COLUMBUS, Ohio — In his budget introduced this week in Columbus, Ohio, Gov. Mike DeWine has devised a way to pay for new sports stadiums without using state taxpayer dollars. His answer? Use some of the money Ohioans lose in sports betting.
DeWine is calling on the legislature to double the tax rate that those operating Ohio's sports book pay on their profits after all winnings are paid.
"Look Ohio citizens are giving every single day millions of dollars to sports gaming companies. It's time for us to raise the tax on them so that we can do things to help Ohioans," DeWine said. "These are the companies that are taking all of this money outside, draining it outside of the state of Ohio on gaming. They ought to pay their fair share, and this would make them pay their fair share."
The budget proposes doubling the tax rate from 20 to 40% and creating what he called the Sports Facilities Construction and Sports Education Fund.
"So that it will no longer be necessary to use general fund tax dollars for this purpose," he said. "What can the money be used for? This fund, once enacted, can be used to help fund professional sports facilities in both major and minor leagues. Also, the proposal allows the fund to support youth sports education. It can be used, for example, to help offset the cost of sports and school activity fees that prevent many Ohio children from playing youth sports or participating in other school-based extra-curricular activities."
When the U.S. Supreme Court legalized nationwide sports betting in 2018, Ohio didn't immediately jump into the pool but slowly waded into the water. They took four years to study the issue before coming up with a plan and, after much debate a 10% tax on the sports books' winnings.
But after more than a billion dollars was wagered in the first month of operation in 2023, the governor called an audible and, with the legislature's help, doubled the tax on winnings to 20%.
In 2024, that netted Ohio $180 million in tax revenue, but it also meant $723 million went to the sportsbooks, most of them located out of state.
New York, New Hampshire and Rhode Island have the highest tax on sports betting revenue at 51%, followed by Pennsylvania (36%), Vermont (31.7%) and then Ohio, Massachusetts and Arkansas at 20%. The jump to 40% would move Ohio to fourth.
"This would mean that Ohio still is certainly not the highest, we wouldn't be the lowest but we would not be the highest," the governor said.
"We've never seen anything like Ohio is proposing," said Ryan Butler, Senior Editor for Covers.com, an industry analyst.
"In talking with some people in the industry there is a lot of concern that this would mean a pullback in eventually advertising and marketing expenses. This could also be less promotion, this could be changing the betting lines. Right now sports books charge what's called a vig, a little bit extra for the line. Maybe that could change, we've seen that proposed in other high tax states by some of these leading sports books," he said.
Also, not all sports betting is alike in that roughly 98% of the bets made in Ohio are made online, and in Ohio, the online side accounts for 100% of the revenue. That's because the state's retail sports actually lost a combined $1 million, with 10 of the 14 retail sports books ending the month in the red.
DeWine's tax proposal caught the industry by surprise, and Columbus lawmakers in both parties questioned the logic.
"We just had a massive increase in this tax last budget cycle from 10% to 20%, and we're still realizing what that actually means to the industry," said St. Rep. Bride Rose Sweeney of Cleveland. "I think we have a lot more due diligence to do."
Republican State Rep. Brian Stewart of Ashville agreed.
"Look speaking for myself we started out with a 10% tax on sports gaming, we've not even finished two football seasons and now we're talking about quadrupling that tax. I think that's going to generate a lot of discussion."
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