Mike DeWine, Ohio’s governor, released his final budget proposal on Monday (3 February), which includes hiking the legal sports betting tax on operators to 40%.
If the state legislature agrees, it would be the second time since July 2023 that the tax was increased. In 2023, DeWine signed a budget that increased the tax from 10% to 20%. This elevated Ohio from a gambling-friendly tax state to one at the higher end of the scale.
If the tax is raised to 40%, Ohio will become the second most expensive competitive market for wagering businesses. New York has the highest tax rate (51%). Last summer, Illinois Governor JB Pritzker began conversations about raising the tax in his state.
Pritzker initially advocated more than raising the 15% tax rate to 35%. However, lawmakers went a step farther, introducing a sliding scale ranging from 20% to 40%. The companies with the largest revenue pay at the top of the scale.
“We have known since day one that DeWine despises sports betting,” gaming consultant Brendan Bussmann told iGB. “Apparently, he failed Economics 101. Definitely a head-scratcher for a Republican who believes that doubling the tax on a firm twice is a logical solution.”
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DeWine seeks stadium funding
According to the Ohio Capital Journal, DeWine intends to boost the wagering tax to support a new “Sports Construction & Education Fund” and youth sports projects. The fund would be used immediately to finance the Cleveland Browns’ new stadium.
The NFL team is now fighting the city of Cleveland for permission to relocate its stadium to the suburbs.
Ohio has what is known as the “Modell law”. According to the Capital Journal, this is “designed to make it more difficult for sports teams to leave taxpayer-funded venues in their home cities.”
“These sports gaming clubs are highly hostile… DeWine told the Capital Journal, “They’re always in your face.” “They’re getting Ohioans to lose massive amounts of money every year and it seems to me only just and fair that some of the stadiums be paid for by them or a portion of it.”
According to the budget proposal, the tax hike would generate between $130 million (£105 million/€126 million) and $180 million in new tax revenue year.
Industry: Worse products; fear of government
Every major US sportsbook operates in Ohio. The Sports Betting Alliance (SBA) includes BetMGM, DraftKings, Fanatics Sportsbook, and FanDuel.
“This would amount to a 400% tax increase over a two-year period,” SBA vice president Scott Ward said iGB. “Upstanding American firms who cooperate closely with state authorities should not have to worry about the government raising their taxes arbitrarily. But that is exactly what Ohio sports betting customers face.
“This proposal will inevitably create worse products for customers, de-incentivise investment through sportsbooks’ community partners and leave far less funding for future responsible gaming initiatives.”
Ward also stated that a significant tax increase would “give a huge boost to unregulated and offshore apps”. These companies don’t pay state taxes and frequently don’t provide responsible gaming resources. That implies their costs are cheaper, allowing them to provide better odds and products to customers.
Source: IGB
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