The State of Ohio will launch sports betting on Jan. 1, 2023. Sports betting operators can look forward to that date with a little more delight after the state legislature revised laws on how the sportsbooks will pay taxes.
The decision will make it less costly for those sports betting operators to do business in Ohio and place the policies in line with how most states operate.
Previously, the Ohio law required sports betting operators to pay taxes on wagering activity on a daily basis (most likely during weekdays when banks are open for business transactions). That would have made Ohio one of the few states to require such a daily reconciliation of sportsbook revenue in regards to taxes owed on betting activity.
But following the passage of House Bill 515 on Wednesday by both the Ohio State House and Senate, sports betting operators will reconcile taxes on a monthly basis.
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Why The Revision Helps Sportsbooks
The changes in tax law will give sportsbooks more time to recover from events, like the Super Bowl or the College Football Playoff, which attract large betting volume. Often, sportsbooks will budget large sums of money to acquire customers for such marquee events. Those expenditures in the form of sign-on bonuses and promotional codes can be (at least partially) deducted from revenue.
But even so, a sportsbook will frequently show a negative result on operations for days at a time, because many wagers are made days in advance without the books collecting from player losses. The negative could not be carried over to future days under the original Ohio sports betting law. Now, under the new language passed in a bipartisan fashion in HB 515, sports betting operators can carry over such losses and reconcile at the conclusion of each month.
This is the manner used in most states, and it effectively reduces the overall tax rate, which would be higher if sportsbooks were required to pay daily. A monthly requirement to pay taxes has a leveling effect as the wins and losses balance each other out to some extent.
Ohio will charge a 10% tax rate on the adjusted gross revenue of the (up to) 25 licensed sports betting operators. That figure is commensurate with the national average. Tax revenue from sports betting in Ohio is targeted to be spent on problem gambling resource programs and the general fund.
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Ohio Sports Betting Update
When the Ohio Casino Control Commission announced on Wednesday that the universal launch date will not be until the last possible date, it came as a bit of a downer. With the launch coming on Jan. 1, Ohio sports bettors will not get to place any legal wagers until Week 17 of the NFL season. They’ll also miss the entire college football regular season and most of the bowl games.
By waiting so long, the Commission said, every entity that wishes to launch sports betting will have a better chance to do so without falling behind other entities that get a head start because they are ready earlier. Ohio could have as many as 3,000 sports betting licenses ranging from mobile apps to retail sportsbooks, and it will take a long time to get all of them ready to go.
“It will be a very busy fall and winter both for the operators, prospective applicants, and the commission,” executive director of the Ohio Casino Control Commission Matt Schuler said during Wednesday’s commission meeting. “There’s a lot to do between now and then.”