Opposition questions wisdom of Ohio’s new 20% sports betting tax rate

Buckeye nuts
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The new 20% tax rate on Ohio sportsbooks is in effect, but there are plenty who do not believe this is a wise choice for the Buckeye State.

The state legislature passed the new rate as part of the budget at the end of June with the new rate set to take effect on July 1. The new tax rate is in place, but anecdotal stories from Ohio suggest not much has changed for bettors in the state.

Sportsbook operators have threatened in states with high tax rates like New York to resort to “draconian” measures like inflated vig to make the business profitable. So far though, no operators have actually pulled the trigger in a US market. That holds true for Ohio as well, where promos and standard lines are still on offer since the change.

Meanwhile, operators are cooperating with the state even if the tax rate has doubled just six months after the market debuted in the state.

“By every measure, legal online sports betting has been a huge success for Ohioans. Even before this change, tax revenue generated for the state in just the first few months since legalization has exceeded expectations. While we strongly disagree with this decision, sports betting’s success in Ohio demonstrates the promise of creating a safe and regulated market for online gaming – both in terms of combating illegal and unregulated gaming enterprises and providing meaningful support for state priorities. SBA member companies want to provide Ohio consumers the best product and remain competitive with illegal, unsafe and untaxed sports books, and we look forward to working with the state on a fair tax regime in order to do so,” said Sports Betting Alliance spokesman Nathan Click.

The Sports Betting Alliance, which consists of several major sportsbook operators, are not the only group skeptical about the change.

“When considering tax rates for sports betting, states must be careful they’re not putting legal operators who are playing by the rules at a significant competitive disadvantage to those who have been operating illegally across the country for a long time,” added Chris Cylke, AGA Senior Vice President.

Rep. Bill Seitz, who was integral to the passage of the sports betting bill in the state last year, spoke with PlayUSA about the changes and how he disagrees with them.

“To me, sports betting has proven to be very successful in Ohio so why would you mess with success?” Seitz said. “So I was against it and never dreamed we would end up doing it, but there you go,” he said.

However, there could be some hope the rate returns to the original 10% in the future. As part of the budget bill, lawmakers agreed on a gaming study to explore the ramifications of the increase. Seitz is hopeful the results could potentially roll back the new rate.

“The explanation given to me is we went along with the 20% but we fully expect the gaming study commission, which will be a bunch of legislators, would come back and say that the tax shouldn’t be 20%,” he explained.