When legal sports betting launched on Jan. 1 of this year, Ohio joined New York as the only states to earmark a percentage of sports betting tax revenue to help fund youth sports and other extracurricular activities.
But a little over six months later, Gov. Mike DeWine signed a new state operating budget that did away with direct funding for sports and extracurricular activities for K-12 students.
Instead, nearly all sports betting tax revenue will now go directly to public and non-public Ohio schools. (Two percent will continue to go to funding problem gambling services in the state.)
Just half a year into the legal Ohio sports betting industry, the change has upset some state lawmakers who were hopeful that the infusion of new funding would allow for more thriving after-school extracurricular programs across the state.
State Rep. ‘heartbroken’ over elimination of extracurricular program funding
Initially, 98% of Ohio’s sports betting tax revenue was to be split evenly between general education funding and extracurricular programs.
The Ohio House of Representatives’ most recent budget proposal included capping the sports betting revenue given to interscholastic athletics and other extracurricular activities at $15 million. But the final budget that was signed by Gov. DeWine included the Senate’s proposal, which allocates the entire 98% of tax revenue to “general support of public and nonpublic education for students in grades K-12.”
Ohio State Rep. Cecil Thomas, who represents the Cincinnati community of North Avondale, was a co-sponsor of House Bill 29, the bill that legalized sports betting in Ohio. Thomas fought for the provision giving tax revenue to extracurricular activities, believing such after-school programs were a way to lower youth violence and give at-risk kids something constructive and motivating with which to occupy their time.
Thomas, who continued to fight for public hearings and transparency on how sports betting tax revenue would be shared after HB 29 was signed into law, told Cincinnati television station Local 12 that he was disappointed that the funding provision was removed from the final budget.
“When I heard that was taken out, my heart was broken,” Thomas said. “And then I said, ‘I got to find some kind of way to make this happen.’ Maybe I didn’t do a good enough job explaining how critically important this was.”
Supporters of change say funding gives schools flexibility
Thomas, a Democrat, told Local 12 he believed Republicans changed the funding provision as a way to funnel more money to charter schools and the state’s school voucher program, which allows tax money to be given to families to send their children to private schools.
Ohio Senate Republicans say the change in sports betting tax revenue allocation gives schools flexibility in how they spend the money, including on extracurricular activities.
“The school district, money being fungible, is going to be getting that money one way or another,” State Sen. Bill Blessing told Local 12. “The changes in the budget makes it so they get all the money and it’s not encumbered.”
That still leaves out extracurricular programs not directly affiliated with schools. Blessing told Local 12 he’d be willing to work with Thomas on a way to have schools divert some of the money they receive from sports betting tax revenue to community nonprofit programs.
Ohio budget also doubled sports betting tax rate
The tax revenue going to Ohio schools will be considerably more than what was anticipated on Jan. 1. Another big change to Ohio’s sports betting law included in the operating budget DeWine signed in July was the doubling of the sports betting tax rate, which was increased from 10% to 20%.
In the first six months of 2023, sportsbook operators in Ohio generated nearly $540 million in revenue, leading to Ohio receiving around $54 million in taxes at the 10% rate.
It’s now estimated that, with the 20% tax rate going into effect July 1, Ohio will garner more than $100 million in additional sports betting revenue over the final six months of the year.
Some members of Ohio’s General Assembly don’t think the 20% tax rate will stand. The latest operating budget also called for the creation of a new committee to study the future of sports betting in Ohio.
State Rep. Bill Seitz has said he feels the new committee will recommend against keeping the sports betting tax revenue rate at 20%.
Seitz, a Republican, was with Thomas on his opposition to cutting funding for sports and extracurricular programs. When the Senate’s budget proposal was first released, Seitz vowed to fight the elimination of funding for extracurricular activities.
“To my dismay, the Senate has chosen to eviscerate the original sports gaming bill in this regard by appropriating not a farthing for sports and extracurricular activities, but rather, putting it all in school funding,” Seitz told WCPO in late June.
Other changes to Ohio sports betting in operating budget
The 2024-2025 operating budget DeWine signed in July included a few other changes to Ohio sports betting law.
The budget contained a provision giving the Ohio Casino Control Commission more power to ban individuals from betting on sports in the state if they are found to have threatened athletes or others associated with a sporting event.
The budget also expanded the types of businesses allowed to host sports betting kiosks. Ohio breweries, distilleries and wineries with the proper licensing can now host up to two self-serve betting kiosks, joining bars, shops, restaurants and other businesses.