Ohio Sports Betting Taxes Could Change as Budget Deadline Looms

Article ByDavid Weir

June 26, 2023

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Posted in: Ohio Gambling News, US Gambling News, US Sports Betting News

Ohio launched its legal sports betting market at the beginning of 2023. Just six months later, state lawmakers are hotly debating new rules and regulations for the market as the deadline for the pending 2023/24 fiscal spending plans approaches.

The House, Senate, and Governor have all tabled potential changes to betting regulations. Any new rules have to be finalized for the end of session on June 30.

That includes potentially eliminating the guaranteed sport betting tax revenue share for Ohio’s youth sports programs, doubling the sportsbook tax rate to 20%, and adding up to two more retail sportsbook locations in several counties.

Sports Funding Debate

One big issue on which politicians are split is the funding allocation for youth sports from gambling taxes.

Currently, 98% of sports betting taxes in Ohio go to high school sports organizations.  

The House, the Senate, and Ohio Governor Mike DeWine (R) have all proposed different amendments to the current structure.

DeWine is concerned about the way those funds can be used. He wants state tax dollars to pass savings straight on to disadvantaged young people.

He proposes the state mandates its schools “reduce or eliminate pay-to-play fees for interscholastic athletics and extracurricular activities” as part of any new funding deal.

Meanwhile, the House wants to cap youth sports funding at $15 million of tax revenue per year. This will free up the rest of the $110-million-plus monthly taxable revenues for other projects.

Then there’s the Senate. Politicians in Ohio’s upper chamber have proposed eliminating the requirement for youth sports funding completely, and instead distribute sports betting funds according to the state’s existing education formula.

“We intend to fight the Senate on this issue,” Representative Bill Seitz (R-Green Township) told local media outlet WCPO 9 News. “To my dismay, the Senate has chosen to eviscerate the original sports gaming bill in this regard.”

Vastly More Productive

Another area of contention is Ohio’s flat 10% tax rate on sportsbook revenues.

It was originally set lower than the 20% rate in some other states, such as Pennsylvania, Illinois, and New York. Ohio lawmakers wanted to encourage as many new operators into the market as possible.

That policy has been very effective, with sports betting revenues looking on track to hit four times the initial state predictions.

The state’s sportsbooks took in more than $1.1 billion in handle in January. They haven’t been able to keep that up. But according to the most recent figures, they paid out $45 million in taxes over the first months of 2023.

That’s much less than the $400 million of “taxable revenue,” which does not include write-offs for promotional bets and credits.

“It was originally anticipated that the sports gaming tax would only amount to about $25 million per year,” Seitz said. “We now find that it is vastly more revenue-productive than that.”

Fiscal Year Deadline

A committee of House and Senate members, plus representative from the Governor’s office, are set to figure out the final budget by the end of this week.

June 30 is the end of the fiscal year, so any changes made after that won’t start until June 2024.

That could see the state miss out on some $100 million in tax, if it does decide to pass the higher 20% rate.

Seitz, however, sees the passage of any legislation as a difficult task. “There are 883 points of difference between the House and Senate versions of the bill,” he said. “At this point, it is quite impossible for me to predict what is likely to be in the final budget bill.”