There has been a lot of talk about making significant changes to gambling laws in Ohio over the past few months. Still, the question remains whether state lawmakers and Gov. Mike DeWine can reach an agreement on how to move forward before the state’s new fiscal year starts in less than two months.
DeWine submitted a budget proposal this year that would raise the tax Ohio sports betting operators pay from 20% to 40%. If approved, it would give the Buckeye State one of the highest tax rates for sportsbooks. It also would mark the second time the state doubled the tax since the first bets were placed in the state on Jan. 1, 2023.
Ohio House Opposes Sports Betting Tax Hike
DeWine’s reason for the increase is to create a funding stream for the state’s involvement in the construction of new professional sports stadiums or updates to existing facilities. It comes as the Cincinnati Bengals and Cleveland Browns, the state’s NFL franchises, are seeking almost $1 billion in state money for their projects.
Last month, the Ohio House of Representatives approved its version of the budget that included $600 million in funding for the Browns' proposed new stadium. However, lawmakers took out DeWine’s sports betting tax hike and approved paying for the state’s share of the $2.4 billion project through the general fund.
Since then, a March 26 memo from Ohio Budget Director Kimberly Murnieks was made public. The eight-page document from Murnieks, who was appointed by DeWine six years ago, raised concerns about lawmakers’ plans. Those plans included paying for the state’s portion of the Browns stadium costs through 25-year bonds. Murnieks said going that route would be unprecedented for Ohio and would cost taxpayers more than $1 billion to pay off the bonds.
The budget bill is in the Senate, which will almost assuredly make changes to the spending plan. That will then require negotiations between the legislative chambers and the governor’s office to reach an agreement.
Ohio Sports Betting Tax Hike Could Shrink Market
In January 2023, Ohio launched one of the most robust sports betting markets in the country. By August of that year, 19 online Ohio sports betting apps operators were taking bets. However, there are now just 14. Among the reasons for the contraction was the increase in the sports betting tax from 10% to 20%. DeWine proposed it in the wake of several operators violating gaming rules, but the hike had more of an impact on smaller operators who were abiding by the guidelines.
Another doubling of the tax would likely have a similar impact, with another likely contraction in the market to follow. Bettors in the Buckeye State also could see fewer Ohio sportsbook promotions or bonus opportunities if the tax jumps up to 40%.
Will Ohio Lawmakers Propose iGaming?
This week, Ohio’s Statehouse News reported that state Rep. Brian Stewart, R-Ashville, plans to file a bill that would legalize online casinos, also known as iGaming, in the state. That measure has not been filed as of Friday afternoon.
It’s not certain that this is a response to DeWine’s proposed sports betting tax increase. But Stewart, who chairs the House Finance Committee, did say that the goal is to create more revenue.
However, passing an Ohio iGaming bill is far from a guarantee. Not all gaming stakeholders agree on how to model iGaming. The state has four full-fledged casinos that are regulated by the Ohio Casino Control Commission and seven “racinos,” with video lottery terminals at racetracks. The state lottery oversees those facilities.
BetOhio.com has learned that two Ohio casinos operators favor a model that would keep out the likes of FanDuel and DraftKings, the two online gaming giants who account for roughly two-thirds of the Ohio online sports betting handle each month.
However, there are concerns among some lawmakers and operators that iGaming would undermine existing brick-and-mortar establishments. In addition, an iGaming bill could face constitutional questions and possibly a legal challenge. Then there’s DeWine, who would be expected to oppose any effort to expand gaming again during his term, which expires just after the end of 2026. He won’t be able to seek re-election because of term limits.
Senate Creates Gaming Committee
While the Ohio House may take up an iGaming bill, the Senate has created an ad-hoc committee to discuss gaming matters. Senate President Rob McColley appointed seven members to serve on the select committee, which is expected to meet while the chamber considers the budget.
State Sen. Bill DeMora, D-Columbus, is the ranking minority member of the committee. In an interview Thursday, he told BetOhio that, though he’s usually not involved in budget discussions with Senate leaders, he believes lawmakers want to find a “longer-term solution” to funding stadium projects without having to touch general fund revenues.
DeMora opposes using public funds in that manner. Last month, he filed Senate Bill 171, entitled the “Public Access to Professional Sports Act.” That measure would require any professional sports team that seeks public funding for a stadium project to have “won at least half of its games” in three out of the last five regular seasons.
From 2020 to 2024, the Browns had two winning seasons.
“I don't think there's any appetite” to use the general fund to pay for stadiums, DeMora said. “I know that no Democrat supports that, and I don't think many Republicans support it either.”
The senator added that the stadium issue goes beyond just the Bengals and the Browns. He added that Nationwide Arena, the Columbus Blue Jackets home that’s in his district, will need upgrades soon, as will Huntington Park, the nearby minor-league baseball stadium.
Where Things Stand For Ohio iGaming
Jerry Reed wasn’t singing about the Ohio Legislature in “East Bound and Down.” Still, the line, “We’ve got a long way to go and a short time to get there,” is a perfect way to describe where things stand in Columbus right now.
The new fiscal year starts July 1. There are distinct lines that have been drawn among all sides, but it appears that any solution to move forward would require at least one or more of the stakeholders to cross theirs.
In an ideal world, using sports betting tax money to fund stadium projects would seem like a good idea. Those who wager on Browns, Bengals or any other Ohio team would likely be the ones to go to their stadiums, and it would free other state funds for essential purposes. However, most of Ohio’s sports betting tax fund is already earmarked for education, and the hike alone may not cover all the stadium needs before the state.
BetOhio will continue to monitor the situation in Columbus and provide updates in the coming weeks.
USA Today photo by Kyle Robertson/Columbus Dispatch
