Ohio Hoping for Sports Betting in 2019, Lots of Factors Still to Consider
The US Supreme Court decided on May 14, 2018, to overturn the 1992 federal law (PASPA) that banned full sports betting in all states other than Nevada. In essence, it gave control back to each state to create and implement sports betting regulations. Ohio tried to position itself to capitalize on a potential SCOTUS overturn, but discussions never made it far. Well, that’s all beginning to change. Over the last two months, state lawmakers are gaining traction on this topic. In fact, some industry pundits believe that Ohio could be in line to have sports betting up and rolling by next summer if all goes well between now and then.
However, if you ask any of Ohio’s politicians, they’re not committing to a specific timeline as the state’s lawmakers are studying all aspects of legalized sports betting including black markets, gambling addictions and student-betting scandals.
Ohio Senate and House Sports Betting Bills
Two bills in the Ohio General Assembly have already been introduced in order to legalize sports betting in the state:
- Senate Bill 316 was introduced last week and sponsored by Senators Sean O’Brien and John Eklund.
- House Bill 714 was introduced this past Tuesday by Representative Dave Greenspan.
Each bill has a few details on how sports betting will be legalized in Ohio, but there’s an intentional level of vagueness due to legislators still hammering out the specifics of how the law will work as they continue to learn more about sports betting. Representative Greenspan’s bill is expected to be similar to the Senate bill so that there is no competition between them. This is standard practice to introduce the same bill in different chambers so that if one gets hung up, the other can make it through.
O’Brien said in an interview with cleveland.com that they would like to have more specifics added to the bill by August or September. O’Brien also wants legal sports betting to stay in the racinos and casinos:
“I’d kind of like to keep it in those institutions because they are set up for gaming.”
He doesn’t want people to be able to go into any bar or convenience store and place bets.
An article on Statehouse News Bureau quotes Republican Representative Greenspan, saying:
“This is happening around the country. This is the beginning of the process. If Ohio is going to participate in this type of activity I believe that we would be prudent in being an early adopter.”
The sponsors for each bill believe that the state already has a gambling infrastructure with the racinos and casinos, which should make it easier to construct and implement a sports betting framework.
Ohio Casino and Racino Taxes
Right now, Casinos in Ohio pay 33 percent on their gross earnings on table games, and racinos pay 33.5 percent, so if lawmakers were to say that sports betting could fall under table games, that’s how much casinos would have to pay, which is a huge amount, especially on sports betting which doesn’t have a big profit margin.
In Ohio, this is how the casino and racino taxes are broken down:
- 51% of the tax revenues from casinos go to a county fund
- 34% goes into a school fund
- 5% goes to the cities that host the casinos
- The rest is split among law enforcement training, the Ohio Casino Control Commission, the Ohio Racing Commission, and problem gambling and addiction programs in the state.
- Racino tax revenues go right to the Ohio Lottery Commission, which regulates the industry. After the commission pays its expenses, any leftover money goes to education.
Illegal Betting in Ohio and Elsewhere
People all over the United States are regularly placing bets on sporting events, but they’re mostly through offshore sites. In fact, institutions like the AGA, estimate that roughly 97% of all sports betting in the United States is done illegally. It’s a reality that many lawmakers and leaders within the state of Ohio are hoping to address and eliminate.
Matthew Schuler, the executive director of the Ohio Casino Control Commission, was in Cleveland just last weekend discussing the reality of “black market” sports betting with other state industry leaders, according to Cleveland.com. He lamented that this is an issue Ohio lawmakers will have to take seriously if they want to legalize sports betting.
Schuler also stated that the Ohio Casino Control Commission doesn’t have an opinion either way if sports betting should be allowed in Ohio, but he is willing to give legislators research and expertise on the topic.
Schuler believes that for legal betting to be successful in Ohio, legislators will have to create a public policy that give bettors a good reason to leave illegal gambling and participate in legal betting. He also noted that if online venues were allowed, the companies that own them would have to be physically located in Ohio in order to follow the law.
This shouldn’t be a problem as sports betting companies are eager to set up shop within casinos already rooted in Ohio. Just look at New Jersey as the perfect example of how sports betting companies have entered deals to run the sportsbooks in actual brick and mortar venues.
Other Factors to Consider
In addition to illegal gambling through online sites, there are a few other factors that Ohio lawmakers are studying at the behest of in-state organizations that provide gambling support services. Derek Longmeier, Executive Director of Problem Gambling Network of Ohio, believes that males age 18 to 25 have the highest risk of developing gambling related problems. Rob Walgate, Vice President of American Policy Roundtable, echoes Longmeier’s sentiments and adds that the state will need to have more gambling addiction services if they legalize sports betting.
Learn from Other States
For Ohio to make the best decisions on their upcoming sports betting regulations, they need to study the successes and failures of other states that have already legalized sports betting. For starters, examine the sports betting tax landscape to see what works and what doesn’t.
Nevada is the gold standard for sports betting and they only take a 6.75% tax on a casino’s sports betting revenue, which is typically around 5% of the handle. If Ohio wants to look at what not to do, then they don’t have to look any further than their neighboring state – Pennsylvania. The “Keystone State” has a huge mess on their hands due to their tax rate of 36% and their $10 million dollar licensing fees.
Ohio is taking a similar approach to states like Iowa and Michigan who are hoping to get their sports betting framework rolled out by next summer. Both of those states have spent a good deal of time studying other states like Delaware, New Jersey and Nevada on how successful their sports betting ventures are.
But, Ohio needs to be careful that they don’t end up like Colorado who claims to be “studying” the landscape and exercising patience. In reality, they’re only shooting themselves in the foot because they most likely won’t have sports betting until 2020, and will miss out on tens of millions of dollars in revenue in the meantime.
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