Ohio’s recent legislative proposal, commonly referred to as House Bill 33, is suggesting considerable alterations to the tax framework overseeing the state’s sports betting sector. This recommendation stipulates that, from 2024 onwards, sportsbooks will be responsible for remitting 20% of their proceeds as tax. As one might expect, this has stirred some consternation.
Overview of Events
At present, sports wagering operators are obligated to contribute 10% of their generated income to tax. Thus, the introduction of the new bill signifies that the tax obligation will be raised twofold. The modified tax rate was first suggested in February this year and gained approval during the budget signing earlier this month.
Preceding this, the House of Representatives had attempted to advocate for a 2024-2025 budget version that did not incorporate this escalated tax rate. However, this concept was overruled by the State Senate, who reintroduced the heightened tax rate into the budget.
Advocates of sports wagering assert that these inflated taxes could perilously impact the industry. From their point of view, exorbitant taxes could render Ohio far less desirable to betting establishments.
Risk of High Taxes Deterring Operators
Currently ranking as the seventh most populous state, Ohio, with its equitable tax rate of 10%, presents a very favorable environment for bookmaking businesses. Consequently, there are now 18 sports wagering companies in operation in the state, with another four on the verge of launching.
Regrettably, the proposed dramatic changes may discourage these corporations. While the state could theoretically collect double its current income from taxes, businesses may elect to withdraw from Ohio if the new terms are not conducive to maintaining a viable operation.
Furthermore, critics have highlighted that Ohio’s appeal to incoming firms could deteriorate, leading to a considerable loss in licensing revenues for the state.
Dann Dodd Proffers a Gloomy View on the Proposed Changes
Exemplifying this skeptical view is former State Rep. Dann Dodd, who has critically addressed the proposition of doubling the tax rate. He sternly reproached the state for enforcing a measure that would potentiate the “oligopoly” operated by casinos and racinos, contrary to the original licensing architecture designed to restrain these entities.
Moreover, Dodd somberly anticipates that up to half of the currently active brands in Ohio could withdraw from the market within a year to a year and a half. He importantly underscored that this would also translate into a loss of licensing fees for the state.
Dodd’s sentiment was mirrored by Americans for Tax Reform, which scrutinized and condemned Ohio’s endeavors to increase taxes. The organization castigated Ohio for opting to be one of the less receptive states to sportsbooks.
The organization highlighted that this step “will transition Ohio from claiming one of the lowest tax rates to being ranked as the third highest in the US, outpacing even Illinois.”
Unified in their critique, the adversaries stipulate that Ohio is not in dire need of the additional funds and that this tax augmentation is a needless gamble that may only injure the economy.
Nonetheless, in the face of the criticism and cautionary advice, Ohio is optimistic that the measure will expand the state’s revenue.
