The existing Ohio sports betting bill has already seen one major revision, and the real work on the bill hasn’t even begun yet.
While it’s too early to tell how many more significant changes may come in the approaching lame-duck session of the state legislature, the latest alteration appears not to bode well for any sportsbook operator interested in entering the Buckeye State.
Perhaps not even for the state. If the bill survives into a final draft, it might limit the state’s ability to collect revenue from legal sports betting as well.
The details on the recent Ohio sports betting bill change
In essence, it’s a slight change to one number that could have a big impact. In the previous text of H 194, master license holders in Ohio would have access to three skins to give out to online operators.
That total has now decreased to two. That means the 11 potential casino and racino licensees will have just 22 skins to dole out to companies like DraftKings and FanDuel rather than the previous total of 33 skins.
For those facilities, it’s a catch-22. More scarcity means they might be able to get a higher price for a skin. At the same time, that sticker shock could cause some operators to hesitate or even pass on the market.
Another change of interest to potential license holders is that they won’t be able to deduct the federal 0.25% excise tax from their state tax liabilities.
Additionally, the structure for renewal for a management services provider license, like that which BetMGM or BetRivers would acquire, morphed. Instead of paying $1,000 every year to renew, $10,000 will buy three years of licensure.
The remainder of the bill appears unaltered from the version that the House passed in May.
It’s unclear right now whether any of these alterations will make it into a final draft sent to Gov. Mike DeWine. At this point, though, it’s not even certain any bill will get that far.
Legislators hard to read ahead of extended session
Ohio legislators face mandatory term limits, and the legislative terms last two years in the Buckeye State. Those terms end in even years and begin in odd years.
So at the end of every even year, the state has what’s known as a “lame-duck” session. That refers to a number of legislators who have either hit their limits or failed to secure reelection.
The 2020 version of that session begins next week. Some prominent proponents of this legislation are among the throng who won’t start 2021 in their current positions. That includes the sponsor of the companion bill, Sen. John Eklund.
Eklund is optimistic but reservedly so about getting a consensus bill out of both chambers of the legislature before the session ends. That end could come as soon as just before Christmas but could stretch into early 2021 if necessary.
If the Ohio House and Senate can’t reach concurrence, the future of legal sports betting in the state is murky. There’s no guarantee that enough of the new crop of legislators will see gambling expansion as a priority, much less come to an agreement on what that should look like.
The first step will be for a Senate committee, most likely the General Government and Agency Review Committee, to consider the House bill. If they advance it to the full Senate with or without any further alterations, approval there would send it back to the House for concurrence.
Should the House make any alterations, the process repeats itself. Given the short time span to work with, it’s crucial to get all stakeholders on board. The reduction in available skins may not work well toward that end.
Why OH casinos and interested sportsbook operators may dissent
There are some terms of the current language of the bill that are friendly to licensees and operators. For example, a master license would cost $100,000, a far cry from the $10 million charged in nearby Illinois.
The tax rate would be a win for operators as well. The current bill sets it at 8%, which isn’t much more than the national low of 6.75% that licensees pay in Iowa and Nevada.
What’s more, unlike most other states with legal wagering, the bill contains no official data mandate. Opponents of such measures have argued that requirement creates unnecessary cost for sportsbooks.
While that all favors casinos and sportsbooks, it’s difficult to blame them if they push for everything they want in a legal framework. That might include restoring the third skin for licensees.
It might be in the state’s best interest to move that number back up to three as well. An extra 11 management licenses could mean an extra $110,000 in revenue every three years, on top of any additional tax revenue a more robust market might produce.
This could be just one part of the current text of the bill that gets an overhaul in the coming weeks. If not, the eventual competition for online skins in Ohio could go up a notch.