Ohio’s sports betting kiosk market has been growing since the legalization of Ohio sports betting on Jan. 1, and it might soon expand into new Ohio businesses.
The new operating budget recently passed by the Ohio House of Representatives would expand the types of businesses allowed to host sports betting kiosks to include breweries, distilleries and wineries.
With the passing of HB33 on April 26, the Ohio House approved the budget for the fiscal years 2024-25. It must now pass the Ohio Senate and be signed by the governor.
If the budget is passed, any brewery, winery or distillery that is licensed to operate an on-premise bar or restaurant would be allowed to apply for a license to host up to two sports betting kiosks.
Sports betting license expansion to include liquor manufacturers
For an Ohio business to host sports betting kiosks, they must receive a Type-C sports gaming host license from the Ohio Casino Control Commission.
Along with possessing a valid lottery sales agent license, Ohio law currently requires Type-C applicants to have a D-1, D-2, or D-5 liquor license from the state. Those liquor licenses are held by businesses that serve and sell alcohol, from bars and restaurants to convenience shops and grocery stores.
HB33 expands the type of liquor license holders who would be eligible to apply to receive a Type-C sports gaming license from the OCCC.
According to the bill, the provision:
“Adds A-1-A (brewery, winery, or distillery that operates a bar or restaurant on-site) and A-1c (micro-brewery) liquor permit holders to the list of liquor permit holders that are authorized to apply for a type C sports gaming host license.”
Those liquor licenses are for manufacturers. An A-1A permit allows breweries, wineries and distilleries “to sell beer and any intoxicating liquor made by other licensed manufacturers for on-premises consumption.”
An A-1C Ohio liquor license allows beer manufacturers that produce up to 31 million gallons per year to sell their beer for consumption on-site.
Expansion would have “fiscal effect” via license fees
HB 33 says that the “fiscal effect” on the state from expanding Type-C licenses will come from:
“Potential license fee revenue gain from more liquor permit holders that could apply for a type C sports gaming host license and pay the appropriate license fee.”
Any business applying for a Type-C sports gaming host license must pay a non-refundable $1,000 application fee, which serves as the licensing fee if the business is approved. The license is good for three years, after which the applicant must re-apply.
So just how many more sports betting kiosk hosts could be added with the expanded eligibility proposed in HB 33?
According to the Ohio Craft Brewers Association, there are more than 400 breweries in Ohio, the majority of which sell their beer in on-premise taprooms. There are more than 320 wineries in the state, according to the 2022 Ohio Wine and Grape Industries Economic Impact Study. And the American Craft Spirits Association says Ohio has 74 craft distillers.
According to the Ohio Lottery, there are currently 926 businesses approved to host sports betting kiosks in the state. The Lottery has pre-approved more than 1,600 businesses to receive Type-C licensing.
Pre-approved businesses must be approved by the OCCC (the commission has approved more than 1,100), then enter into an agreement with a Type-C sports gaming proprietor to provide the machines and tech before final approval from the Lottery.
Increase could help Ohio Lottery earn more from kiosks
Expanding the types of businesses in Ohio eligible to host sports betting kiosks would help the Ohio Lottery cover some of the costs of implementing and regulating the kiosks.
Revenue from the kiosks has gradually grown since the Jan. 1 sports betting launch in Ohio. In March, the overall handle for the kiosks was $1.3 million, a 42% increase over February. Revenue was up 32% from February to March.
While the OCCC collects the kiosk host licensing fees, the Ohio Lottery earns its money through kiosk revenue. The Lottery’s share of the kiosk revenue in March was just over $33,000. For the year, through March, the Lottery’s share of kiosk revenue was $75,473.
According to a recent cleveland.com report, it costs the Lottery $650,000 a year (or about $54,200 each month) to pay for the staffing that helps regulate and operate the kiosks. The Lottery’s communication director Danielle Frizzi-Babb said the Lottery also had $335,000 in startup costs ahead of the launch.
In other words, an increase in kiosk revenue is necessary to just cover the Lottery’s monthly operating costs.
Frizzi-Babb told cleveland.com that the Lottery knew the kiosks would not be highly profitable, saying:
“While we were tasked by the legislature with starting the lottery sports gaming program, we knew that it was not going to be as lucrative as traditional lottery products.”
New state budget would also expand retail sportsbook licenses
The Ohio House’s operating budget also includes the expansion of the number of retail sportsbook licenses that can be granted in Cuyahoga, Franklin and Hamilton counties.
Current Ohio law allows for up to five retail sportsbooks in counties with a population of over 800,000.
If the Ohio House’s proposed budget passes, the maximum number of retail sportsbook licenses able to be granted in the state’s three largest counties would increase to seven.
Franklin County, where Columbus is located, currently has five licensed retail sportsbooks, as does Cuyahoga County, home to Cleveland. Hamilton, the county in which Cincinnati sits, currently has only four retail sportsbooks.