Poised to go into effect at midnight January 1st

Poised to go into effect at midnight January 1st

  • Ken Adams
August 14, 2022 8:57 PM

Nearly every article on sports betting in Ohio begins as follows, “With sports betting poised to go into effect at midnight on January 1, 2023.”

The rest of the articles cover narratives that have surfaced in Ohio. These include the names of teams, casinos, and racinos that have applied for a sports betting license and the companies that offer mobile and online betting. Combined, retail and mobile sports can have a maximum of 65 licenses, called Type A and Type B. A third category, Type C, is for retail businesses that sell lottery tickets and liquor for onsite consumption. More than 1,000 locations are already lining up in that queue.

Ohio is probably no different than any state that has authorized sports betting. The final legislation is the result of months, if not years, of debate and testimony on the conditions under which betting on a sporting event in Ohio would be allowed. There appears to have been very little outright resistance to sports betting, though while igaming might have tagged along, it met with political pushback. Instead, e-bingo slipped through the gap.

Under the new Ohio law, electronic bingo is a slot-like terminal that is permitted in approximately 900 eligible veterans and fraternal lodges, halls, and posts. Each location is allowed 10 games. The bingo bill was an amendment to the sports-betting bill; it had been hotly debated for nine years. The organizations wanted slots; the casinos and racinos did not want any slot machines outside of their premises. Sports betting gave electronic bingo the vehicle it needed to end the standoff. While sports betting will not begin until January 2023, the bingo machines went into operation in April.

The legalization of e-bingo in Ohio is typical of the political process. Getting sports betting was more important to the casinos and racinos than stopping VFW Post 6069 in Lebanon, Ohio, for one, from having 10 slot machines. The final bill in Ohio was the result of many compromises.

Staunch supporters included its sponsors and other lawmakers who consistently favored gaming in Ohio; they cited all the benefits that have accrued to Ohio from the taxes paid and investments made by the four casinos and seven racinos.

The sponsors wanted a bill that would have the maximum possible economic impact on Ohio; that impact is to be judged by the infrastructure investment and wages paid. And lawmakers want to create proper regulation with free-market mentality: “Let the market determine the winners and losers.”

The final bill took years to pass and it included some surprises that few anticipated in the beginning. Certainly, e-bingo was one. The number of licenses was also larger than envisioned in the first drafts. One of the biggest surprises was the Type C license. It too was a compromise. The Ohio Lottery wanted the right to offer sports betting, but in its own way. The lawmakers settled on a kiosk system that allows lottery retail outlets to participate, but the actual betting product will be the same as offered by the licensed mobile operators. The compromise included many retail lottery locations, but excluded others. Convenience stores, though they argued that lottery sales were critical to their survival, didn’t make the cut, but they will probably be back seeking to ride future legislation into legality.

The failure of convenience stores is doubly surprising, given that grocery stores will be eligible for a kiosk. So far, three major grocery chains have applied. In fact, that may be the most surprising thing about the new law. Even Nevada, with its supermarket slots, has yet to allow sports-betting kiosks there. This is another example of legislative compromise.

As the debate wore on, unlike in previous decades when gaming expansion was discussed, there was very little resistance to the idea of sports betting. Forty, 30, or even 20years ago, much of the testimony would have concerned the undesirability of gambling itself and the dangers of addiction. In the third decade of the 21st century, the absolute opposition to gambling seems to be gone. At least, it cannot mount a campaign sufficient to prevent legalization of additional gaming options. That said, igaming is not as easily accepted as sports betting. And the bill does include a portion of the revenue generated to be used to combat problem gambling.

Ohio is joining more than 30 other states with legal sports betting. Fans will bet on the same games via mobile and retail choices and have the same options, including fast-growing in-game wagers, as in other states.

The differences will be more important and visible to the licensees than the bettors. Ohio took a very conservative approach to taxation: 10 percent. New York and Pennsylvania have a much higher rate. On the extreme edge is New York’s 50 percent.

From the standpoint of volume of wagers, revenue, and taxes, the most important factor is the mobile option. The states with mobile wagering generate 10 to 20 times the handle and win as states with only retail options. When New York had only retail betting, it generated between $10 million and $20 million a month in handle; with mobile wagering, the handle is $1 billion a month.

Ohio has nearly 12 million residents, so regardless of the passion of its fans, the state can be expected to generate about the same level of wagering, revenue, and taxes as Illinois and Pennsylvania, but about 25 percent less than New York. Given the tax difference, the gross gaming revenue of the operators may be equal to New York.

The excitement is mounting, although lots of work is yet to be done. Applicants need to be vetted, the licenses granted, and the retail books built. It is a tight time schedule, but one dictated by the legislation; opening day is fixed. As they all say, “Ohio is poised to begin taking bets in January.” That will be a very good month. The real potential for sports betting in Ohio, however, will be seen a year from now with the beginning of the 2023-2024 NFL season.