Posted on: July 4, 2023, 08:10h.
Last updated on: July 5, 2023, 04:10h.
The Ohio general assembly has agreed to a $191 billion budget deal just hours before the end of the fiscal year last Friday. One of the changes included in the deal is an increase in the tax on sportsbooks from 10% to 20%.
The higher tax rate sought by Republican Gov. Mike DeWine was one of hundreds of issues the state House and Senate had to reconcile before passing the two-year budget deal.
A legislative conference committee released details of the deal Friday afternoon, and it easily cleared the state Senate on a 25-6 vote and the state House on a vote of 67-30. While the state’s new fiscal year starts Saturday, the new budget is not expected to go into effect until early next week to allow legislative staffers to draft final language and get the deal to DeWine’s desk.
State budget analysts estimate the higher rate would generate an additional $100 million to $135 million per year from taxes on sports betting. The 20% tax aligns Ohio with states such as Pennsylvania and Illinois, which charge the same rate.
Reduction in Sportsbooks
Industry watchers anticipate that the higher tax rate may hamper the state’s sports betting industry growth.
At a 20% tax rate and in the current environment, it’s not hyperbole to predict Ohio will have 10 or fewer mobile operators offering bets in 12-18 months,” former state Rep. Dan Dodd wrote on Twitter Friday. “The state will also lose over $10m in license fees (unless proprietors pay for license themselves hoping to get a new operator).”
Dodd said the new law will have unintended consequences.
“The irony in doubling the Ohio sports betting tax is that several key legislators created the license framework purposely to break up the oligopoly on gaming that casinos/racinos have,” he wrote. “With maybe two exceptions, the 20% rate will strengthen, not weaken, the grip of casinos/racinos.”
Other Notable Changes
The Ohio budget includes additional changes to state law governing sports betting, including allowing regulators to ban individuals who threaten “violence or harm” against athletes from participating in wagering.
The new law also expands the number of establishments authorized to apply for sports gaming licenses to include breweries, wineries, or distilleries that operate on-site bars or restaurants, as well as micro-breweries.
Legislators agreed to expand the membership and duties of the Joint Committee on Sports Gaming and rename it to the Study Commission on the Future of Gaming in Ohio. The commission would be required to recommend the future of lottery, sports betting, and casinos in the state by June 30, 2024.
The final deal does not include language from a Senate-passed budget that would have required annual reports on sports gaming. Nor does it include restrictions requested by DeWine on the use of “free” or “risk-free” promotional credits.
Also absent from the final deal was a House proposal that would have increased the maximum number of sports gaming facilities allowed in counties with more than 800,000 residents.