The gambling industry’s reaction to Ohio’s record-setting first month of legal sports betting will be a springboard for future discussions on tax rates, promotional spending and market share.
But most responses to Ohio sports betting setting an all-time monthly revenue record and being only the second state to report over $1 billion in legal wagers in its debut month were generally positive.
Analysts view January as ‘tip of the iceburg’ for Ohio sports betting
David Forman, vice president of research at the American Gaming Association, the industry’s D.C.-based lobbying arm, told the Dayton Daily News that January’s results are just the tip of the iceberg.
“I think there’s no doubt you’ll see a bigger month than (January) in the future. … Just in its first month of operation, Ohio is probably comfortably one of the top four sports betting markets in the country.”
At this moment, Ohio is, in fact, among the top states which have reported January numbers. The $1.1 billion bet in Ohio trails only New York’s $1.8 billion and is ahead of New Jersey’s $1.08 billion and Nevada’s $935.8 million.
Casey Clark, AGA’s senior vice president, told The Columbus Dispatch January’s data in Ohio is a win for regulated sports betting markets.
“Legal sports betting’s strong start in Ohio is a direct reflection of residents moving away from predatory offshore sites and bookies for the protections of regulated sportsbooks.”
Operators in Ohio benefited (sort of… more on this below) from the strong showing. Sportsbooks won more than $208.9 million in January, according to Ohio Casino Control Commission data.
In the post-PASPA era, that is the highest monthly total reported in any state, besting NY’s high by more than $58 million. New Jersey (November 2021) and Illinois (October 2022) are the only other states where sportsbooks have generated more than $100 million in monthly revenue.
High hold affected by promotions
But the high hold percentage (total money bet – total money paid out = hold) of nearly 19% was an easy target for some recognizable voices in the sports betting space.
Professional gambler Joey Knish took to Twitter to lambast Ohioians for losing so much in the first month.
Fellow pro-bettor Brad Powers had a similar take on the poor showing in the Buckeye State.
Of course, there’s always a catch, particularly in new markets where promotional spending is often an overlooked line item on monthly reports. Ohio sportsbooks “gave away” nearly $320 million in promos, often in the form of non-withdrawable bets, deposit matches and bonuses.
Considering those figures, Ohio sportsbooks actually “lost” almost $114 million in January. Only Caesars Sportsbook and Betr Sportsbook had a monthly net positive for the month.
However, Ohio did not follow the lead of other states by permitting sportsbook operators to subtract significant portions of promotional spending from taxable revenue. As a result, Ohio lawmakers can claim immediate victory since state tax coffers saw a bump of almost $20 million. Maryland, by comparison, has only collected $2 million in sports betting taxes since late November due to a temporary 100% deduction of promos.
Ohio’s regulatory framework, tax rate already being re-examined
Clark, the AGA executive, noted Ohio’s approach to legalized sports betting is paying off.
“Because of the state’s regulatory framework, legal operators can offer a competitive product that appeals to consumers and has already brought in more than $20 million in taxes and $39.4 million in licensing fees to the state.”
The flip side of that argument is the tax rate itself. Ohio’s 10% tax rate on sports betting revenue is among the nation’s lowest. Gov. Mike DeWine is already floating the idea of doubling it.
Mike Mazzeo, a gambling industry analyst with Legal Sports Report (a branded site under Catena Media, the parent company of PlayOhio), is no stranger to tax rate debates. Mazzeo previously covered the launch of online sports betting for another Catena site, PlayNY, home to the nation’s highest tax rate of 51%.
Most industry analysts and experts projected Ohio to be among the national sports betting leaders. The state’s initial showing in January proved most of those forecasts correct, even if some undersold Ohio’s potential.
The eyes of the gambling industry are watching what Ohio does next.