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Another significant tax increase may soon be implemented in Ohio’s sports betting market. The state would increase its sports betting tax from 20% to 40% if it were authorized. This comes after Governor Mike DeWine boosted the tax rate from 10% to 20% in July 2023 by pushing through a budget. The action marked a change from Ohio’s formerly pro-gaming position and put the state among the highest-taxed gambling states in the nation.
Should this new proposal pass, Ohio will become one of the most expensive markets for sports betting operators, ranking just behind New York, which currently has the highest tax rate at 51%. The proposal to raise the tax to 40% comes in the wake of similar discussions in Illinois, where Governor JB Pritzker initially sought to raise the tax rate from 15% to 35%. Lawmakers there introduced a sliding scale tax rate ranging from 20% to 40%, with the highest revenue-generating companies paying at the top end.
Gambling industry experts are concerned about the potential consequences of these increases. Gambling consultant Brendan Bussmann told iGB, “We have known since Day One that DeWine has hated sports betting… He apparently failed Economics 101. Definitely a head-scratcher for a Republican that continually thinks doubling the tax on a business not once, but twice, is a logical answer.”
The tax increase, according to the Ohio Capital Journal, is part of Governor DeWine’s plan to raise funds for a new “Sports Construction & Education Fund.” This fund is intended to support various initiatives, including youth sports programs and a new stadium for the Cleveland Browns. The team is currently engaged in a legal battle to move its stadium from the city of Cleveland to the suburbs.
DeWine’s stance is clear: he wants to use the additional tax revenue to benefit Ohioans and ensure sports teams contribute to the state’s infrastructure. As he told the Capital Journal, “These sports gaming [groups] are extremely aggressive… They’re in your face all the time. 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.”
Between $130 million and $180 million in new tax income may be generated annually if the tax hike is approved, which would provide a sizable amount of funding for the suggested projects. It is unclear how this would affect the market and Ohio’s reputation as a gambling destination, though, given the additional strain on sports betting companies.