As the sports betting industry continues to grow, some states are looking to make changes. That includes Ohio, where Republican Gov. Mike DeWine is seeking to double the tax rate.
His plan would see the rate go from 20% of gross receipts to 40%. The effort comes after the state already raised the rate from 10% to 20% in 2023. The new increase is part of DeWine’s proposed $218 billion budget for 2026 and 2027 that would also see tax increases on tobacco and marijuana.
Additional sports betting tax revenue would be used to help fund youth sports and help pay for a new stadium for the Cleveland Browns. The team has a lease in place with the city for Huntington Bank Field through 2028 but is seeking a new stadium to move into by 2029.
In announcing the tax increases, DeWine expressed some animosity toward sports betting operators.
“These sports gaming [groups] are extremely aggressive… they’re in your face all the time,” DeWine told the Ohio Capital Journal. “They’re getting Ohioans to lose massive amounts of money every year and it seems to me only just and fair that some of the stadiums be paid for by them or a portion of it.”
Increase Would Put Ohio Among Top Taxing States
The Ohio House Finance Committee will now tackle the budget and consider DeWine’s proposals. However, not everyone in the state legislature appears to be on board with raising the rate. SB190 has been proposed by Senator Niraj Antani to reduce the rate back to 10%, with backers arguing that the state is actually limiting industry growth with excessive taxes.
A recent study from the U.S. Tax Foundation looked at tax rates in legalized sports betting states across the country. Raising the Ohio percentage to 40% would move the Buckeye State into the high end of the spectrum with states like New York, New Hampshire, and Rhode Island (51%) as well as Pennsylvania (36%) and Vermont (31.7%).
New York sports betting has been so popular that last June FanDuel passed $1 billion in tax payments to the state.
Ohio currently sits among states in the middle of the pack when it comes to collecting sports betting revenue. Arkansas and Massachusetts also collect 20% with several others in this range including: Tennessee (19.7%); North Carolina (18%); Virginia (15%); Illinois (15%); Louisiana (15%); and Maryland (15%).
States at the low end include Nevada and Iowa at 6.75%. Others in this single-digit range include Michigan (8.4%) and Indiana (9.5%). Several states collect 10% of revenue including Arizona, Colorado, Wyoming, Kansas, West Virginia, and Maine.
“The market for sports betting will likely continue to grow substantially,” the foundation reported. “Texas and California don’t yet permit legal sports wagering markets. With nationwide legalization, sports betting market volume could easily double. As the tax base grows, tax policy design becomes increasingly important. Rates should be low enough to pull participants out of black markets and into the legal, regulated markets.”
