For instance, for several years since the U.S. Supreme Court in May 2018 effectively ended Nevada’s nationwide monopoly on sports betting, mobile betting was legal in New Jersey but not in neighboring New York. From 2018 to 2022, New York only permitted such bets at brick-and-mortar casinos.
So a pedestrian or bicycle rider crossing the George Washington Bridge from Manhattan en route to New Jersey would find themselves unable to place a wager on regulated mobile sportsbooks until just after crossing the midpoint of the bridge. After that, GeoComply’s technology could recognize that the traveler had crossed over into New Jersey – thereby allowing them to place wagers on their New Jersey-based sportsbook accounts.
The company recently decided to review the amount of activity in three states new to sports betting – Ohio, Massachusetts, and Maryland.
In the “NFL Week One” period of Sept. 3-10, GeoComply found that 59,000 new accounts were created that week in Massachusetts and 61,000 were created in Maryland.
Impressive numbers, but Ohio gamblers dwarfed those figures, as 133,000 new accounts were created in the state in that seven-day period.
Ohio also led those other states in “geolocation checks” with 19.4 million, compared to 12.7 million in Maryland and 9.2 million in Massachusetts.
The big jump in “Week 1” in Ohio boosted the total number of sportsbook accounts in the state to 854,000 versus 388,000 in Maryland and 383,000 in Massachusetts.
Ohio Bettors Caught On Quickly after Legalization
Legal sports betting in Ohio launched on Jan. 1, 2023, leading to a U.S.-record 11.3 million geolocation transactions over New Year’s weekend. That figure eclipsed even that of New York, a state with a population nearly twice as large as Ohio’s.
Much of the Ohio population is in reasonably close proximity to Pennsylvania, West Virginia, Indiana, or Michigan – all of which were years ahead of sports betting legalization compared to Ohio. That appears to have produced an intense level of pent-up demand for a legal sports betting product.
It also helps that Ohio State University is an annual contender for an NCAA college football championship and that Ohio has a total of eight professional sports franchises among the five most popular U.S. team sports.
While some states, such as New Jersey and Delaware, launched legal sports betting within a month after the landmark Supreme Court ruling, the speed of the process in other states varied quite a bit.
It wasn’t until March 2019 – 10 months after the Court’s ruling – that state Sens. John Eklund and Sean O’Brien introduced a bipartisan bill to allow sports betting at Ohio’s casinos and racinos – that is, racetracks that also feature slot machines or similar gambling devices – as well as on mobile phones.
In some states – and Ohio wound up being among that group – as some lawmakers at first latter provision has proven thorny and opposed sports betting beyond retail locations.
The lawmakers introduced an amended version of a sports betting bill in 2020, and in December 2021, Gov. Mike DeWine finally signed a compromise bill into law – setting the launch to be an unusually long 12-month period before the first bets would be cast. That made Ohio the 33rd of 50 U.S. states to legalize sports betting.
Casinos, sports teams, stadiums, bars, and restaurants all were permitted to apply for permits from the Ohio Casino Control Commission. The initial tax on betting revenue was 10%, making it one of the industry-friendliest rates in the country. All of the tax dollars would go to education, aside from 2% allocated to assisting residents who develop compulsive gambling issues.
Tax Revenue Flowing in a Big Way in Ohio
In the first six months of operation, sportsbooks in Ohio generated $539.4 million in revenue, leading to nearly $54 million in tax revenue for the state.
But in early July, DeWine signed a bill into law that doubled the tax rate to 20%.
In the abstract, that seemingly would double the amount of tax collected as well. But the change also is likely to cause ripple effects that will cut into that tax revenue increase.
For instance, sportsbook operators who paid anywhere from $3 million to $10 million in licensing fees were persuaded that a favorable tax rate made that a worthwhile tradeoff.
With a flip in the tax rate coming so quickly, however, some sportsbooks may wind up leaving the state. Newcomers, meanwhile, might shy away from doing business in Ohio – after all, with the precedent now set, what is to stop lawmakers from increasing the tax rate again, perhaps closer still to the industry-high 51% that operators pay in New York?
Also, consumers may find that the amount of promotions offered by Ohio sportsbooks dwindles as a cost-cutting measure by the sportsbooks. That could slow the volume of new customers signing up on the state’s sportsbooks, as those promotions are responsible for many of the new customers.
Still, the GeoComply figures for the start of football season bode well for a banner fall of wagering in the Buckeye State.
