Sports Betting Operators in Ohio May Face Major Tax Increase

Sports Betting Operators in Ohio May Face Major Tax IncreaseLast Thursday, the Ohio Senate approved an omnibus budget bill, which includes provisions aiming to double the state’s sports betting tax to 20% in the first year of a sportsbook’s operations. The Senate voted in favor of the legislation without discussing the tax hike. However, the dramatic tax increase is likely to spark a debate among House members.

The sports betting sector in the state has experienced a significant decline since the record-breaking results in January. According to industry experts, the tax increase may severely hit the sustainability of the sports betting industry and lead to many reputable operators leaving the market.

Only two months after sports betting was legalized in Ohio, Gov. Mike DeWine proposed the tax increase. However, the proposal failed to gain any support from lawmakers, and the matter has not been discussed again. The tax hike for sports betting was initially included in House Bill 33. The tax increase proposal was removed from the legislation before the House approved the state budget on April 26.

But last Wednesday, the Senate Finance Committee passed an amended version of the budget bill that included a provision under which sports betting operators will be taxed at a 20% rate instead of 10%. The amendment was introduced without any prior discussion on the matter. And on Thursday last week, the Senate passed the revised version of the bill on a 24-7 vote. Senators did not comment on the tax hike again. Instead, they discussed proposals seeking to introduce changes to the current income tax scheme and education funding.

House Members Will Most Likely Disagree with the Amendments Introduced by the Senate

The amended version of the bill now heads to the House for concurrence. However, House members are unlikely to approve all amendments introduced by the Senate, including the dramatic tax hike that would affect sports betting operators in the state. This means that a conference committee will potentially discuss the legislation and resolve differences by the end of the month.

Under the Senate version of the bill, the Sports Gaming Profits Education Fund would use most of the revenue to support public and nonpublic early education. Additionally, the bill includes a new provision under which the Ohio Casino Control Commission must join forces with a state university to prepare an annual report on the prevalence of sports gambling problems in Ohio. The report must also include recommendations on how to tackle the issue.

In January, Ohio’s sports betting handle amounted to $1.1 billion. Figures released by the Ohio Casino Control Commission revealed that the state’s sports betting handle in April was $521.7 million, representing a decline of 29.36% when compared to the amount Ohioans wagered in March – $738.6 million. Industry insiders warn that the dramatic tax hike would negatively affect the sports betting industry in the state, and lawmakers should carefully examine the advantages and disadvantages of such a move.