Since New Jersey’s landmark Supreme Court victory in 2018, states across the country have passed legislation to legalize sports betting. Recently, this wave of legislation has made its way to Buckeye country. Ohio now stands poised to be the next state to allow fans to not only risk their sanity while watching their favorite team but their money too.
While there is unquestionable momentum behind the legalization of sports betting in Ohio, there is some debate on how it should be regulated. Enter House Bill 194 (“HB 194”) and Senate Bill 111 (“SB 111”). Either bill would have the effect of legalizing sports being within the state, however, the two bills present different answers to three notable questions: which entity will regulate, what locations will betting be permitted, and how will betting be taxed?
Under HB 194 the state lottery commission would regulate the sports betting industry; the Casino Control Commission would be the regulatory authority under SB 111. As a practical matter, this distinction is inconsequential to the fan who wants to bet that the Browns will keep it within two touchdowns Sunday. However, it does indirectly affect where they can place that bet. While both bills would permit online wagers, SB 111 limits in-person wagers to casinos, and racetracks. HB 194 would potentially permit additional establishments to conduct in-person wagers. While whatever impact location availability has on the individual consumer may vary, the impact it will have on those in the industry could be significant. Under HB 194, although all the locations would allow for sports wagering, there will certainly be differences and nuances in how betting is conducted within the different types of establishments. What would be proper wager administration at a casino may go against the regulations that govern wagering at a small kiosk allowed under HB 194. Businesses entering this newly created space will have to ensure that they have people in place to help them successfully navigate such issues. Relatedly, there is potential for the Lottery and Casino Control Commission to differ in how they approach the regulation of sports betting, but that remains to be seen.
The final point of discussion between the two bills is what a tax on sports betting would look like. HB 194 proposes a 10% tax rate on all revenue generated while SB 111 suggests a decidedly lower rate of 6.25% of revenue. While we can only speculate on what number Ohio will ultimately land on, we can look to some of the state's neighbors to make a more informed guess. In addition to the applicable six-figure licensing fees states regularly require, and starting with “that state up north”, Michigan legalized sports betting in late 2019 and finds a middle ground between HB 194 and SB111 by taxing revenue at 8.4%. The Mountain State, West Virginia, taxes at the same 10% rate suggested by HB 194. And Pennsylvania haunts the dreams of sportsbooks everywhere with its enormous 36% effective tax on revenue. Thankfully for sportsbooks looking to make more inroads in the Midwest region, there is no reason to expect Ohio’s tax will approach Pennsylvania’s.
While both HB 194 and SB 111 have not moved in almost a year, there is hope on the horizon that sports betting will soon be coming to the Buckeye State. Just this month, in fact, Ohio Governor Mike DeWine stated sports gambling in Ohio is “inevitable” and is “coming to Ohio”. This comes after the fifth meeting in six weeks of the Ohio Senate’s Select Committee on Gaming. Although the Covid-19 pandemic has certainly delayed the state legislature’s efforts to agree on a final bill, the legalization of sports betting in Ohio seems to be a foregone conclusion.
As sports begin resuming play in America, and throughout the world, fans will unquestionably be looking for ways to engage with sports while physical attendance is restricted. Many see sports betting as one such way to accomplish just that. Ohio (and other states considering similar measures) appears to recognize this, and those involved in the sports betting industry should start preparing now so they are ready to capitalize as soon as Ohio gives the signal. It will be important to monitor the legislative vehicles for which sports betting may come into Ohio as it could dramatically impact how Ohioans place their bets and how the industry will be regulated going forward.
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