Pros And Cons Of Raising The Ohio Sports Betting Tax Rate

Written By David Danzis on March 15, 2023
Ohio Sports Betting Tax Rate

The early success of legal sports betting in Ohio is pushing officials in Columbus to reevaluate the state’s tax rate. But, should lawmakers begin serious discussions about how much sportsbooks pay in taxes, the impact on bettors would be minimal.

Republican Gov. Mike DeWine kickstarted the tax conversation in February. DeWine’s 2024-25 budget included doubling Ohio’s 10% tax rate.

Ohio’s legal sports betting market started on New Year’s Day. The first month of retail and online sports gambling generated nearly $21 million in taxes, according to state data. Ohioans bet over $1.1 billion in January, and the sportsbooks reported more than $208.9 million in revenue.

PlayOhio estimates over $10 billion could be legally bet this year, based on January’s results. Assuming sportsbooks keep between 7-11% after paying out winning bets, the state could collect more than $100 million in 2023.

The wheels of government are slow, steady

Both the state Senate and House would have to approve any tax increase. A House finance committee is currently reviewing the governor’s proposal.

One state legislator and a gambling operator doing business in Ohio quickly came out against raising the tax rate, according to PlayUSA. They argued it was still too early in the market’s lifespan to start making substantial changes.

Rep. Bill Seitz, a Republican House member, said:

“I do not agree with this idea. A low tax rate encourages legal play through regulated entities, which we prefer compared to illegal bookmaking outfits. Moreover, the betting has only been legal for a little over a month. So we don’t even know what kind of money the regulated entities are making.”

Money for Ohio schools, problem gambling programs

Increasing taxes on sports betting revenue would provide additional money for educational programs throughout the state and funding for problem gambling. Under current state law, 98% of taxes go to the Sports Gaming Profits Education Fund. The remaining 2% is dedicated to the Problem Sports Gaming Fund.

It is unlikely sportsbooks would opt out of Ohio if the tax rate went up. The Buckeye State is already among the largest legal sports betting markets in the U.S., making it attractive to operators.

New York (51%), New Hampshire (51%), Rhode Island (51%), Delaware (50%) and Pennsylvania (36%) are the nation’s highest tax rates on legal sports gambling revenue. Conversely, Nevada (6.75%) and Iowa (6.75%) are the lowest.

Rise of unregulated sports betting markets

On the other hand, increasing taxes on operators could have unintended effects.

Sportsbooks could choose to pull back on bonuses and promotional offers to players. However, that happens naturally as markets mature and customer bases are established.

For some industry professionals, the concern is pushing existing customers to unregulated markets. Casey Clark, senior vice president for the American Gaming Association, told ABC5 Cleveland that sports bettors in Ohio are already familiar with black market sportsbooks.

“What we have to be careful about is making sure that we’re not putting legal operators who are playing by the rules at a significant competitive disadvantage to those who have been operating illegally in the state for a long time. Anything we do to deter (legal sportsbooks) from being able to operate effectively in essence enables the illegal market to continue.”

Photo by AP / John Locher
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David Danzis

David Danzis is a lead writer/analyst for Catena Media's network of Regional sites, appearing on PlayNJ, PlayCA and PlayOH. He is a New Jersey native and an honors graduate of Rutgers University. As a newspaper reporter for the New Jersey Herald and Press of Atlantic City, Danzis earned statewide awards for his coverage of politics, government, education, sports, and business. David covers northeast gambling and sports betting news with a focus on Atlantic City casinos. He lives in Mays Landing, NJ with his wife and two children. When not on the beach, golf course or snowboarding, David enjoys watching his beloved New York sports teams — Yankees, Jets, Rangers, and Knicks.

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