The possibility of doubling Ohio’s sports betting tax to 20% in the state’s first year of sportsbook operations is back on the table, as the Ohio Senate included it without discussion as part of an omnibus budget bill approved Thursday.
Gov. Mike DeWine first proposed raising the tax from 10% in his budget announcement in February, which was just the second month of legalized sports betting in the state. The proposal, unprecedented for any state that soon after launching sports betting, failed to win any evident support from legislative leaders and has not been a notable topic of public discussion since.
While originally included in HB 33, the massive $85.8 billion legislation that covers the state’s next two fiscal years, the tax increase was removed by the time the House voted 78-19 to approve its version of the budget on April 26. In the amended 9,198-page version of the budget bill passed by the Senate Finance Committee Wednesday, however, page 4,026 included a provision striking out 10% as the sports gaming tax and changing it to 20%. That particular change was not discussed at the committee meeting.
The full Senate approved the budget bill 24-7 Thursday — also without discussion of sports betting, instead focusing on topics such as proposed changes in income taxes and education funding.
The broad measure now goes back to the House, which will almost certainly disagree with the many Senate amendments to the legislation and send it to a conference committee to resolve differences by June 30. The House and Senate are both under Republican control, and DeWine is also a Republican.
Sports betting’s been strong early in state
Consideration of a possible hike in the sports betting tax comes in a state that came out of the box Jan. 1 with an exceptionally strong embrace of the activity.
Mobile and retail sportsbooks in Ohio set a national monthly record for any state’s revenue by generating $209.2 million in January. That was in an unusually active month spurred by heavy promotions offered by the mobile sportsbooks, as April’s betting handle of $520.6 million — the most recent month reported — was less than half of January’s $1.11 billion.
Even with the betting slowdown, taxable sportsbook revenue over the first four months of 2023 amounted to $449.2 million, with $44.9 million siphoned to the state — primarily to support education funding. With a tax rate of 20%, taxes would have instead amounted to $89.8 million.
The Senate-passed budget bill includes a change in use of tax dollars, in that the Sports Gaming Profits Education Fund where most of the money goes would no longer have half of its revenue dedicated to supporting interscholastic athletics and extracurricular activities. It would be dedicated more broadly to “support of public and nonpublic education for students in grades kindergarten through twelve as determined in appropriations made by the general assembly.”
One other new provision in the bill calls for the Ohio Casino Control Commission to contract with a state university to prepare an annual report on the “prevalence of problem sports gaming in this state,” including recommendations on how to address it.
Unlike the House version of the budget, the Senate does not provide for creation of a state commission to study and make recommendations on all aspects of Ohio’s gambling industry, including casinos, racing, lottery, and sports betting. Nor does the latest bill call for expansion of the number of retail sportsbooks allowed in the state’s largest counties, which the House had included.
In addition to the tax rate, the latter issues would be settled in whatever new version of HB 33 is produced by a House-Senate conference committee.
