Ohio Gov. Mike DeWine’s budget proposal includes doubling the tax rate on sportsbooks operating in the Buckeye State to help with funding a domed stadium for the Cleveland Browns, among other projects.
Raising the Roof
After passing sports betting legislation with an industry-friendly 10% tax on sportsbooks revenues, Ohio Governor Mike DeWine convinced the legislature to double that tax to 20% within six months of the launch of sportsbooks in January 2023.
However, DeWine is convinced that the sports betting operators in Ohio are still not paying enough and has included another tax hike in his most recent budget proposal. The governor is advocating for a 40% tax on sportsbooks’ profits, which would help the state pay for a domed stadium for the Cleveland Browns.
“Look, Ohio citizens are giving every single day millions of dollars to sports gaming companies. It’s time for us to raise the tax on them so that we can do things to help Ohioans,” DeWine said. “These are the companies that are taking all of this money outside, draining it outside of the state of Ohio on gaming. They ought to pay their fair share, and this would make them pay their fair share.”
DeWine plans to create the Sports Facilities Construction and Sports Education Fund, which is where a portion of the tax money would be earmarked. Although not everyone is on board with publicly financing roughly 40% of a professional football stadium, there is precedent for doing so, and DeWine noted as much.
“It’s not a question of whether we are going to help professional sports. We’ve done that for 50-60 years. The question is, who is going to pay for it?” DeWine told reporters in Cleveland on Thursday. “The state was involved a few years ago for the tune of about $30 million for the Guardians. We have a lot of great sports in the state of Ohio, professional sports, and we have minor league sports too, and they’re always looking for help in regards to that,” added DeWine.
Industry Blowback
A conservative estimate projects $288 million in additional tax dollars over the next two fiscal years for stadium projects and youth sports. However, considering Ohio’s tax coffers will swell by nearly $210 million from sportsbook proceeds in this fiscal year alone, it is likely the $288 million in additional tax revenue over the next two years is a gross understatement.
And although additional revenue is always welcomed by state and local governments, those footing the bill are far less enthusiastic. Therefore, it was no surprise the industry response was chilly to the idea of doubling its tax burden. Scott Ward, vice president of the Sports Betting Alliance, cautioned that the tax increase could lead to “worse products for customers, de-incentivize investment through sportsbooks’ community partners, and leave far less funding for future responsible gaming initiatives.”
Even some fellow lawmakers were apprehensive about another significant tax increase on the mobile sportsbooks in the state. “We just had a massive increase in this tax last budget cycle from 10% to 20%, and we’re still realizing what that actually means to the industry,” said St. Rep. Bride Rose Sweeney of Cleveland. “I think we have a lot more due diligence to do.”
