The following article was originally published in the Ohio Capital Journal and published on News5Cleveland.com under a content-sharing agreement.
Sports betting went live in Ohio just five months ago. But lawmakers are already wrangling over small tweaks and big changes for the industry in the state budget.
Sports betting: a primer
Ohio established its sports gaming system in late 2021, but it didn’t go live until Jan. 1 this year. One of the chief questions lawmakers had to answer was which agency should oversee the program — the state lottery or the casino control commission? It’s an important distinction because the lottery funnels money directly to education. The casino commission puts nearly all its sports gaming revenue in a fund split evenly between education and sports or other extracurricular activities.
Lawmakers decided to split the pot but wound up heavily favoring the Ohio Casino Control Commission. The OCCC oversees sports gaming at brick-and-mortar casinos and the online sportsbooks which make up the vast majority of wagers. The lottery meanwhile, runs a small corner of sports betting via kiosks set up at sports bars.
The most recent reports from the OCCC show the agency generating nearly $300 million in revenue during the first two months of sports betting. Nearly all of that came from online wagers.
The lottery on the other hand generated a bit less than $350,000 over the course of three months. The majority of that money, about $270,000, stayed with the proprietors hosting the lottery kiosks. As Cleveland.com reported, that puts the lottery’s sports betting program in red.
Governor’s proposals
The introduction of sports betting in Ohio was raucous, with at least half a dozen online sportsbooks flooding the airwaves with various promotions. Less than a week after gambling became legal OCCC officials announced it would seek fines against three sportsbooks. One of them — DraftKings — got hit with a violation before betting was even legal.
Gov. Mike DeWine made no secret about his distaste for the sportsbooks’ aggressive approach.
In his budget proposal, DeWine sought to crack down on so-called “free” or “risk-free” bets. The language would prohibit such promotions if they require people to put up their own money to “use or withdraw” any winnings from the wager.
In another significant change, DeWine proposed doubling the tax rate for sports betting, raising it from 10% to 20%. According to the Legislative Service Commission, that change could add $120-175 million to state coffers each year.
The governor’s budget would also allow officials to exclude people from gambling if they’d made threats against people involved in a sporting event.
The House’s counterproposal
Although Ohio House lawmakers kept the governor’s exclusion list provision in place, they scrapped both of his more significant changes. In place of raising taxes or addressing deceptive promotions, the House proposed a study on the “future of gaming in Ohio.”
House lawmakers made a handful of other proposals that likely to expand the footprint of sports gaming. Although the bulk of bets are placed online, their budget proposal would expand the maximum number of brick-and-mortar sports gaming facilities per county from five to seven. A statewide cap of 40 such facilities would remain in place.
The spending plan would also add breweries, wineries, or distilleries with restaurants on-site to the list of businesses eligible to host lottery-run sports betting kiosks.
House members also have ideas for tweaking the revenue stream. Instead of splitting revenue evenly between education and sports or extracurriculars, they’d cap the latter at $15 million a year. According to the House’s math, that change amounts to $50 million a year for education.
The House’s spending plan also includes an earmark to fund sports programs for people with disabilities — known as adaptive sports. That funding stream would be 3% of the total sports gaming tax revenue, but not less than $500,000 a year.
