Ohio Sports Betting — Future Legal Online Sportsbooks

Gary Rotstein

Ohio, surrounded almost entirely by states with legal sports betting, stands for now as a large anomaly bucking a Midwestern trend that has seen neighbor after neighbor legalize the activity since 2018.

That could all change in 2020, bringing the Buckeye State into the fold alongside adjacent Michigan, Indiana, West Virginia, and Pennsylvania. It is in a race with bordering Kentucky, among other states, to see which will legalize sports wagering next.

Ohio’s Republican-controlled legislature is expected this year to consider two competing measures introduced in 2019 in the House and Senate. Either, if passed, would make the state — with its sizable population and large number of professional sports franchises, plus Ohio State University — extremely attractive to sports betting operators.

Future for legal Ohio sports betting

Here’s a rundown on how that might happen in both chambers of Ohio’s legislature, then ultimately what reaches the desk of Governor Mike DeWine (R).

The House bill

HB 194 has gotten more attention than its Senate counterpart, as the House Finance Committee held nine different hearings on it since its introduction. On May 29, 2020, the measure passed on the full House floor by a 83-10 vote.

Among other key aspects, the bill would:

  • Place sports betting under regulatory control of the Ohio Lottery Commission.
  • Allow retail sports wagers at the state’s four casinos and seven racetracks and at kiosks set up in veterans clubs and fraternal halls around the state.
  • Provide for online/mobile sports betting, the wagering format that has come to dominate the industry where permitted.
  • Permit wide-ranging betting on professional and collegiate sports, including Ohio’s college teams.
  • Set a tax rate of 10% on sports betting revenue, with the funds devoted to lottery-supported educational programs.

The measure is primarily the handiwork of Republican state Rep. Dave Greenspan, supported by Democratic co-sponsor Brigid Kelly. The legislation’s biggest difference from what has passed in many states is the provision allowing bets at licensed social clubs. Greenspan said he would like to see the groups such as the VFW allowed one betting terminal each.

“In every one of our cities, big or small, there is a veteran hall or [fraternal club]  really close by, and specifically, you have to be a member to place a bet,” he said of the proposal.

The Senate counterpart

Sen. John Eklund, also a Republican, has sponsored SB 111, which is pending in the Senate General Government and Agency Review Committee.

He and Greenspan have said there’s overlap in probably 90% of the provisions in their bills, which is part of the reason both are optimistic something will pass this session.

Among the similarities, SB 111 also allows the sportsbook industry’s highly coveted online/mobile sports wagering in addition to all collegiate as well as professional sports betting. The lack of a “college carve-out” would be a great asset to sportsbooks in terms of action they could thus generate on Ohio State Buckeyes contests, in particular.

However, as in other states, Ohio’s colleges and universities have banded together to seek a prohibition on wagering on their contests, so the issue is likely to be hotly debated by lawmakers before any bill is passed.

Among some key points where the Senate bill differs from the House version:

  • Regulation would fall under the existing Ohio Casino Control Commission.
  • Retail bets could be placed only at the state’s four casinos and seven racinos.
  • The tax rate would be set at 6.25%, lower than in the House proposal and even lower than the Nevada 6.75% rate that the gaming industry has long embraced as a gold standard.
  • Revenue from taxes would go into Ohio’s general fund, rather than be dedicated to education.

Of the notion to put sports betting kiosks in clubs, which could bolster their revenue, Eklund called it “well-intentioned,” but said, “I don’t think putting this activity in those venues would have the effect that people would like to see happen. I don’t think it’s a purposeful approach, number one. Number two, you’ve got some very potentially serious security issues with that in real sports gaming.”

What happens now

There has been little evidence of Eklund and Greenspan planning any dialogue to reconcile their measures in advance of their chambers taking separate action.

In most such pieces of major legislation, that would mean a conference committee ironing out differences between competing versions once the House and Senate have both acted. The key lawmakers involved would then hash out a version acceptable to both chambers, which could be voted upon and sent to Gov. Mike DeWine for his signature.

That is exactly what Greenspan anticipates will occur this year, without predicting just what details will be finalized.

“It’s safe to say when these bills go through conference committee, we’ll come up with a resolution there,” the House sponsor said. “I’ve always believed that from whenever the governor signs the bill, it would take four to six months for sports betting to take place.”

The main sticking point

Which entity will regulate Ohio sports betting: Under the House version, that’s the Ohio Lottery. On the Senate side, the Ohio Casino Control Commission.

Greenspan has referred to an opinion from the Legislative Service Commission (LSC) that he interprets to mean that sports betting can only be regulated by the Ohio Lottery. The Senate disagrees.

Where might sports bettors stand? Well, Lottery-run states have encountered much more difficulty and generally produced inferior, if not wholly unpalatable, options in their jurisdictions. In many of them, the Lottery has granted a monopoly to only one sportsbook operator (New Hampshire with DraftKings) or produced a single option in house, shirking an open, competitive market (Montana, Oregon and Washington D.C.)

Governor’s office

Without getting deeply involved in details of sports betting legalization as of yet, DeWine has indicated he is supportive of the concept but wants the Casino Control Commission overseeing it, as in the Senate version.

