Ohio Doubles Sports Betting Tax to Start July

The Ohio State Buckeyes mascot as we look at the financials for Ohio's legal sports betting industry in January 2024. — The Ohio State Buckeyes mascot is seen during a game against Virginia Tech in the Elite Eight. Photo by Steph Chambers/Getty Images via AFP.

The Ohio legal sports betting industry underwent significant changes on July 1, with the most notable being a development that could have a profound impact on the state’s sports wagering scene.

Ohio sports betting apps and retail sports wagering sector are now required to double their tax contributions, which has caused some dissatisfaction among residents in the Buckeye State.

Ohio Governor Mike DeWine (R) signed the state’s fiscal year 2024-2025 budget into law after only six months in office. One of the notable changes included a raise in the tax rate for Ohio sports betting from 10% to 20%, which stirred some controversy.

The process of deciding to raise the tax rate has been ongoing. Governor DeWine first proposed the increase in February, shortly after the Buckeye State sports betting industry was fully launched. The plan has been discussed in both the state House of Representatives and Senate, with the Senate ultimately being the driving force behind the tax rate hike.

How the doubling came about

In February, Ohio’s governor proposed raising the tax rate on retail and top sports betting apps just one month after the platform’s launch in the state. This increase was intended to be included in the 2024-2025 budget, pending approval by the state House and Senate before becoming law.

Earlier this year, the Buckeye State House of Representatives proposed their version of the budget, which notably omitted any mention of increasing the tax rate, a move that contradicted the governor’s public support for such a measure.

The state Senate voted 24-7 in favor of amending the House version of the budget on June 15 to include a 20% tax on legal sports betting.

Two weeks ago, upon returning to the House, Representatives rejected the Senate’s new budget proposal without discussing the proposed increase in sports betting tax rate.

The Senate budget plan was approved by the Ohio House of Representatives last week and signed into law, effective July 1st.

What it all means

The legal sports betting industry in Ohio has exceeded expectations since its launch in January, with over $1.1 billion in wagering activity in its first month. It has consistently ranked among the top six sports betting jurisdictions in the country.

In the first five months of operation, Ohio’s sports betting sites and retail wagering outlets received nearly $3.5 billion in wagers, resulting in approximately $507.08 million in taxable revenue. Due to the state’s 10% tax rate, providers contributed $50.7 million in taxes to the Sports Gaming Profits Education Fund, with 2% allocated to the Problem Sports Gaming Fund.

A tax increase that doubles the current rate would result in $101.4 million in tax revenue from Ohio’s legal sports betting industry, providing a significant boost to the programs that rely on this funding.

The possible effect of high taxes

Although Ohio does not have the highest sports betting tax rate in the country, there are concerns that doubling the current rate could negatively impact the legal sports betting industry in the state.

Americans for Tax Reform pointed out that the tax hike would elevate Ohio from having one of the lowest tax rates to the third highest in the country, surpassing even Illinois.

In theory, high taxes could make Ohio a less appealing market for current and potential sports betting providers. In April, four out of Ohio’s 18 top sportsbooks did not generate revenue exceeding $100,000, with SuperBook failing to turn a profit for the month.

In summary, if the sports betting market in Ohio does not continue to attract new providers and maintain its current list of sportsbooks, there is a risk of decreased overall revenues from handle and licensing fees. This could impact the tax-funded programs supported by the industry.

Due to the high new tax rate, current Ohio sports betting apps may choose to leave the state’s industry, with no plans for replacement.

Observers will closely watch Ohio’s legal sports betting industry to see how the revised taxation policy affects sportsbooks and the overall tax revenue.

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Written By:
Perry Sandra

Perry Sandra and betting go hand-in-hand. Both are characterized by “odds”. Dave fancies himself as one of the most dedicated sports and pop-culture junkies around, to the chagrin of his family and friends. Following sports for 50 years and writing about it for 20, Dave hasn’t found a sport yet that can’t contribute to 2-3 straight hours of couch time. That search remains ongoing. As a good old Canadian boy, hockey is in Dave’s heart, as is curling sadly. But evolution is a real thing and that’s why football, baseball, and just about every sport on the planet has become a passion. Dave isn’t afraid to kill some time obsessing over politics or the far-too-frequent awards shows the consume the airwaves.