That has led to numerous six-figure fines of operators who have run afoul of the state’s relatively stringent regulations.
But sometimes, even strong-willed regulators recognize a need to be flexible. And so the Ohio Casino Control Commission recently announced that a Jan. 1, 2024 deadline for all approved Ohio online sportsbook licensees to launch would be extended by six months to June 30.
A remarkable 15 licensees have yet to find a partner to run a sportsbook, including the Cincinnati Reds, Cleveland Browns, Cleveland Cavaliers, and Columbus Crew of Major League Soccer.
Six months helps, perhaps, but the obstacles remain. That may be why the commission hasn’t even ruled out granting further extensions in some cases – a practical response to the situation.
States such as Delaware and New Jersey launched legal, regulated sports betting only one month after that voided a 26-year-old federal law that effectively granted Nevada a national monopoly the May 2018 U.S. Supreme Court ruling on the gambling option.
Eager overseas operators soon flooded the U.S. market wherever they could, hoping to grab a significant piece of an enormous new pie. But those hopes turned into nightmares for a number of smaller operators like Fubo, leading them to gloomy exits.
So for a later-adapting state like Ohio – it was the 32nd state in the U.S. to launch sports betting – attracting new sportsbook partners is liable to prove much more difficult.
A Top-Heavy Sports Betting Marketplace In U.S.
The extent of the dominance of daily fantasy giants FanDuel and DraftKings was not generally anticipated in the industry. Each so far has been garnering about one-third of the betting handle in Ohio, similar to its performances in many other states.
BetMGM, Bet365, and Caesars tend to combine for a majority of the remaining betting handle, leaving more than a dozen other Ohio sports betting operators settling for modest numbers.
In October, for example, only Fanatics, Barstool – now in the midst of being re-branded as ESPN Bet – and Hard Rock also produced at least 1% of the state’s $724 million sports betting handle for that month.
That means a majority of the 20 mobile sportsbooks were unable to produce even a modestly significant handle in October. Seven of them didn’t even clear the low bar of a $2 million handle.
Three sportsbooks – Betr, MVGBet, and Superbook – actually lost money for the month, thereby providing no contribution to the state’s sports betting tax revenue numbers.
In September, Parx Interactive landed in the same boat. Superbook – aligned with the Cincinnati FC Major League Soccer franchise – also lost money in May and June, while MVGBet – a partner of the Miami Valley harness racing track – also did so in January and April. Additionally, at least one retail sportsbook has been a money-loser in each of the state’s first 10 months of betting operations.
Given those numbers, it may be difficult even for long-established professional sports franchises like the Reds, Browns, and Cavaliers to find willing partners given the top-heavy nature of the betting market.
Further complicating matters is that Ohio became the only U.S. state in 2023 to change its tax rate on gross betting revenue – from an industry-friendly 10% to a more typical rate of 20%.
State senator Niraj Antani last month introduced a bill that would restore the sports betting tax rate to 10%, noting that the tax hike inevitably leads to less favorable odds and fewer promotions available to gamblers. But bills that deliberately reduce a state’s total tax revenues typically have a high bar to climb to achieve success. The bill has not yet advanced beyond the Senate Finance Committee.
The unused licenses are split between mobile “Type A” licenses and retail “Type B” licenses. The Cavaliers, Reds, and the JACK Thistledown racino had earned Type A licenses, while the Browns, the Crew, and the Pro Football Hall of Fame in Canton have yet to find partners for their Type B licenses.
Ohio’s Healthy Sports Betting Numbers
While there is reason for concern about whether the sports betting marketplace in Ohio will grow as large as had been anticipated, that doesn’t mean that the Jan. 1, 2023 legalization has been unsuccessful.
In the first 10 months of operations, Ohioans and visitors wagered almost $6 billion in the state – all but about 3% of that via mobile betting rather than at brick-and-mortar sites, a typical result in states with both betting options.
Thanks in significant part to the July 1 doubling of the tax rate, Ohio’s share of the betting dollars has reached $106 million – far beyond initial estimates for the first year of operations.
That figure has been boosted by the fact that operators have “held” at least 10% of the total amount wagered in every month except June, with a record-high of 18.8% in the launch month of January. Almost $21 million – or more than 20% of the state’s 10-month tax revenue total – was accomplished in that one month, even with the lower 10% tax rate in place at the time.