The Ohio Senate has put forth a proposal to double the tax rate on sports betting in the state as part of an omnibus budget bill. If approved, the tax would increase from its current rate of 10% to 20% in the first year of sportsbook operations.
Governor Mike DeWine had previously suggested this tax hike in February, but it did not gain much traction at the time. However, the provision has resurfaced in the Senate’s version of the budget bill without any substantial discussion. The impact of this proposed tax increase would be significant for Ohio’s online sports betting industry.
The state had a strong start to sports betting in January, with mobile and retail sportsbooks generating a record-breaking revenue of $209.2 million. Nevertheless, betting activity has since slowed down, as April’s betting handle of $520.6 million was less than half of the amount wagered in January.
During the first four months of 2023, taxable sportsbook revenue totaled $449.2 million, with $44.9 million going to the state’s coffers. Currently, the tax rate of 10% primarily supports education funding. If the tax rate is doubled to 20%, tax revenue would have amounted to $89.8 million instead.
The Senate’s budget bill also includes changes in the allocation of tax dollars. The Sports Gaming Profits Education Fund, which receives a significant portion of the revenue, would be directed to support public and nonpublic education for students in grades kindergarten through twelve, as determined by the general assembly.
Furthermore, the bill proposes that the Ohio Casino Control Commission collaborate with a state university to conduct an annual report on the prevalence of problem gambling in the sports betting sector and provide recommendations for addressing this issue.
It is worth noting that the Senate’s budget bill does not include provisions for the creation of a state commission to study and make recommendations on various aspects of Ohio’s gambling industry. Additionally, the bill does not address the expansion of the number of retail sportsbooks permitted in the state’s largest counties, a provision present in the House’s version of the bill.
The budget bill will now return to the House, where it is expected to encounter disagreements with the Senate’s amendments. A conference committee will be established to resolve these differences and produce a final version of the bill before the June 30 deadline. Both the House and Senate are under Republican control, and Governor DeWine, a fellow Republican, will play a crucial role in the final decision-making process.
The fate of the proposed tax increase and other gambling-related provisions in the budget bill will be determined through further deliberations and negotiations among Ohio’s legislative bodies. The outcome will have significant implications for the future of sports betting in the state.
