Be careful what you wish for.
Online gambling companies hoping more states authorize internet-based slots and table games may have found a receptive and willing audience in Ohio.
However, the the Buckeye State's currently proposed price of admission would be quite steep for online gambling firms.
That cost may also be very intentional, a way to protect brick-and-mortar casinos and racetracks and prevent the same kind of dominance DraftKings and FanDuel managed with online sports betting.
Key Insights
- Supporters proposed two bills to legalize online casino gambling in the Ohio General Assembly.
- Both contain relatively steep licensing costs, as well as considerable tax rates, which has some online gambling companies concerned.
- Those concerns aren’t necessarily shared by companies with brick-and-mortar gambling operations in Ohio, which are more worried about iGaming’s effects on their in-person businesses.
Two bills recently proposed in the Ohio General Assembly would legalize internet casino gambling (or iGaming). Both proposals appear to favor brick-and-mortar gaming facilities and would impose relatively high tax rates and licensing fees for would-be iGaming operators.
Concerns over those costs were highlighted Thursday during a meeting of the Ohio Senate’s Select Committee on Gaming. Committee members heard testimony on one of the two iGaming measures circulating in Columbus, Senate Bill 197.
S.B. 197 contains a number of proposed tweaks to Ohio sports betting and gambling laws, but the headline item would authorize iGaming in the Buckeye State.
Modernizing Play: Ohio’s Path Toward Regulating iGaming and iLottery is Here https://t.co/fy5zezGGvf | by @IceMillerLLP
— Tax Alerts (@Tax_Alerts) May 22, 2025
Only an Ohio casino operator or horse racetrack owner could be licensed as an iGaming operator, though, and the bill would limit them to one iGaming platform apiece.
Moreover, an iGaming operator would have to pay a $50 million license fee and a $5 million renewal fee for a five-year permit.
A casino or track owner could contract with an iGaming company to run the iGaming platform. However, if the same person doesn't own or control at least 50% of both the operator and manager, then the latter must also pay a $50 million licensing fee and a $5 million renewal fee.
I feel targeted
In addition to those fees, the state would charge an iGaming tax rate of either 36% or 40%, depending on if a casino or track owns or controls more than 50% of the iGaming management company.
A representative for the Sports Betting Alliance, which consists of online sports betting and casino gambling operators BetMGM, DraftKings, Fanatics, and FanDuel, warned the committee the licensing fee would be either five times or 10 times the highest similar fee in any other iGaming state.
“The brands who are being targeted with the higher tax and fee offer online sports betting in Ohio, and … provide hundreds of millions of dollars of economic activity and tax revenue to the state,” said Scott Ward, a representative of the SBA, in written testimony to the committee. “We also believe these provisions would violate the U.S. Constitution under the Dormant Commerce Clause principle as it seeks to discriminate against out-of-state business in favor of in-state businesses.”
The other proposed iGaming measure in the Ohio legislature, House Bill 298, would go easier on “out-of-state” operators, but still require a lot of money to participate.
Again, only an Ohio casino operator or racetrack owner could be licensed as an iGaming operator, and they'd be limited to one platform each. An iGaming operator would have to pay a $50 million licensing fee and a $10 million renewal fee every five years.
A casino or track could contract with a third-party operator to run their iGaming site under H.B. 298. However, unlike the Senate bill, the legislation wouldn't require the operator to pay another $50 million licensing fee if the casino or track doesn't own or control the majority of the third party.
The tax burden would also be lower under the House bill. The rate H.B. 298 proposed is 28%.
Even if costs may be less under the House bill, they're not insignificant. They're also higher than in other iGaming states.
OSB>iGaming
In general, online casino gambling has proven to be a much harder sell in the U.S. than online sports betting. While 34 states legalized some form of online sports wagering, only seven have authorized iGaming.
Some of those jurisdictions also decided to keep their markets purposefully small. Connecticut, Rhode Island, and Delaware have only a handful of authorized iGaming operators combined. New Jersey, meanwhile, has more than 30.
Furthermore, even if you're allowed into an iGaming state, the price of admission can vary greatly. New Jersey and West Virginia, for example, charge a 15% tax rate on iGaming revenue.
Graduation day
To further compare, nearby Michigan uses a graduated iGaming tax rate, with the maximum levy set at 28% of adjusted gross revenue. Pennsylvania has a graduated rate as well but it depends on the type of gambling, with online slot revenue taxed at 54% and table game income at 16%.
Yet the steep cost of entry being proposed in Ohio could be more of a feature than a bug.
“With no comparable operating costs associated with the existing gaming industry in Ohio, those without land-based operations in state will have a significant advantage to only incentivize online play on their platforms and deter visitation to the state’s casinos and racinos, which will result in gaming revenue being extracted out of state,” warned Eric Schippers, senior vice president of public affairs and government relations for Ohio casino-owning and ESPN BET-operating PENN Entertainment, in written testimony.
It’s also worth noting both iGaming bills are far from the finish line, could be amended further along the way, or may never pass and become law at all.
There are also some who are striking more of a middle ground in their approach to iGaming in Ohio.
“We support bringing iGaming to Ohio because our experience shows that regulated iGaming provides a significant new source of state tax revenue, provides consumers with a strictly regulated and fair gaming option, and protects vulnerable populations,” said Trevor Hayes, vice president of government relations for the online gambling arm of casino-operator Caesars Entertainment, in written testimony. “It’s also a vehicle to encourage casino and racino visits, enhancing customer experiences and improving brick-and-mortar gaming businesses.”
