Ohio Operators, Lobbyists Push Against iGaming Bill's Fees, Tax Rate

May 23, 2025
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A bill that would legalize internet gaming in Ohio has received pushback from lobbyists concerned about some of the highest proposed tax rates and licensing fees in the country.
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A bill that would legalize internet gaming in Ohio has received pushback from lobbyists concerned about some of the highest proposed tax rates and licensing fees in the country.

Senate Bill 197, authored by Republican Senator Nathan Manning, was introduced two weeks ago and had its second hearing in the Ohio Senate Select Committee on Gaming on Thursday (May 22).

Manning proposes to tax iGaming at 36 percent for incumbent casinos or racinos who use their own iGaming platforms, but a 40 percent tax rate would apply for licensees who contract with an outside company, such as FanDuel or DraftKings.

The bill also seeks to reduce the current tax rate on retail sports wagering from 20 percent to 10 percent, while eliminating a partial tax exemption for promotional bets issued to sports bettors that begins on January 1, 2027.

“Unfortunately, the current tax and license provisions in SB 197 punish success by charging the most successful brands higher license fees and tax rates,” said Scott Ward, a lobbyist representing the Sports Betting Alliance, a trade association including FanDuel, DraftKings, Fanatics and BetMGM.

Ward believes that the current inclination of the state legislature would be to create a flat tax for all taxpayers.

“I’m sure one of the policy goals behind that is not to penalize success in business or life,” Ward said.

“A flat tax doesn’t pick winners or losers and encourages competition. But SB 197 goes in the opposite direction. It creates two tax rates for businesses doing the exact same thing.”

Under the bill, each iGaming license awarded to an established Ohio casino or racino would cost $50m. Licenses are good for five years and renewal fees are $5m. 

But Ward opposed the bill’s proposed $100m upfront license fee for out-of-state operators.

“The license fees generated from internet gambling could be as much as $1.1bn in FY 2026 and up to $110m thereafter, depending on the ownership structure of the internet gambling platforms,” according to a fiscal note published by the Ohio Legislative Service Commission.

John Pappas, state advocacy director with online gambling trade group iDEA, said states that have legalized iGaming have seen the generation of billions in tax revenue. He suggested Ohio lawmakers should consider a 25 percent tax rate to generate the revenue the state seeks to raise.

“First of all, the tax rates are far above what the national norms have been,” Pappas said. “The licensing fee is well beyond what we have seen in other states, with the $50m to $100m depending on what your partnership looks like. 

“The highest so far was $10m in Pennsylvania. We are looking at five to 10 times as much. I don’t think that is a recipe for a competitive market, rather I think it would just pick winners and losers or maybe allow the biggest companies to participate in the state.”

Senator William DeMora, a Democrat and ranking minority member on the committee, agreed that the fees are too high. DeMora asked Pappas if he believed having higher fees would lead to fewer companies in the Ohio market.

“This would be a real test case. I will say that much,” Pappas said.

“A $50m entry fee or $100m depending on how you enter the market would be so outside the norm of what we’ve seen in any other jurisdiction,” he said. “It’s hard to believe that others besides the biggest companies would be able to participate here.”

SB 197 requires internet gambling operators to be either an Ohio casino operator or a racetrack owner, limiting the number of operators to 11. The bill would also legalize iLottery.

“We see iGaming as a natural next step in the evolution of the industry,” said Ryan Soultz, vice president of governmental affairs with Boyd Gaming. “We believe iGaming, if legalized through the proper framework, can be beneficial to both the state and existing gaming venues.”

Soultz told the committee that Boyd appreciates that the bill’s current framework includes a tethered model, which is a way to recognize the significant capital investment that the industry has made in the state.

But Soultz reminded lawmakers there is also a need to figure out a way to address the illegal market and bring people into a regulated one.

“If you set the barrier for entry so high then you cannot get enough entrants into the market to capture as much of this illegal activity as possible,” he added.

Soultz said that a market limited to 11 skins, with a fee structure on par with what is in the current bill, would compromise the policy goal of moving people to the regulated market.

He also criticized an iGaming bill introduced in the Ohio House earlier this week that specifies that casinos and racino could only promote their land-based casino brands.

House Bill 298, authored by Republican Representative Brian Stewart, chair of the House Finance Committee, would only allow current Ohio-based casino and racino operators to offer iGaming, while banning online sweepstakes casinos in the state.

Stewart’s bill sets the tax rate at 28 percent, with each license costing $50m and lasting five years. The bill sets the license renewal fee at $10m.

The bill, co-sponsored by Republican Representative Marilyn John, does not authorize iLottery or allow online pari-mutuel wagering as SB 197 would.

The legislation has been referred to the House Finance Committee, but as of Thursday no hearing date has been scheduled. Stewart estimates his proposal could raise between $400m and $800m in new tax revenue from a mature iGaming market.

MGM Resorts International and Penn Entertainment, which also operate casinos in Ohio, submitted written testimony in support of iGaming but did not testify before the Senate committee.

“We support an iGaming market tethered to in-state casinos and racinos, with each facility having the opportunity to promote two mobile platforms that would result in up to 22 possible brands operating in the state,” Ward said.

Ward said this expansion would put Ohio in line with the highest grossing iGaming states that “promote fair competition”. 

Michigan has 18 iGaming operators, while the number of licensees in Pennsylvania is 21 and 29 in New Jersey.

He stressed that the Sports Betting Alliance is opposed to those who would limit the Ohio market, including those who would extend casino market restrictions to iGaming

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