CLEVELAND — Sports betting in Ohio is only a month and a half old, but already Gov. Mike DeWine is proposing some changes. Among the asks in his just-released budget, the governor would like the legislature to double the tax rate the state places on winnings.
"He sees that the Ohio sports betting market is maybe a little more robust than some of the bill makers thought it may be and they're leaving a lot of revenue on the table," said Robert Linnehan, a sports betting analyst with XL Media who has extensively covered the process in Ohio.
Ohio charges sports betting operators a tax of 10% on their winnings after all bets are paid. In line with many other states, with the exception of New York which charges 10% for online but 51% for brick-and-mortar sports books, and neighboring Pennsylvania which charges a tax of 36%.
DeWine's proposal? Double the 10% to 20%.
"This would put Ohio just a little bit over the national average of 19%, according to Forbes," he said.
Operators will argue the trade-offs for the low 10% tax were the higher licensing fees they already paid, in the $3-to-$10 million range. And they'll also likely argue that the higher tax will cut into the promotions and bonuses they're able to offer Ohio bettors — all of which the American Gaming Association says may provide oxygen to the illegal market.
"Ohioans have been betting on sports for a really long time, that certainly isn't an activity that started on January 1," said Casey Clark, Senior Vice President with the American Gaming Association. "What we have to be careful about is making sure that we're not putting legal operators, who are playing by the rules at a significant competitive disadvantage to those who have been operating illegally in the state for a long time. Anything we do to deter [legal sports book operators] from being able to operate effectively in essence enables the illegal market to continue."
That being said, because of the size of the Ohio market, Linnehan doesn't see any operators leaving Ohio if this changes.
"If the law is passed, honestly I don't think you'd see operators flocking out of Ohio if the tax rate is bumped up to 20% instead of the 10%. It's too big of a market, there's too much action in Ohio and I don't think that that would force a lot of people out to be honest with you."
The governor is also calling on the legislature to make it a crime to make betting-related threats. This followed University of Dayton's men's basketball team getting threats on social media last month after the team lost a game they were favored to win drawing the immediate fire of the Ohio Casino Control Commission's executive director.
"These are kids that are out playing a game," said Matt Schuler during the Commission's January meeting. He said while the commission doesn't have the authority to control free speech, they do have it to put people on an exclusion list from all gambling in Ohio. The governor's proposal would essentially codify that.
"No state's ever tried to do this before," Linnehan said. "No state's ever said we're going to monitor social media, we're going to monitor other platforms and if you're harassing athletes over betting events and betting outcomes then you can't use our product anymore. Nobody's done this before, so it's going to be interesting how this is done legally, whose going to monitor it, how they're going to ban people."
"You've seen so far they've been very strict with their regulations and everything they said they would do so if they said they're going to do it, they're definitely going to explore how to get something like this done," he said.
A third proposal would seek to further crack down on operators who play loose with their advertisements, either in their wording offering free play or going after those under 21, by seeking to restrict the operators' ability to offer promotional credits on top of any fine that's been issued.
"Now they're saying, in addition to a monetary violation, if you do this again you're not going to be able to offer promos and bonuses to your customers anymore. Just sort of an extra incentive for these operators to make sure that anyone that's sending out these advertisements or their affiliates that send out some materials on their behalf that they are up to date on every rule and every regulation that the Ohio Casino Control Commission has put forth because it will be enforced and they will be fined," Linnehan said.
