As legal sports betting approaches the six-month mark in Ohio, the overwhelming majority of those betting in the Buckeye State have done so using one of the 18 sports betting apps operating statewide.
Thanks to their ease of use and accessibility, Ohio online sports betting accounted for about 98% of the state’s sports betting revenue in the first five months of operation, with around 2% coming from brick-and-mortar retail sportsbooks located at casinos, racinos and pro sports stadiums.
An even smaller percentage of Ohio’s overall sports betting volume has come from the sports betting kiosks located inside bars, restaurants, stores and other businesses across the state.
While the Ohio Casino Control Commission oversees Ohio’s retail and online sportsbooks, the Ohio Lottery Commission is charged with regulating the sports betting kiosks.
Handle and revenue for the sports betting kiosks have held relatively steady according to numbers for the first five months of operations. But the Ohio Lottery’s share of revenue from the kiosks has yet to approach what is needed to cover the Lottery’s administrative costs.
Unless overall revenue from the sports kiosks increases significantly, the Lottery will continue to operate the sports betting kiosks at a loss.
Kiosks account for tiny percentage of Ohio sports betting volume
The handle for sports betting kiosks in their first five months of operation was around $5.5 million, with just under $600,000 in revenue.
Compare that to the $446 million in handle reported for online and retail sportsbooks in just May. The OCCC reported that sportsbooks made nearly $58 million in April alone.
Overall, Ohio’s sports betting market has seen around $3.5 billion in betting volume since the Jan. 1 launch.
The Ohio Lottery’s income for operating the kiosks comes from its split of the revenue with the kiosk proprietors, the companies that provide and maintain the kiosks’ hardware and software.
The Lottery shares Type-C licensing (the official name for the license kiosk host locations apply for) approval duties with the OCCC. But the Lottery doesn’t receive money from licensing and application fees.
The non-refundable $1,000 application fee for host locations applying for Type-C licensing (which serves as the licensing fee, good for three years, if the business is approved) goes to the OCCC. The OCCC also keeps the $15,000 application fee required of Type-C sports gaming proprietors.
Meanwhile, the bulk of tax revenue from the kiosks, as well as the initial five-year $100,000 licensing fees from Type-C sports gaming proprietors, go to Ohio’s Sports Gaming Revenue Fund.
Through May, the Lottery’s share of the approximately $600,000 in overall revenue from the sports betting kiosks has been $135,217.
Lottery admin costs outweighing its kiosk revenue share
The Ohio Lottery’s administrative costs for regulating the kiosk program are $650,000 per year, or just over $54,000 each month. (The Lottery also reportedly had startup costs ahead of the sports betting launch of around $335,000.)
The sports betting kiosks’ best performing month was March (likely due to March Madness college basketball betting), which saw a handle of $1.3 million and revenue of $168,485.
If the Lottery matched its share of revenue from March ($33,283) in each of the last seven months of 2023, it would put the Lottery’s annual revenue at around $368,000, or just a little over half of the $650,000 the Lottery spends on admin costs.
Sports betting kiosks had a rocky rollout
When sports betting launched in Ohio on Jan. 1, the sports betting kiosks had a somewhat rocky rollout.
Initially, some host businesses in Ohio had kiosk issues related to lack of familiarity with the machines and ID scanners, forcing staff to learn on the fly to help — and ID — new users.
Many machines were also not operational initially due to software issues. Intralot (now doing business as Sports Bet Ohio) has been the sports gaming proprietor to provide the most kiosks in the state. In the initial rollout, Intralot was licensed to operate 700 of the first 771 kiosks in Ohio. Sports Bet Ohio/Intralot currently provides nearly 80% of the sports betting kiosks in the state.
But software updates led to many of Intralot’s kiosks not being operational in the first several weeks of the year, leaving users at host locations to utilize an app to build bets and then have them scanned by staff. The majority of Intralot’s machines were finally up and running by the beginning of February.
