existed of whether the smallest operators could be viable long term in Ohio. The increased tax rate could be a factor affecting the answer, although any that cease operating in the state might have been likely to do so anyway.

“Their goal is to make money, and if it’s taken away, they’re not gonna like it, but from my perspective this is not going to change the market,” he said. “We’re watching month to month to see what happens in the state with [the overall industry having] all of the mergers and acquisitions and contractions. If anything, the tax rate is only going to add a little accelerant to things.”

A tough enforcer

Right out of the box, Ohio’s regulator made its mark as a strict enforcer of how sportsbook operators follow rules in the state. That includes industry leaders like DraftKings, BetMGM, Caesars Sportsbook, and PENN Entertainment (operator formerly of Barstool Sportsbook and now ESPN BET), which were fined a combined $1,050,000 early on for marketing that was deemed either to improperly target underage individuals or mislead customers with offers advertised as “risk-free.”

Then in May, the commission directed Fanatics Sportsbook to cease a promotion in which customers purchasing merchandise through its e-commerce site were told they qualified for bonus offers from the sportsbook.

Schuler said the commission intends to follow through with a proposed regulation that will bar operators from any promotional campaigns involving non-gaming transactions in which individuals under age 21 or who are problem gamblers on voluntary exclusion lists could be among those receiving offers.

As an example, Schuler said FanDuel partnered with Pizza Hut in a promotion in which those placing an order through the Pizza Hut app were informed they had qualified for a special FanDuel offer. Ohio intends to bar any such third-party offers that could reach those under 21 or with admitted gambling problems, despite concerns raised by both FanDuel and Fanatics that it’s unrealistic to expect them or their partners to be aware of each non-gaming consumer’s age or gambling history.

Schuler is unsympathetic to the objections, as he says state law clearly prohibits sports betting marketing that could be directed at underage individuals or those with a gambling addiction.

“It comes down to the law, and the commission does not have discretion here,” he stressed. “It’s already required.”

Attacking bettors who harass athletes

Ohio has also stood out for its emphasis on protecting collegiate athletes from some of the negative consequences of the spread of sports betting. In the same omnibus bill that doubled the tax rate, the legislature enacted a recommendation from the governor to include a provision that calls for banning betting in the state by anyone deemed to have threatened or harassed an athlete, coach, or official.

The new law came months after University of Dayton basketball officials highlighted how players had been vilified on social media following a game they lost by one point. The law covers those bettors guilty of harassment of any sports participants, but the Ohio commission has stressed that collegians are far more vulnerable to abuse than professional counterparts and it is looking at various ways to protect them.

“Maybe this is one downside of legalization, in that before legalization social media was not necessarily lit up with people saying, ‘You missed that goal and it cost me my rent money,” while cussing out an athlete publicly, Schuler said.

Enforcing such a law could be challenging for various reasons, and Schuler said the commission has had no complaints to investigate thus far resulting from it, so has yet to place any such unsuitable bettors on the state’s involuntary exclusion list.

“It gives the commission the ability to use another tool,” Schuler said of the law. “If we can stigmatize unacceptable behavior like threats against athletes, I think that’s a good thing.”

The college baseball scandal

Aside from anything related to harassment, the state’s involuntary exclusion list barring future betting will grow by at least one — and possibly two — from a different unsavory aspect.

In April, the former BetMGM Sportsbook at Great American Ball Park in Cincinnati was the location of an attempt by an Indiana resident, Bert Neff Jr., to place an abnormally large six-figure wager on a college baseball game.

BetMGM representatives reported to the Ohio regulator that they had learned Neff was in phone communication with University of Alabama baseball coach Brad Bohannon before wagering against Alabama in its game versus LSU. Reportedly, Bohannon informed Neff that Alabama’s star pitcher would be rested that day due to injury.

Schuler credited BetMGM with doing everything right in the incident, which led to a quick investigation by the commission in collaboration with the U.S. Integrity watchdog organization. All betting on the Alabama baseball program was suspended, and Bohannon was fired by the university.

“This is a case of everyone involved doing exactly the right thing at the right time in the most professional manner possible,” Schuler said. “Sports betting has been alive and well in the U.S. for a very long time in a very robust manner. … What’s true now [from legalization] is there are a lot of safeguards and checks and balances in place, where incidents come to light that might not have made it to the light before.

“It doesn’t mean there’s some huge, billowing  problem, in that you’re always going to have a small population of bad actors, and then everyone else doing it by the book.”

The case is still active for the Ohio commission in that Neff has requested a hearing in response to the regulator’s intent to place him on the list barring him from gambling activities in the state. Bohannon received a similar warning notice from the commission, and he will be placed on the exclusion list as he has not requested a hearing.

The post As Sports Betting Debuts Go, Ohio’s First Year Was A News-Making Doozy appeared first on SportsHandle.