Neighboring states better watch out as Ohio’s proposed sports betting bill is in good shape, and may even improve.

On taxes, Senate Bill 176 is ultra competitive, with a 10% tax rate on bets. Tax rates around 15% and up reduce betting activity. This keeps consumers in the black market, where proceeds can go to shady causes.

High taxes also make it more difficult for sports books to succeed, which threatens growth, job creation, and competition.

Lower taxes are better, and Iowa and Nevada sport the lowest sports betting tax rates at 6.25%, but Ohio’s proposed rate is primed to compete with overtaxed Pennsylvania, and Indiana’s 9.5% tax rate.

The bill distinguishes between two types of licenses that will be offered, type A licenses and type B licenses. There will be 20 licenses issued for type A and type B licenses each.

Type A licenses are for mobile gambling, and will allow the license holder to have a potentially unlimited amount of partners. No other state in the country has yet taken this open approach of having uncapped partners for online betting. This would allow a very open, competitive market that will let consumers decide which products they prefer.

Sen. Kirk Schuring said of the distinction, “Under the Type A license they can hire, as an operator, a mobile application. Now I’m not showing preference to anybody, but just to make sure what we’re talking about, it’s the FanDuels, DraftKings, Barstool, whatever. We’re going to let the free market decide that.”

A key aspect of the Type A licenses is that they will not only be licensed to existing operators. The bill was expressly written to be open ended towards which entities could be eligible for a Type A. As many expect a handful of likely applicants, the processes was modeled to allow open competition for any company closely tied to Ohio to apply.

Type B licenses represent traditional brick and mortar sports books and will be given to a number of businesses large and small. As of recent changes to the bill, casinos and “racinos” will be eligible to receive type B licenses.  

Ohio’s SB 176 offers many market oriented reforms and a large degree of openness and competition with some caveats, while it also avoids major regulatory pitfalls a couple states have fallen into.

Sponsors Senators Niraj Antani and Nathan Manning have introduced SB 176 in the Ohio Senate, and expect a vote in late June. Ohio has considered sports betting for a number of years. In 2020, a sports betting legalization bill passed in the House of Representatives but failed in the Senate.