Ohio could end up spending $1 million every year to support responsible gambling.
Gambling expansion is well underway in Ohio. As states expand their wagering catalogues, their responsible gambling resources need to scale alongside the list of options.
Sports betting in Ohio begins Jan. 1, 2023.
In general, the more responsible gambling resources available, the better.
However, those resources need funding. Despite its huge potential market size, Ohio will be sending less money toward responsible gambling compared to some nearby states.
Ohio taxes for responsible gambling
Legal sports betting states send a chunk of their revenue toward fighting problem gambling. Ohio will be no different.
Ohio plans to send 2% of its sports betting tax revenue to the state’s Problem Sports Gaming Fund.
A locked-in percentage is important because it will scale alongside the growth of the industry. The more money that sports betting makes in Ohio, the more money sent to help promote responsible gambling in the state.
That’s a great approach in theory, but a 2% rate will amount to Ohio raising less money for responsible gambling compared with other Midwest states.
Flat rate vs. percentage tax system
Not every state takes the same approach to divvying up its tax money.
Pennsylvania, for example, uses a flat-rate system to send money toward responsible gambling initiatives. It sends $2 million of its sports betting revenue to responsible gambling each year. That flows directly into the state’s Problem Gambling Treatment Fund.
Although that $2 million doesn’t scale up alongside the industry, it’s ultimately a larger amount of money than most nearby states spend.
Ohio’s market could generate $50 million in annual tax revenue once it matures. With the state’s 2% rate, that shapes out to be $1 million per year to fight problem gambling.
So even though Ohio’s sports betting market could be even larger than Pennsylvania’s, the Buckeye State could end up only sending half of the amount of money to promote responsible gambling. A 2% rate just isn’t high enough to match Pennsylvania’s numbers.
Each state spends tax money differently
Like Pennsylvania, Michigan also uses a flat-rate approach to send sports betting money toward responsible gambling.
However, its annual rate is much lower than Pennsylvania’s $2 million. Michigan sends $500,000 to the state’s Compulsive Gaming Prevention Fund every year. Michigan also contributes another $500,000 to the fund annually from internet gaming proceeds derived from online casinos and online poker.
Ohio’s projected $1 million spending tops Michigan’s sports betting contributions, but Ohio will be a much larger sports betting market than Michigan.
Indiana, the other sports betting industry nearby, approaches things in a similar way to Ohio. The Hoosier State also uses a scaling percentage system to fund its responsible gambling programs; 3.33% of the state’s sports betting tax revenue goes to responsible gambling initiatives.
However, like Ohio, Indiana’s percentage stacks up to a smaller amount of spending compared with Pennsylvania.
Indiana made a little more than $29 million in taxes from sports betting in 2021. At the state’s 3.33% rate, that sent about $967,000 toward responsible gambling.
That puts Indiana’s responsible gambling funding on a nearly identical track compared to Ohio’s projections.
Ohio will generate less than its neighbors
Most casinos in the U.S. only allow gamblers who are at least 21 years old to play. That’s generally the standard around the country.
There are nearly 8 million residents in Ohio who are 21 and over.
With Ohio’s current sports betting tax rate, the fully mature industry will create about 13 cents for responsible gambling per citizen of legal age.
That’s nearly twice as much as Michigan’s 7 cents, but lower than Indiana and Pennsylvania’s spending of about 23 cents per legal resident.
Overall, Ohio ends up in the middle of the pack when it comes to how much money its sports betting industry will generate for responsible gambling. The state’s new industry could create more funding than some nearby markets like Michigan and Indiana, but less money than other smaller markets like Pennsylvania.