After three years of drafts and negotiations, the Ohio General Assembly has passed legislation legalizing sports betting in the state. In a special joint conference committee meeting Wednesday, the House and Senate voted to pass House Bill 29 (HB 29), which now awaits the approval of Gov. Mike DeWine. Regulations could be in place to allow betting on college, professional and esports by next year. The deadline to kick off is Jan. 1, 2023 and there will be a universal launch date.
Just like previous drafts, HB 29 creates different classes of sports betting licenses based on the type of provider utilizing them. Online platforms, brick-and-mortar betting centers and kiosks in bars and restaurants will become available. These are designated as Type A, B and C licenses.
Type A Sports Betting Licenses
As it stands, Ohio will offer up to 25 five-year Type A licenses for applicants, such as Ohio’s 11 casinos and racinos, to partner with online and mobile app-based betting services. Negotiations primarily centered around these online betting services. Mobile betting operators can maintain two “skins” (an industry term describing the website and accompanying branded app that customers would use).
Specifically, teams, leagues, casinos and racinos can launch one skin each with a chance at a second. A second skin can be launched but the licensee must prove it will have an incremental economic benefit to the state. There can be more than 25 mobile licensees as long as those applying can demonstrate Ohio needs more online sportsbooks. Any licensee approved after the first 25 will only get one skin each. These licenses and skins are valuable because most sports betting is done online or on apps rather than in brick-and-mortar stores.
The Type A license will not come cheap as the first license will cost $3 million and second license will cost $10 Million. The second license will include the incremental economic benefit analysis and license will be valid for a 5 year period.
Type B Sports Betting Licenses
Type B licenses are offered for in-person betting at brick-and-mortar locations. Population will be the deciding factor on how many betting facilities will be available in each county. Counties with 800,000 or more residents are eligible for a maximum of five Type B licenses; those with 400,000 to 800,000 residents are eligible for a maximum of three Type B licenses and those with 100,000 to 400,000 residents may have a maximum of one Type B license.
Initial license fees would range from $50,000 to $100,000 depending on whether the business already had an online betting license.
Type C Sports Betting Licenses
Bars with certain liquor licenses could apply for Type C licenses to offer spreads and over/under bets on kiosks. Clerks couldn’t pay out more than $700 in wagers to an individual per week but could pay in cash. HB 29 greatly expanded the number of C licenses that could be awarded to address concerns that previous bills cut out smaller operators.
Sports Betting Tax Revenue
A 10% tax will be imposed on net revenue from sports betting. Most of that money would go toward public and private K-12 education with about 2% earmarked for problem gambling services. Another 0.5% of license fees would go toward veterans’ services. This will generate tens of millions of dollars in tax revenue for the state of Ohio.
Online and In-Person Sports Betting
Businesses can apply for multiple licenses if they want to offer both online and in-person sports betting. In fact, with layers of overlap between Type B licenses and Type C licenses, it will be valuable for businesses to analyze the strategy when proceeding in the application process.
If you’re looking to secure a license or vet the addition a license may make to your business, contact Scott Norcross (san@kjk.com or 216.736.7264) or Paige Rabatin (pmr@kjk.com or 216.736.7270).