Five takeaways from Ohio's sports betting bill
A bill to legalize sports betting in Ohio is on its way to Gov. Mike DeWine (R-Ohio) for his possible signature. It's the culmination of three years of work and debate among lawmakers and interested parties to allow people to bet on sports.
In May 2018, the U.S. Supreme Court ruled that states could authorize sports betting. This triggered action in legislatures across the country to enact a sports betting structure in their state.
For Ohio, the process saw several fits and starts to create an industry that has the potential to generate hundreds of millions of dollars.
Here are some takeaways from the sports betting plan, HB29, passed by the legislature.
To run a sports betting program is going to take money -- lots of money. Professional sports teams, casinos, and racinos that want to run an online sports betting program will need a Type A license and partner with a "mobile management services provider."
So, for example, if the Cincinnati Bengals wanted to partner with one mobile sports betting app -- such as Draft Kings or Fan Duel -- it would cost that partnership $3 million over five years.
If a license holder wanted to partner with two mobile apps, it would cost the partnership a total of $10 million over five years. The revenue from those fees would go to the Ohio Casino Control Commission.
Skin in the Game
But Type A license holders cannot jump immediately into a partnership with two mobile apps, also known as "skins."
The bill says a sports gaming proprietor would have to demonstrate to the Ohio Casino Control Commission that the second contract would generate an "incremental economic benefit" to the state.
Making that case would include (1) proving that the possible benefit extends beyond the benefit already generated by the first contract and (2) that a second skin would not prevent another Type A license holder from securing a contract.
From Rushing Yards to Rocket League
Not only would Ohioans be able to place wagers on professional and college games, but they can also place proposition bets.
Prop bets are wagers on things other than the final score of the game, such as how many first downs occur in a Cleveland Browns game or how many home runs happen in a Cleveland Guardians game.
Along with pro and college games, people can also bet on eSports events. These are organized video game competitions regulated by a governing body. Eligible eSports events will be held between professional players who play individually or as teams.
In a study, Deloitte found that more than $4.5 billion was invested in the budding eSports industry in 2018.
Where does the money go?
The bill places a 10% tax on sports betting in Ohio. That tax, along with the revenue from license fees, will mostly go to the General Revenue Fund directed towards public and private schools with 2% going towards funding problem gambling programs.
There is an allocation of 0.5% of the license fees to the Sports Gaming Profits Veterans Fund, which is created in the bill.
That fund is to be used for a variety of purposes including direct support for veterans, veterans' families, and additional funding for county veteran service commissions.
Delay of Game
Part of the debate over sports betting has been about creating an industry where different organizations get a "piece of the pie" ranging from Ohio's four casinos to the state's restaurants, bars, and bowling alleys.
The state's liquor permit holders can apply for a Type C license, allowing a self-service sports betting kiosks at their facilities. The bill requires sports betting to have a "universal start date" to launch mobile, brick-and-mortar, and self-service kiosk betting all at the same time.
The executive director of the Ohio Casino Control Commission will determine that start date but it must happen no later than January 1, 2023.
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