Ohio Sports Betting Tax Cut Bill Introduced as Other States Consider Increases
Ohio approved a 2023 increase on its sports betting tax. At least one lawmaker wishes to return it to its initial rate.
State Sen. Niraj Antani, the lead sponsor of the 2021 legislation that legalized Ohio sports betting, introduced an expense previously this week that would cut the tax rate from 20% of operator gross video gaming earnings to 10%. Filed in his last days before leaving office, Antani composed in testament supporting the tax decrease that the present rate makes it "considerably challenging" for numerous smaller operators to be "economically feasible."
"10 percent was a reasonable tax rate that put us in the middle of the pack," Antani wrote in a letter to the state Senate's financing committee. "While I 'd love for us to be at the 6.75% rate to tie the lowest in the nation, going back to 10% is reasonable."
Ohio sports betting
Ohio's 2021 sports wagering legalization bill consisted of one of the most extensive licensing caps in the nation. More than two-dozen operators revealed interest in the market, the nation's seventh-largest by population.
As part of the state's most current budget plan, Gov. Mike DeWine pushed to double the rate. The 10% rate was near the median average; the 20% puts Ohio at the sixth-highest mark of the 39 states that have authorized legal sports betting.
The 10% tax rate was likewise a foundational aspect that encouraged operators to get in the marketplace said John Pappas, state advocacy director for gaming market assistance group iDEA, in an email to Covers.
These businesses made substantial investments, developed market gain access to contracts, and secured supplier contracts based on this rate, Pappas wrote. The midstream boost to 20% interrupted their service designs, developing more obstacles for operators and forcing a number of to leave Ohio while hindering other books from seeking readily available licenses.
Nineteen mobile sportsbooks accepted bets in Ohio in August. Three of those - Betfred, Superbook, and Betway - have given that left the state. Six of the staying 16 books have less than 1% market share each.
Larger books by handle such as DraftKings and FanDuel, which each have around one third of the Ohio market, will have the ability to withstand the greater rate. But it injures competitors for the smaller books, Pappas stated, harming the Ohio sports wagering market overall.
"Returning to the original 10% rate would restore stability, making it possible for operators to grow and provide worth to Ohio customers, while promoting a healthy, competitive market that benefits the state in the long term," he said.
Ohio lawmakers are nearing the end of a lame-duck legal session following the 2024 elections. The sports wagering tax rate likely won't be considered up until the brand-new legislature convenes next year.
National ramifications
Ohio's prospective tax decline comes ahead of a critical 2025 legislative season for gambling industry stakeholders in statehouses nationwide.
Several recognized sports wagering states have actually considered tax increase expenses ahead of the 2025 session, which begins in January in many states. Illinois, one of the country's highest-grossing sports betting markets, has currently passed legislation that develops a tiered tax structure, pushing high earners such as DraftKings and FanDuel to near a few of the country's greatest levels.
DraftKings presented and rapidly rescinded a proposition to pass the tax on to wagerers in Illinois, New York City, and Pennsylvania. Operators are still handling how to handle a greater tax concern in the face of drooping growth chances.
Missouri was the only state to approve sports wagering in calendar year 2024. Minnesota and Georgia appear like leading competitors in 2025, but there appears to be long shot for legalization in California and Texas, the country's 2 largest states by population.
Louisana lawmakers will not increase sports wagering taxes on sportsbooks today but interest stays in the legislature; state Rep. Michael Johnson indicated today the proposed 51% rate in a new bill- which would be the nation's highest - is too low.
The limited future growth opportunities for sports wagering come as online casino legalization has been even slower. Though multiple states are expected to introduce online slot and table game legalization steps in 2025, there is no sure thing any such legislation passes.
These video games, which have substantially higher revenue margins than sportsbooks, are only legal in 7 states.
Sportsbooks have increased their margins in the past two years mostly due to the proliferation of single-game parlays. But without new state markets, and prospective future tax increases, there is a reduced earnings ceiling for the largest operators - and a prospective existential risk for smaller companies.