In a keynote address Thursday, during the first day of the National Council of Legislators from Gaming States summer meeting in Denver, Stephen Krombolz gave some advice to lawmakers and regulators in attendance.
Don’t move the goalposts.
While Krombolz, Tipico senior vice president of business development and strategy, wasn’t specifically calling out Ohio and its recent decision to double the tax rate on Ohio sports betting operators, the implication was crystal clear.
“From an operator perspective, we really are making long-term commitments to invest in your states that we choose to enter in,” he said. “So, it’s helpful if the goalposts don’t move maybe along the way. Especially if you have operators that are operating within the letter of the law and following the rules and being good corporate citizens.
“As you’re considering changes down the road, whether it be tax rates, or markets that you allow, or advertising restrictions, we’re 100% on board in following those rules, and we will one way or the other. But the ones that impact you financially are just going to hurt the smaller operators more than they are the larger operators.”
Two weeks ago, Ohio lawmakers passed a budget that raised the tax rate on revenues to 20%. It was a proposal made by Gov. Mike DeWine earlier this year as he was not happy with the way some Ohio sports betting app operators were violating the state’s sports betting rules. In some cases, rules were broken by operators before wagering began on Jan. 1.
High Taxes Will Weed Out Smaller Competitors
While Tipico is a leading provider in its native Germany, its operations are not nearly as large in the U.S.
That’s why Tipico Ohio was a key state for the company, Krombolz said. The universal launch date allowed for them to be a first mover.
“We were live on Day One in Ohio, and we spent a lot of money in Ohio to try to grab market share, and we continue to invest heavily in Ohio,” he said.
He called on regulators and lawmakers to think about the consequences of the actions they take regarding sports betting and gaming.
“If you want to have a real competitive market that is open to the large and small operators, and we’re very much a challenger brand in the U.S. . . . every dollar counts,” Krombolz said. “So, when you set tax rates really high, sure, the big operators are going to pay, because they want to be there. But for smaller operators, it’s going to be more difficult, so you’re going to really weed out competition down the road.”
Ohio Retail Sportsbook Still a Tipico Priority
Tipico has an online license in the state, and it has the rights to operate a brick-and-mortar sportsbook with the Columbus Crew, the MLS team that serves as Tipico’s sports betting partner in Ohio.
According to the Ohio Casino Control Commission, Tipico’s retail license is conditionally approved. OCCC Director of Communications Jessica Franks told BetOhio.com earlier this week that approval status means that, in some cases, an entity has yet to complete all the compliance requirements to open.
Despite his pointed comments about states moving the goalposts, Krombolz reiterated Tipico’s commitment to the state and to a retail sportsbook. He told BetOhio.com that Tipico must take a bet by the end of the year to retain the retail license, and that would happen.
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