Several gaming bills have caught the attention of the industry, and the first has to do with Ohio becoming the first state to tax both the mobile sports betting revenue and handle, while the others would make Ohio only the eighth state to legalize online casino gambling.
Tax on Handle
Those who may not be aware should know that every state that has passed sports betting legislation taxes sportsbooks’ revenues, except Tennessee, which is the only state to tax the handle (the total volume of bets regardless of wins or losses) but not revenues. Naturally, the handle always exceeds the revenue; therefore, Tennessee’s tax on its sports betting operators’ handles is only 1.85%. Tax on revenues ranges from 10% to as high as 51%.
Ohio currently has a 20% tax on sports betting revenues, but Governor Mike DeWine wanted to double the rate to 40% during this session. However, many legislators did not support another steep increase after DeWine doubled the original tax from 10% to the present 20% only months after launching in Ohio in January 2023.
However, Senator Louis Blessing has proposed a twin tax involving the current 20% on revenues plus an additional 2% on the handle. This would placate those who didn’t want to double the revenue tax while effectuating additional revenue for the state. After crunching the numbers, a 2% tax on the betting handle would bring the state just slightly less than the additional 20% on revenues requested by the governor.
Should Blessing’s bill pass, Ohio would be the only state to tax both the revenue and the handle. Yet, there will be industry pushback to the additional profit coming out of the pockets of the sportsbooks, and as this becomes closer to reality, the trade industry mouthpieces like the Sports Betting Alliance and others will likely lobby the legislators to rethink their support for such a tax.
Will Ohio Be No. 8?
Sports betting has become widely accepted in America, with 39 states passing legislation to welcome providers to operate within their territory to accept sports bets and pay taxes on their revenues. However, getting legislators to back online casino gambling, also known as iGaming, has been much more difficult despite the taxes generated from it towering above those of sports betting.
The concerns range from fears of addiction to cannibalization of business from land-based casinos. This is why only seven states, including Rhode Island, Michigan, West Virginia, Delaware, Pennsylvania, New Jersey and Connecticut, allow 24-hour casinos on mobile devices and PCs. But iGaming could be coming to Ohio if one of two online casino bills is passed.
Last week, the Senate Select Committee on Gaming held its second hearing on Senator Ethan Manning’s Senate Bill 197, while Representative Brian Stewart introduced his iGaming measure in the form of House Bill 298 at the same time.
Manning’s bill contains:
- 11 licenses for the state’s casinos and racinos
- $50 million license fee
- 36% tax for Ohio operators
- 40% tax if an operator contracts with a management company
- $5 million renewal fee
- iLottery legalization
- Pari-mutuel horse racing wagering
Stewart’s bill contains:
- 11 licenses for casinos and racinos in the state
- $50 million license fee
- 28% tax rate for Ohio operators
- $10 million license renewal fee
- Prohibition of sweepstakes casinos
- Ban on credit card funding
- Prohibits bonuses and promo credits
