Just over a month after Ohio’s sports betting launch, state Governor Mike De Wine is seeking to double the tax rate from 10% to 20%, an increase included in his biennial executive budget proposal for the 2024-25 fiscal years.
The budget doubles the tax on sports betting to be paid by casinos and teams running sportsbooks with mobile companies. And just slightly over the average of 19% that other states are levying, according to a report from Bloomberg Tax.
The revenue would go to schools for athletics and extracurricular activities, as well as to tackle problem gambling in the jurisdiction and to administrative costs of overseeing sports betting, including monitoring the ads of sports gambling apps.
Governor Mike DeWine.
As reported by PlayUSA, a spokesman for DeWine said the tax increase, as well as other sports betting reforms in the budget proposal related to promotional credits and threats against athletes, is related to some sports betting proprietors and customers who have not followed the rules during the first month of Ohio sports betting.
Since launch, DraftKings, Penn Sports Interactive and BetMGM have faced fines of hundreds of thousands of dollars for breaking state law with their ads, suggesting risk-free betting or free bonuses, and for targeting underage people.
Dan Tierney, press secretary for the governor, explained the move is “part of the package designed to encourage better compliance with the rules,” and noted that “Ohio is serious about enforcing the regulations passed by the Ohio General Assembly.”
DeWine’s budget includes two additional elements relating to Ohio sports wagering, as it prohibits describing promotional gaming credits as “free” or “risk free”; and instructs the state’s regulator to exclude bettors “who threaten violence or harm against people who are involved in sporting events, where the threat is related to sports gaming.”
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Tierney stated the proposed sports betting changes in the budget are meant “to encourage a marketplace where the rules and the spirit of the law are better followed,” PlayUSA reports.
Both the House and Senate would have to agree with the governor for an Ohio sports betting tax increase. The Ohio House Finance Committee began examining DeWine’s budget this week, in a process that will continue through June.
Rep. Bill Seitz told the aforementioned source that he “highly doubts” the House will include the sports wagering tax in its budgetary bill, stating he does not agree with the idea and that a low tax rate encourages legal play through regulated entities.
Eric Schippers, senior vice president for Penn National Gaming, agreed with Seitz and stated that a tax hike would have “a negative impact on this nascent industry.”
Tax rates have also been a subject of discussion in New York in the past weeks. Operators are raising a warning flag on the state’s record-high tax rate and how it could jeopardize the gambling landscape in the state. The tax, standing at 51%, is the highest among all states that have authorized mobile sports wagering in the US.
During a legislative hearing, Christian Genetski, president of FanDuel; and Jason Robins, CEO of DraftKings, urged lawmakers to lower the 51% tax on gross gaming revenue. Genetski, citing estimates, said that New York’s mobile sports betting handle will decrease 10 to 20% annually unless the tax rate is changed.