Zoe Sharp
As reported by BonusInsider at the beginning of this week, the Ohio Senate passed an omnibus budget bill last week, under which sports betting operators would be required to pay a 20% tax, which represents a 100% increase compared to the current tax rate. But the House did not concur with the Senate and voted down the tax increase proposal by a 3-1 margin this Wednesday. However, the amendment introduced by the Senate would have generated just a small part of the $85.8 billion spending plan.
Lawmakers from both chambers must come to terms soon because the bill has to be signed latest on June 30 in order to become effective before the beginning of the 2023-2024 fiscal year, which starts from July 1. Legislators are expected to meet in a conference committee to discuss the issue.
In April this year, House representatives passed their version of the budget bill, which did not mention anything about a sports betting tax hike. But last Thursday, the Senate introduced over 800 amendments to the bill before passing it. Under the revised version of the budget bill, sports betting operators would pay a 20% tax. The Senate version of the bill passed the respective chamber on a 24-7 vote.
As expected, House members voiced objections against some of the amendments introduced by the Senate, with the tax hike being one of them. Lawmakers claim that the tax increase would raise more funds for education programs but would have a negative impact on the sports betting industry in the long term. Industry experts claim that the dramatic tax increase may also prompt reputable operators to leave the market.
Ohio’s Sports Betting Industry Has Experienced a Significant Slowdown in the Months Following January But Remains Viable
Sports betting was launched in Ohio in January this year. Only a month later, Governor Mike DeWine (R) suggested doubling the sports betting tax. No other state has ever considered increasing the tax rate just a month after legalizing sports betting. He also came up with the proposal to prohibit operators from using “free” and “risk-free” in their commercials. Quite expectedly, his proposal to increase the sports betting tax rate did not gain traction among lawmakers and has not been a topic for discussion until recently.
Figures released by the Ohio Casino Control Commission reveal that the state collected just under $450 million in tax revenues between January and April. In January, Ohio’s sports handle reached $1.1 billion. However, the industry significantly slowed down in the months following, and figures come to prove this.
In February, the state’s sports betting handle was $638.2 million, representing a decline of 42.6% compared to the previous month. In March, Ohio saw $737 million in bets, while the state’s sports betting handle for April was $521.7 million, representing almost a 30% decrease compared to March. As of May, Ohio’s sports betting companies reported an overall handle of $670,173.
Of all US states, only seven have a sports betting tax rate equal to or greater than 20%. A curious fact is that Rhode Island and Delaware tax sports betting operators at a 50% rate. However, it would be wrong to compare these markets to Ohio, considering that they are smaller in size.