Ohio Sports Betting Tax Rate Once Again Up For Debate
An Ohio lawmaker has submitted a bill that would lower the state’s sports betting tax to 10% from 20%.
State Sen. Niraj Antani presented the bill before the Senate Finance Committee this week. He noted that Ohio sportsbooks used to pay 10%, but lawmakers increased it to 20% last year to raise more money for the state budget.
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Many neighboring states offer better tax rates
Antani argued that the tax rate needs to be lowered because it puts the state at a regional and national disadvantage. From a national perspective, Ohio’s 20% rate is the sixth highest out of 38 states with sports betting, Antani pointed out.
Most of Ohio’s neighbors offer lower tax rates, except for Pennsylvania, which has a 36% rate:
- Kentucky: 14.25%
- West Virginia: 10%
- Indiana: 9.5%
- Michigan: 8.4%
Generally speaking, tax rates are highest in the Northeast (New Hampshire, New York, and Rhode Island are at 51%) and lowest in the Midwest and West. Nevada, for example, is tied for the lowest tax rate in the nation at 6.75%.
Ohio’s tax rate does make it stand out somewhat from its neighbors, especially since it’s such a massive market.
Biggest sports betting markets often have higher tax rates
However, it’s important to point out that several of the biggest sports betting markets in the country have a tax rate no lower than 14.25%:
- New York: 51%
- New Jersey: 14.25%
- Pennsylvania: 36%
- Ohio: 20%
In that context, Ohio’s tax rate is relatively normal. However, Antani believes a 10% tax rate is the best fit for the state.
“(Ten percent) was a reasonable tax rate that put us in the middle of the pack,” he said, referring to state-by-state sports betting tax rates. “While I’d love for us to be at the 6.75% rate to tie the lowest in the country, going back to 10% is reasonable.”
How would a lower tax rate impact your Ohio sports betting experience?
Probably not much. Sportsbooks spent only slightly less on promotions in August and September 2024 than they did in August and September 2023 when their tax rate was 10%. So, it’s likely they won’t leverage revenue saved on taxes to offer more or bigger promotions.