Gaming operators are also more inclined to support Eklund’s proposal, with its lower tax rate, avoidance of competition from betting in clubs, and oversight of the new enterprise from the regulatory body the casinos already know well.

With the sports calendar completely reshaped from COVID-19 shutdowns, the pressure on Ohio lawmakers to act quickly may be reduced. They have a somewhat leisurely timetable in which to act, in any case, as the bills are viable through the end of the legislative session in December.

Ohio’s land-based casinos and future online sportsbooks

Ohio is likely to take the approach of offering legal sports betting by tying (or tethering) online and mobile sports betting platforms to land-based casinos, similar to what is being done in Indiana and Pennsylvania. With that being the likely path, let’s take a look at the current casino operators in the Buckeye State.

Ohio is home to a handful of casino venues, two of which of run by Penn National Gaming.

  • Hollywood Casino Columbus (Penn National Gaming): Located in Columbus, Ohio, Hollywood Casino Columbus offers more than 2,000 slots, 60 table games, and three dozen tables of live poker.
  • Hollywood Casino Toledo (Penn National Gaming): As you could’ve guessed, Hollywood Casino Toledo is located in Toledo, Ohio. The venue features 2,000 slots, nearly 60 table tables, and almost 20 live poker tables.
  • Hard Rock Cincinnati (Hard Rock International): Formerly JACK Casino Cincinnati, this venue will be rebranded to Hard Rock Cincinnati. It is located in Cincinnati, Ohio, and boasts 100,000 square feet of gaming space.
  • JACK Casino Cleveland (JACK Entertainment): Formerly Horseshoe Cleveland, JACK Casino Cleveland is located in Cleveland, Ohio, and has 100,000 square feet of gaming space, including more than 1,600 slots and more than 100 table games.

Similar to what we might see in Michigan, where Penn National Gaming operates Greektown Casino Hotel, we very well could see the company launch a regulated sports betting platform in Ohio once able to do so. As stakeholders in Barstool Sports and a foot in the door in the U.S. sports betting market, Ohio is another state where we could see Penn National Gaming become a big player.

In addition to the state’s land-based casinos, Ohio is home to several racinos (race track and casino combined). These properties allow for a few more operators to get in the mix, such as Boyd Gaming, MGM, and Eldorado.

  • Belterra Park Gaming & Entertainment Center (Boyd Gaming)
  • Hollywood Gaming at Dayton Raceway (Penn National Gaming)
  • Hollywood Gaming at Mahoning Valley Race Course (Penn National Gaming)
  • JACK Thistledown Racino (JACK Entertainment)
  • MGM Northfield Park (MGM Resorts)
  • Miami Valley Gaming (Churchill Downs/Delaware North)
  • Scioto Downs Racino (Eldorado Resorts)

MGM owns and operates MGM Northfield Park, a 200,000 square foot racino in Northfield, Ohio, that was formerly the Hard Rock Rocksino Northfield Park. The BetMGM online and mobile sports betting platform continues to grow throughout the U.S. and we can expect the brand to become available in Ohio was allowed.

Eldorado Resorts is working on completing its acquisition of Caesars Entertainment. William Hill Sportsbook has an arrangement with Eldorado and seems likely to outfit a sportsbook at that property. However, Caesars has operational sports betting lounges and apps in other states, and may have priority for Eldorado in Ohio.

DraftKings and FanDuel in Ohio

Two of the biggest players on the legal U.S. sports betting scene are DraftKings and FanDuel. Both have operational daily fantasy sports (DFS) platforms in Ohio, thanks to HB 132 being signed into law in late 2017. But this doesn’t mean DraftKings and FanDuel can simply open up their sportsbooks in Ohio once the state gives sports betting the green light.

Having operational legal DFS platforms in Ohio can show that DraftKings and FanDuel are able to operate under the state’s regulatory guidelines to create safe and secure platforms, but the two operators will still need to partner with a land-based casino if they want to enter Ohio’s legal sports betting market when it becomes available. Entering into an agreement with a land-based license holder will be nothing new for DraftKings and FanDuel, though.

The two operators have experience taking this path in other states. For FanDuel, they will almost certainly be the online brand for the Boyd Gaming-owned Belterra Park Gaming & Entertainment Center, given the FanDuel-Boyd partnership in other jurisdctions. DraftKings is likely to pair up with Penn National Gaming for one of its properties.

Ohio’s gambling history

Ohio is generally known as a more conservative state than many of its neighbors, which could help explain why it has been slower to take advantage of the sports betting opportunity since the U.S. Supreme Court’s May 2018 decision striking down a federal prohibition against it (outside of Nevada).

The Buckeye State was later to the party, for instance, in allowing commercial casinos years after Michigan, Indiana, West Virginia, and Pennsylvania had already done so.

Prior to a statewide referendum approving casinos in 2009, the state only had its lottery and horsetrack racing, as voters had rejected casino proposals on multiple occasions previously. The four existing casinos opened in 2012-13 in the state’s major cities: Cleveland, Cincinnati, Columbus, and Toledo.

In 2011, a governor’s executive order granted the seven racetracks the right to add video slot terminals under regulation of the Lottery Commission. The racinos are not permitted to operate table games, but they collectively took in more than $1 billion in revenue from the slots in the last fiscal year.