Gambling

Legalization of Sports Betting in Ohio


Ohio boasts a great potential sports betting market. The Buckeye State features 11.7 million residents along with the seventh-largest economy in the country.

However, it has still yet to legalize and regulate sports gambling. It has stalled on the matter while several neighboring states have capitalized on betting.

Of course, some Ohio politicians don’t like the fact that residents are crossing state lines to bet in Michigan, Indiana, Pennsylvania, and West Virginia. They’d rather keep this money within the state.

That said, is Ohio ever going to legalize sports betting? I’ll take a closer look at this matter and discuss where the state is with regard to regulated betting.

The Ohio Senate Has Already Passed a Sports Betting Bill

The Buckeye State already has sports gambling legislation on the table. Senate Bill (SB) 176 is alive and well after passing the State Senate by a vote of 30-2.

It now heads to the State House for a vote in the fall 2021. Assuming SB 176 passes there, it’ll move to Gov. Mike DeWine’s desk for a final signature.

This legislation makes concessions for the following types of sports betting:

  • Mobile (Type A) – 25 three-year licenses will be given out for mobile/online sportsbooks. Licensees must pay $1 million in fees within the first year, and $500,000 in both the second and third years. The Ohio Casino Control Commission will regulate mobile operators.
  • Land Based (Type B) – 33 three-year licenses will be awarded to brick-and-mortar sportsbooks. The licensing distribution will depend upon a county’s population. Land-based licensees must pay a $100,000 fee. The Casino Control Commission will oversee these operators.
  • Kiosk (Type C) – 20 three-year licenses will be given out to bars and restaurants for 1-2 self-serve betting kiosks in each location. Vendor licensees must pay a $100,000 fee, while bars/restaurants must cover a $6,000 fee. The Ohio Lottery Commission will regulate kiosk operators.

Disputes over Licenses Cast Some Doubt Over the Bill

SB 176 looks good in theory. It allows multiple types of businesses to participate, including land-based casinos, online operators, bars, restaurants, convenience stores, and vendors.

It also ensures that the state’s largest population centers will served by land-based sportsbooks. The 33 brick-and-mortar licenses will go to the 27 counties that have populations of 100,000+ residents.

However, the first disputes involve how professional sports teams get first dibs. Ohio made this concession to appease pro sports leagues, but they risk angering casinos and racinos as a result.

Thistledown Casino

Along with Franklin Country, Cuyahoga County is one of only two counties that qualify for three land-based licenses (1 million+ residents). The Cleveland Indians, Cavaliers, and Browns could take all three brick-and-mortar licenses. The Thistledown racino and JACK Casino, as a result, wouldn’t be able to have a land-based betting establishment.

Similarly, the Cincinnati Reds and Bengals could take both of Hamilton County’s brick-and-mortar licenses. Belterra Park racino and Hard Rock Casino, meanwhile, would be shut out of Type B licensing.

Most Bars and Restaurants Won’t Get a Slice

Many bars, restaurants, convenience stores, and bowling alleys sell tickets for the Ohio Lottery. These same businesses want a fair shot at sports betting too.

Most/all of these businesses don’t have the money or means to run Type A betting (mobile) or Type B (land based). However, they’d like to participate in through Type C (kiosk).

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Even 1-2 self-service kiosks, however, is expensive for the average mom-and-pops business. Bars/restaurants/convenience stores will need to front $6,000 even before paying for the kiosk and other expenses.

If these businesses can’t cover the costs, then smaller counties will get shut out of kiosk betting. Locals will either have to use a mobile app or visit a land-based sportsbook in the nearest large city.

Of course, many gamblers use mobile sportsbooks these days anyways. Some, however, like the option of placing in-person bets too.

Sports Teams Benefit More than Anybody

Ohio professional sports franchises are getting the best of both worlds from this bill. They have first choice between mobile and land-based licensing. This aspect puts them at an advantage over casinos and racinos.

Pro teams also have the means to pay for the licensing costs. This factor gives them a leg up on smaller businesses that won’t be able to afford the app and land-based licensing fees.

The idea was to prevent any single area or operator from monopolizing the market. This is why the different types of licenses are spread out.

However, the first casino or racino to get shut out of a brick-and-mortar license will be angry. They’ll argue that they have just as much of a right to a land-based sportsbook as the sports teams.

Neighboring Sportsbooks Provide Motivation

Ohio politicians have no shortage of motivation to eventually approve sports gambling. After all, they’re losing money to neighboring states on a daily basis.

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Those who live around the borders of Ohio have quick access to online betting. Somebody in Toledo, for example, can take a quick drive to Michigan and place an online bet. If they want the live experience, they can even drive up to Detroit’s sportsbooks.

Likewise, someone who lives in Youngstown can quickly visit Pennsylvania. They’ll then be able to make a mobile wager or even travel to Pittsburgh.

The Buckeye State loses lots of potential revenue through cross-state betting. They could keep much of this money in-house by finally legalizing sports gambling.

Tax Rate Is Reasonable

The tax rate is another factor going in SB 176’s favor. Operators will only need to cover a 10% tax rate on net revenue earned through sports gambling.

Stock Market Chart with Sports Balls

Compare this to neighboring Pennsylvania, which charges a 36% rate. Bookmakers will find Ohio much more reasonable in this regard.

Of course, the initial $1 million fee for the app and $100k for the land-based sportsbook license are hefty. Operators who can survive this initial expense, though, should be okay with the 10% tax rate.

What Happens If This Bill Is Defeated?

As covered earlier, SB 176 is not guaranteed to pass the House. It has various hurdles to overcome in order to get approved.

The House may ultimately decide to pass the legislation to start capitalizing on betting. However, it could just as easily go the other route and reject sports wagering.

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In the latter case, SB 176 could be rewritten and submitted again. It would then draw another vote from the State Senate and, possibly, House in 2022.

If the current bill is defeated, then no guarantees exist that a re-draft will be approved either. Now that the matter has at least passed the Senate, though, sports betting will remain a hot topic in Ohio.

It’s likely to continue inspiring legislation until a bill gets passed. That said, SB 176 being defeated won’t end of this matter.

What to Expect Regarding the Future of Ohio Sports Betting

Ohio has proven progressive with regard to gambling. It was one of the earlier states to legalize casino gaming. It now offers four casinos and seven racinos.

However, the Buckeye State hasn’t been quite as progressive with sports wagering. Over two dozen states have passed betting legislation, Ohio lawmakers are still mulling over the matter.

When considering the large instate casinos, it’s not like Ohio is against gambling. Legal sports betting will likely be available at some point.

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Legislation still has a chance to pass in 2021. The State House is expected to vote on the matter in the fall. If it doesn’t get through during this year’s session, then it should have an even stronger chance to be approved next year.

One thing is clear, Ohio doesn’t want to sit back and keep watching opportunities pass by. Four neighboring states already offer regulated sports betting.

The Buckeye State, meanwhile, continues to lose revenue to these states every year that it fails to pass a betting bill.

Conclusion

Ohio is no lock to legalize sports betting in 2021. SB 176 has already passed the Senate, but it faces a challenge in the House.

Even if this bill doesn’t make it through in 2021, though, the efforts to legalize betting won’t die out. More legislation will arrive in 2022. If nothing passes next year, then more bills will continue surfacing.

Ohio lawmakers realize that they have nothing to gain and more to lose by rejecting sports betting. Those who want to place wagers will just continue doing so across state lines or through offshore sportsbooks.

That said, the Buckeye State is likely to legalize sports gambling either this year or within the very near future. I expect regulated betting in Ohio no later than 2023.



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