Ohio Lawmakers Consider Online Casino Legislation

When the country’s seventh-largest state starts talking about legalizing online casinos, it draws a lot of attention. And much of that attention was on Columbus this week as lawmakers heard from those who support the addition of online casinos in the Buckeye State. Bookend bills, House Bill 298 and Senate Bill 197, were both introduced earlier this month in yet another attempt to get online casinos over the finish line. 

Perhaps in an attempt to head off contentious testimony, this week's speakers were all pro-iGaming experts and advocates, with the nay side getting their turn next week.

Not surprisingly, FanDuel was there making a strong case for an additional $600 million in tax revenue in the first year, and they were joined by the Sport Betting Alliance(SBA) who pointed to recent studies showing Ohioans already place more than $5 billion in wagers with grey or black market online casinos. 

One gets the feeling that both Cesar Fenadez from FanDuel and Scott Allen from the SBA may have been down this road before, as they rolled out exactly how much Ohioans were losing to offshore gaming and the benefits of additional tax revenue from something that the population was already doing with the practiced choreography of a dance team.

Representatives from casinos already operating in the state also lined up to show support. MGM, which operates the racino at Northfield Park, and Caesars, which operates the Eldorado Scioto Downs in Columbus, both expressed their support for passing the bill. 

Boyd Gaming, perhaps somewhat surprisingly, also expressed cautious optimism that online casinos wouldn’t harm their operations at Belterra Park or elsewhere, stating that they believe studies show Americans want and will use both online casinos and still visit brick-and-mortar locations. 

Though this may have more to do with recent regional iGaming aspirations, Boyd expressed when it bought out Resort International’s online gambling arm, Resort Digital, last Fall for an undisclosed amount than spokesman Ryan Soultz would have been willing to admit. 

Things weren’t all wine and roses; the Senate Bill, in particular, got some sharp rebukes about both its tax rate and licensing fee, which would be some of the highest in the nation. Many smaller operators believe an upfront $50 million licensing fee is a non-starter, as the next highest fee for a license in Pennsylvania is already an onerous $10 million.

Additionally, the Senate bill envisions a 36% tax rate, which increases to 40% if you choose to partner with a third party instead of running your own. In contrast, the House has set a tax rate of 28% as more of a placeholder than anything that is set in stone. Both Bills, as currently written, would only allow already currently licensed Ohio casinos to run online casinos.

One particularly off-putting proposal in the Senate bill, likely included to appease the unions who will play a major role in whether any of this legislation moves forward, is a requirement that all online casino promotional offers can only be redeemed at brick and mortar casinos.

For example, if a company wanted to offer a $500 sign-up bonus, it might be required to issue that as free play, usable only at a physical casino location. Or a hotel package or dinner comp might need to be tied to an Ohio property rather than a partner resort in Las Vegas or the Bahamas.

To the best of my knowledge, no state has ever required that online casino promotions be tied exclusively to in-state brick and mortar properties. While there is something to be said for innovation, this feels more like trying to launch an already overtaxed balloon with sandbags strapped to its sides.

Admittedly, using promotions to drive foot traffic to union-staffed restaurants, hotels, and casino floors might appeal to those worried that iGaming could hurt jobs or reduce visitation. It may not be ideal, but it might be the only way to get iGaming across the line in Ohio.

Stay tuned for next week's sure to be entertaining legislative hearing with those against the Bills…