Gov. Mike DeWine signed a bill legalizing Ohio sports betting in December 2021. It took some time, but legal sports betting launched in the state in January 2023, and all signs point to the decision being a success.
A handful of other states have legalized online casinos. Ohio online casinos aren’t a reality yet, but legislators and regulators could look at Ohio online sportsbooks as a guinea pig before determining if online casino legislation would work in the Buckeye State.
But Ohio doesn’t need to look very far to see what a successful online casino market looks like. Ohio’s neighbor to the north, Michigan, legalized online casinos legal in January 2021.
There are 15 online casinos operating in the state, and more are still to come. There are several positives to take away from how things are going in Michigan that Ohio lawmakers can watch whenever the online casino conversation makes its way to the legislature.
Ohio online casinos would bring in much-needed revenue
At the end of the day, the question anyone opposed to Ohio online casinos wants answered is: will online casinos in Ohio be profitable? If you use Michigan as a case study, the answer to that question would be “yes.”
The Michigan online casino market is one of the most successful and lucrative in the country. Since the January 2021 launch, Michigan’s online casino revenue is over $1 billion. Also, the amount of money online casinos bring to Michigan is growing. The state’s online casinos are on pace to provide a record amount of tax revenue in 2023.
That is a lot of potential money Ohio is missing out on that could be put to good use and improve the lives of Ohioans. Also, failing to legalize online casinos does not stop it from happening. It just continues illegally.
Gambling illegally leaves bettors vulnerable to scams in a system lacking consumer protections. Michigan lawmakers cited this in their decision to legalize the industry.
Ohio is losing over $125 million in taxes annually by not legalizing online casinos
It’s time to crunch some numbers. Some hesitancy to legalize Ohio online casinos is sometimes based on the idea that people in the state aren’t betting on illegal, unregulated online casino sites. However, that is a false narrative.
Based on an American Gaming Association study, some $91.8 billion is wagered annually through illegal online casinos by people living in the 12 Midwestern states. That amounts to some $3.7 billion in revenue captured by the black market in the Midwest.
The combined population of those 12 midwestern states is about 69 million. Ohio has the second-highest population and accounts for about 17% of the total number of people in the region.
A 17% share of $91.8 billion in handle wagered on illegal online casinos and $3.7 billion in lost revenue comes out to:
- $15.6 billion in handle
- $629 million in revenue
Ohio online sports betting revenue is taxed at 20%. For the sake of the argument, let’s apply that same tax rate on the estimated lost revenue to illegal online casinos in Ohio of $629 million, and it works out to approximately $125.8 million in taxes lost to the black market that could go the state of Ohio.
The bottom line is that there’s a lot of lost revenue in a state that needs it.
Where Ohio casino and sports betting revenue goes
Ohio casinos are taxed at a rate of 33% on gross casino revenue. The state then disburses the tax revenue to the County Fund, the Student Fund, the Host City Fund, the Law Enforcement Training Fund and the Problem Gambling and Addictions Fund. The Ohio State Racing Commission and the Ohio Casino Control Commission also get 3% each.
Meanwhile, 98% of Ohio sports betting tax revenue goes to the sports gaming profits education fund. Those funds will be distributed to specific organizations when lawmakers develop the 2024-2025 fiscal budget. The other 2% of sports wagering revenue goes towards the sports gaming responsible gambling fund.
Across the country, the tax and payment rates for internet gaming range from about 20% to 28%, depending on how much money a casino generates from online gambling. So, in the end, it would be up to state lawmakers and the Ohio Casino Control Commission to find a way to ensure residents are getting the most bang for their buck.