Ohio Governor Approves Sports Betting Tax Hike, Operators Will Pay 20% on Their Revenue

Ohio Governor Approves Sports Betting Tax Hike, Operators Will Pay 20% on Their RevenueOn Friday, Ohio lawmakers voted in favor of a proposal to increase the sports betting tax rate to 20%. The move aims to boost Ohio’s sports betting tax revenue by $100 million to $315 million annually. Of that revenue, 98% would go to sports educational programs, while the remaining 2% would be directed to the Problem Sports Gaming Fund. The tax increase was included in the state’s $85.8-billion budget for fiscal year 2024-2025.

The budget bill became effective on Saturday after Governor Mike DeWine signed it into law. In April, the House presented its version of the budget bill, which did not include a sports betting tax increase. But in June, the Senate passed the budget bill after introducing several amendments to it. The revised version of the bill included a provision, under which state sports betting operators would be taxed at a 20% rate. The idea to double the sports betting tax was initially suggested by Governor DeWine in his version of the budget bill this February.

However, DeWine’s proposal did not gain traction among legislators immediately. But in June this year, members of the Senate decided to include DeWine’s tax hike proposal in the budget bill in a bid to maximize revenues from the recently-launched sports betting market. As expected, House members opposed the sports betting tax increase, claiming it might have a negative impact on the industry. However, the budget bill passed the Senate on a 25-6 vote and the House on a 67-30 vote on Friday last week.

The Recent Tax Hike Raises Concerns among Sports Betting Operators

As of January this year, online and retail sports betting is legal in Ohio. The gambling regulator, the Ohio Casino Control Commission (OCCC), initially licensed 16 online sports betting platforms and 13 land-based sportsbooks. Some of the most popular online sportsbooks that operate in the Buckeye State are Barstool Sportsbook, BetMGM, Caesars, DraftKings, and FanDuel. Currently, 18 online sportsbooks cater to the needs of Ohioans.

Some operators claim that smaller sportsbooks may have to leave the market due to the recent tax hike. Former state Rep. Dan Dodd commented on the sports betting tax increase that the state might lose millions of dollars in licensing fees because many operators would prefer to stay away from Ohio. Americans for Tax Reform referred to the recent tax increase as “tax risk” and explained that the state’s revenue would not increase under the new tax rate because the number of active operators is expected to decrease.

At the moment, 40 states offer legal sports betting. Of all those states, only 10 have a sports betting tax rate of 20% or more, with Ohio being among them. Only New York, Delaware, and Rhode Island tax sports betting operations at a rate of 50% or more, while the average across the country is 13%.