An eye-opening debut month for legal sports betting in Ohio has some gambling industry experts rethinking the market’s potential.
Before the Jan. 1 launch, PlayOhio projected sports betting in Ohio could generate as much as $8 billion in bets this year, putting the state among the top five largest U.S. markets.
After just one month, the Buckeye State positioned itself as the second-largest legal market in the country.
Eric Ramsey, PlayOhio’s senior analyst, says the market could be 25% larger in the first year than initially forecasted. If the pace holds, Ohio sportsbook could see as much as $10 billion in bets in 2023, he says.
“Everyone had big expectations for Ohio heading into launch, but this early performance is outpacing even the most optimistic forecasts. There’s a real possibility that it could end up as the second largest sports betting state behind New York this year, likely positioned ahead of larger and more mature states like Illinois and Pennsylvania.”
Ohio sports betting market maturing before our eyes
According to state regulators, bettors spent more than $1.1 billion in January on sports betting. Ohio’s retail and online sportsbooks generated just under $209 million in revenue, an all-time monthly high in the post-PASPA era.
“These numbers are more in line with what we expected to see in the second or third year of operation,” Ramsey says.
Should Ohio sportsbooks maintain a comparable activity level for the remainder of 2023, the market would overtake all others except New York.
By the end of the year, NY gamblers are projected to spend more than $17.1 billion. Legal sports betting in Illinois could see as much as $10.4 billion in bets.
Ohio could exceed 2023 projections in more-mature markets, such as New Jersey ($10.1 billion), Nevada ($8.3 billion) and Pennsylvania ($7.6 billion).
In January, NY sportsbooks generated $1.8 billion in bets, allowing the Empire State to remain the national leader. New Jersey, which was briefly the largest national market, reported $1.08 billion while Nevada books posted $935.8 million in legal betting. Illinois has yet to report January’s numbers.
Ohio’s appetite for sports gambling
A combination of factors plays into Ohio’s favor to stake a top-tier position in the legal U.S. sports betting industry.
The seventh-most populous state (12 million residents) is home to eight professional sports teams and an elite college football program at Ohio State University. The timing of the state’s launch coincided well with the football playoff schedule, typically a heavy sports betting period. The regular seasons in basketball and hockey were also underway.
Besides being a sports-crazed, heavily populated state, Ohio’s 10% tax rate on sports betting revenue is attractive to sportsbook operators. The low rate also encourages smaller or unproven bookmakers to launch in Ohio. The path to profitability is less challenging than somewhere like NY and its 51% tax rate.
How much sportsbooks are willing to spend in order to attract and retain customers is another key market metric. Promotional spending by Ohio sportsbooks in January was nearly $320 million. In Maryland, which launched online sports betting five weeks before Ohio, operators spent $71 million on promos.
“To be on the path to $10+ billion in year-one handle is a real testament to the appetite for betting in Ohio — and to operators’ willingness to spend money to acquire customers in a highly competitive market,” Ramsey says.
The Ohio Casino Control Commission licensed 28 sportsbooks — 12 retail shops and 16 sports betting apps — for the New Year’s Day launch. Others have already joined the market, and more are expected to be available sometime in 2023.