Number of businesses hosting kiosks has plateaued
The number of businesses hosting kiosks has also been in flux since Ohio’s sports betting launch.
From January through the end of March, the number of kiosk host locations went from 772 to 940. But that number dipped to 926 host locations in April.
After a slow climb week to week, the number of active host locations returned to 940 with the Lottery’s weekly report for the week ending June 23, meaning it took more than two months for the active host number to increase by just 14 locations.
Danielle Frizzi-Babb, director of communications at the Ohio Lottery, says the active host number is continually fluctuating as new retailers are brought on and existing retailers drop off. She says that as the market has matured, the number of new locations has leveled off.
“The most common reasons for host locations to drop off are they are undergoing a sale of business where the new owners must reapply for a Type-C license as the original sports gaming license from the OCCC is non-transferable,” Frizzi-Babb says. “There are host locations that decide to switch proprietor partners which makes them inactive during the transition to the new partner which can take a couple weeks. Also, retailers that go inactive on the traditional lottery side which in turn causes them to be inactive locations on the Sports Gaming side.”
Kiosks’ springtime performance a positive sign
There are some positive signs for Ohio’s sports betting kiosk market.
After peaking in March, betting volume from the kiosks dropped going into April. This was expected, as the sports betting industry overall slows down after the NCAA tournament and through the end of the summer.
But, while the sportsbooks’ handle dropped 30% from March to April in Ohio, the handle decrease for sports betting kiosks was only 18% in the same time period.
Even more promising for the kiosk market, though revenue dipped slightly, handle increased 10% in May. That suggests that interest in using the kiosks could remain steady through the summer, bucking the overall sports betting slow down trend ahead of the start of the NFL season.
Kiosk market has room to expand in coming months
Despite the leveling off of host locations in recent months, Frizzi-Babb says the Lottery is hopeful that more businesses will be adding kiosks as the year goes on.
“We do anticipate additional locations coming on board as we move forward into the fall,” she says.
Since the launch of the kiosk program, the Ohio Lottery has pre-approved more than 1,600 businesses for Type-C licensing. Pre-approved businesses must be approved by the Ohio Casino Control Commission, which has so far approved more than 1,100, before final approval from the Lottery once the host has partnered with a sports gaming proprietor.
One way the number of active hosts could be increased is by expanding the types of businesses that are able to host kiosks. In late April, the Ohio House of Representatives approved a new operating budget for the state that included a clause expanding the types of businesses allowed to host sports betting kiosks to include breweries, distilleries and wineries. Lawmakers in the House and Ohio Senate last week approved the budget, which also increased the state’s sports betting tax rate from 10% to 20%.
Another big expansion could come from two of Ohio’s biggest supermarket chains.
“All eligible Giant Eagle and Kroger locations that have submitted applications have been approved to be C host locations through the Lottery and OCCC,” Frizzi-Babb says. “Each are working with potential proprietor partners to implement their own timelines for a prospective launch.”
Kroger has been approved to host kiosks at 42 of its Ohio locations, while Giant Eagle is approved for 64 licenses. Neither Giant Eagle nor Kroger have announced plans for when kiosks will finally be introduced at their stores.
Kiosk proprietors and regulators working to grow market
Sports betting is still a new industry in Ohio and the state’s kiosk program is up against the steep competition presented by online sportsbooks, which essentially puts sports betting in nearly everyone’s pocket.
The kiosk market in Ohio also faces more regulatory limitations than the sportsbook market. Bettors are only allowed to bet a maximum of $700 each week across all kiosks in the state, so spending is capped for users. And the kiosks only accept certain wagers — spread, over/under, moneyline and limited parlays.
When asked if there were any plans to do things differently in the coming months to attract more business to the sports betting kiosk market, Frizzi-Babb sounds a note of optimism.
“All Type-C proprietors are continuing to work on innovative ways to engage players, expand their offering and market/promote their own solution,” she says. “From the Lottery perspective our focus as the regulator is to ensure that proprietors do so in a manner that complies with all the rules and regulations established for the program.”