Ohio Lawmaker Wants Extra Tax Levied on Sportsbooks

On Wednesday last week, Ohio Sen. Louis Blessing put forward SB 199, a new piece of drawing law that would seek to introduce an extra 2% tax on the currently existing 20% tax. The 2% tax, however, is not an increase to the current rate, but rather a separate tax.

New Tax Wants to Tax Sports Betting Handle in Ohio

This 2% tax, as described by Blessing’s draft law, would tax sports betting gaming handle on top of adjusted gaming revenue, which means that Ohio would be the only state in the country to tax both metrics, while only the second to tax handle.

Sports betting handle is clearly a difficult stream to tax from a business standpoint, as the handle simply represents how many wagers have been placed in total, but this hardly accounts for whether a business ended up generating sufficient revenue, or even a profit.

Should this tax proposal pass, it would present sportsbooks with new challenges, raising the costs of doing business and suppressing their offerings, making them less attractive to local players. This new draft law comes at a time when State Gov. Mike DeWine argued that sportsbooks ought to be paying a much higher tax to begin with, proposing to boost it to 40% from the current 20%.

This proposal has now been withdrawn, but Gov. DeWine seems keen to pitch it once again. When Ohio launched its regulated sports betting industry, it proposed taxing companies at 10%, and most sportsbooks planned for that, but six months after that, the tax was increased to 20%.

Slim Chances of Success, But Tax Hike Will Happen Sooner or Later

In the meantime, Sen. Blessing is already thinking of ways to spend the money generated through a would-be new tax.

SB 199 would direct all sports gaming tax revenue to a newly created Sports Gaming Privilege Fee Fund. After covering state expenses, 98% of the remaining funds would go to a facility renovation fund, while 2% would support an interscholastic athletics fund.

The facilities that would receive funding are those that are used by professional sports franchises used by the state. The fund will also seek to specifically back women’s sports, leagues, and facilities.

However, all of this hinges on whether the tax is passed. Chances are that Ohio will experience another tax increase on sports betting in the coming legislative sessions.