Legislation to permit sports betting in Ohio is heading for the governor’s desk after a whirlwind day where the bill was amended and approved by both chambers of the state legislature.
House Bill 29 cleared a conference committee Wednesday afternoon (December 8) with updated language, then received overwhelming support in both the Senate and House later in the day.
The bill creates a market where casinos, racinos and professional sports teams will receive first preference for 21 of an initial 25 “type A” licenses that will allow them to offer mobile betting and a “type B” license that permits an on-site sportsbook.
Professional sports teams would include nine Ohio teams in the five major leagues, as well as Muirfield Village Golf Club and the Mid-Ohio Sports Car Course.
Each of these licensees will receive at least one mobile skin, as well as the ability to apply for a second skin if the company can demonstrate that the second skin would generate “an incremental economic benefit” beyond the first and that the deal would not prevent another type A licensee from securing its own mobile betting partner.
Any type A licensee other than the named entities, however, would only be able to use one mobile skin.
An online operator or any other business could potentially apply for its own license, but would be required to have a physical presence in the state, whether that be a type B licensed location, or an operational place of business “at which the proprietor regularly maintains multiple employees.”
Fees have proven to be one of the biggest sticking points during the months of negotiations since the Senate last passed a sports-betting bill in June, and although the finished product retained a 10 percent tax rate on gross sports-betting revenues, legislators increased the fees with a complicated schedule, particularly hammering operators of multiple mobile skins.
Over the course of a five-year license, type A licensees and their management service providers will pay a combined $3m for a single skin, or as much as $12m for multiple offerings.
Although the cost may be steep, the seventh-most populous state in the U.S. is still expected to see significant interest from sports-betting operators.
A fiscal note from the state’s Legislative Budget Office projected $243m in gross sports wagering revenue for potential operators in 2024 and projected a market with $3.3bn in betting handle upon maturity.
Although the legislation includes an initial limit, it ultimately leaves the potential mobile market uncapped in terms of number of operators, allowing the Ohio Casino Control Commission to issue licenses beyond the 25-proprietor limit if the applicant can demonstrate that “the sports gaming market … needs additional [mobile operators].”
The commission can issue up to 40 type B licenses as well, with licenses to be issued to a person who “conducts significant economic activity in the county in which the sports gaming facility is to be located,” with restrictions on how many licenses can be issued in counties of a certain size.
In addition, the bill creates a third type of license for betting to be operated by the Ohio Lottery. The Casino Control Commission must license at least two, but up to 20, “type C” licenses to a proprietor that can offer wagering kiosks at an uncapped number of host locations throughout the state. Hosts are required to have an Ohio liquor license.
The lottery would be required to contract with the type C licensees to operate betting in exchange for an unspecified revenue share and would be limited to spread, over-under or moneyline wagers, and parlays with no more than four legs.
Kiosks would also be limited to accepting no more than $700 in a calendar week from any individual player.
Type B licenses would come with a $50,000 license fee for applicants who do not also have a type A license, or a $100,000 for those who do. Type C licensees would also pay a $100,000 license fee, while each host would pay a $1,000 fee.
The move represents a significant breakthrough for Ohio, which had seen serious but ultimately unsuccessful attempts to legalize betting in each of the last three years. The House passed a bill in 2020 that never received a vote in the Senate and earlier this year the Senate passed two different forms of legislation that either never received a vote or were voted down in the House prior to the legislature’s summer recess.
“This represented a lot of give and take, a lot of compromise, a lot of wrangling over seemingly innocuous words, but that’s how it is with complex legislation, you have to be patient,” said House majority leader Bill Seitz.
Governor Mike DeWine has consistently voiced his support for sports-betting legislation in recent years, and with Republicans controlling both chambers of the legislature, a signature from the Republican governor is likely.
The start date for wagering could be some time away, however, as legislators have stressed a desire for the commission to take its time in crafting regulations rather than rushing a launch.
Senate majority leader Kirk Schuring, who led the sports-betting process in his chamber, said that in a meeting last week the commission voiced its preference for a universal start date rather than a staggered launch.
“No one’s going to get out ahead of this, they all start at the same time, all the licensees,” Schuring said Wednesday.
That start date, the bill says, can be no later than January 1, 2023.
“We hope that it will start before then, but we want to make sure we do it right,” Schuring said. “We want to make sure we have the right regulatory guardrails, we want to make sure there’s enough applicants out there that can take advantage of this new economic opportunity in the state of Ohio.”
The legislation does not set any deadlines or targets for when applications should be available or issued, deferring that decision to the commission.