After a long wait and much fanfare, legal sports betting became effective in Ohio as of January 1, 2023.1 Ohio joined 36 other states and Washington, D.C. by authorizing some form of sports gaming. Ohio bettors may now place wagers online or in-person at casinos, professional sports events, racetracks, and kiosks at bars and restaurants. In Hamilton County alone, Hard Rock Casino, Paycor Stadium, Great American Ballpark, TQL Stadium, Belterra Park, and more than 50 bars and restaurants offer in-person sports wagering. Popular online apps available in Ohio include FanDuel, DraftKings, Caesars Sportsbook, Tipico, Bet365, and BetMGM.
The sports gaming landscape is complex. The Ohio Casino Control Commission (OCCC), an administrative agency, has jurisdiction over all persons participating in sports gaming, whether bettors or proprietors.2 Ohio law requires the OCCC to implement appropriate regulations.3 This landscape, outlined below, will likely change as experience with legalized sports betting evolves.
Bettors must be at least 21 years old4 and physically present in Ohio to place a bet, even online.5 Proprietors do not need to offer the same odds or the same sports to bet. Not surprisingly, pro football is by far the most popular sport to bet, but most proprietors also offer college football, college and pro basketball, baseball, soccer, horse racing, golf, and combat sports.
Generally, betting in person is a straightforward transaction, as long as the bettor understands the mechanics of placing a bet. Online betting might be more convenient or accessible but requires a different set of financial and privacy considerations. To use an online sports gaming app, bettors must provide their name, date of birth, and the last four digits of their social security number. Bettors can, for the most part, deposit funds into their online accounts with debit cards, credit cards, online banking transfers (including Venmo or direct ACH transfers), Apple Pay, and PayPal. Different apps may offer different funding options. Some forms of deposit will not also accept withdrawals of a bettor’s winnings. Some credit cards will not fund online betting, whether linked to a digital wallet like PayPal or directly.
Online bettors must decide whether they are comfortable using one form of deposit and withdrawal or another. They should also consider whether they want a trail of wagering to appear on their bank or credit card statements. Credit reporting agencies such as Experian and TransUnion advise that gaming activity does not appear on a consumer’s credit report or affect a consumer’s credit score directly, but prospective lenders evaluating risk may still see such transactions on a consumer’s statements.
As the credit reporting agencies note, there are particular risks to using credit cards to fund online gaming.6 Deposits made with a credit card may be treated as cash advances. Cash advances typically carry high interest rates. Using a credit card to make a deposit also affects a consumer’s credit utilization rate, which is the amount of available revolving credit in use. Credit reporting agencies use credit utilization to help determine a credit score. Failing to pay the card issuer for a betting deposit in full prior to the issuer reporting credit usage could have a negative impact on credit utilization and, therefore, on a consumer’s credit score.
All bettors should know that gaming income is taxable and must be reported as income.7 The tax on certain winnings may be withheld by the paying entity. Gaming losses may be deducted by a taxpayer who itemizes deductions, but only to the extent of the gaming winnings reported and only if tracked accurately with sufficient documentation. As always, one should consult a tax professional for advice on this subject.
Though not a tax, bettors should also understand the fee that a proprietor charges simply to make a bet. Google “vigorish” if you want to learn more.
Bettors have recourse if they dispute whether they won a wager. If a proprietor refuses payment of alleged winnings, the proprietor must inform the bettor that he or she may file a complaint.8 The proprietor must investigate and respond to the complaint within ten business days.9
There can be criminal consequences for violating Ohio’s sports betting laws. For example, it is a felony to bet on a sporting event under age 21 or to help someone under age 21 do so. It is also a felony to place a bet with knowledge not available to the general public, offer anything of value to affect the outcome of a sporting event, or use counterfeit currency to place a bet.10
Proprietors must be licensed by the OCCC to accept bets. There are three types of sports gaming licenses. The “Type A” license authorizes a gaming proprietor to offer sports gaming through one or more online sports pools.11 Type A proprietors must also operate under a “Type B” license or maintain at least one operational place of business in Ohio.12 There can be no more than 25 Type A licensees in Ohio at once.13 Type A licensees may only contract with one mobile management service to provide an online app.14 Type A proprietors in Hamilton County include Hard Rock Casino, the Cincinnati Bengals, the Cincinnati Reds, FC Cincinnati, and Belterra Park.
Type B licenses authorize a proprietor to offer sports gaming at a location specified on the license.15 Type B licensees must conduct significant economic activity in the county in which it is located.16 There can be no more than 40 such licenses at once.17 The OCCC must give preference to professional sports organizations, casino operators, and video lottery sales agents in granting Types A and B licenses.18
“Type C” licenses authorize a proprietor to offer sports gaming through a self-service or clerk-operated sports gaming terminal.19 Hamilton County has more than 50 bars and restaurants with kiosks to place sports bets.
Ohio law allows gaming proprietors to manage their risk. Proprietors may reject or pool wagers, or lay off one or more wagers with another proprietor.20 A proprietor may also offset losses or manage risk with a liquidity pool in another jurisdiction.21
Ohio bettors were busy on the opening weekend. On January 1 and 2 alone, Ohio had over 11.3 million betting transactions, the most of any state. Cincinnati had 1.9 million betting transactions, the most in Ohio. Ohio is slated to have between $8 billion and $12 billion in bets placed in 2023. Projections have Ohio in the top four states for future betting transactions.
Estimates of taxable revenue range from $30 - $50 million in 2023. Proprietors are taxed at a 10 percent rate on sports gaming receipts.22 This tax revenue will help pay for various educational programs and interscholastic extracurricular activities and athletics, and to help alleviate the effects of sports gaming addiction.23
The OCCC has broad authority. It makes licensing decisions, including issuing and revoking licenses.24 The OCCC may also fine licensees.25
Ohio has strict sports gaming advertising laws. All sports gaming advertisements must clearly convey the conditions to win, disclose the identity of the proprietor, and include a message designed to prevent gambling problems.26 Sports gaming advertisements may not depict any individual under age 21, target individuals under age 21, obscure material facts, be false, deceptive, or misleading, promote irresponsible participation in sports gaming, or even suggest that sports gaming will guarantee personal or financial success.27 Proprietors must offer an opt-out option for all direct or targeted advertisements.28
The OCCC already announced action against popular sports gaming apps for violating the advertising laws. The OCCC is seeking $150,000 in fines against BetMGM, Caesars Sportsbook, and DraftKings specifically for failing to provide a message designed to prevent gambling problems and for describing promotions as “free” or “risk free.”29
Bettors face various restrictions too. Ohio law requires the Attorney General to develop and implement a real time data match program.30 Proprietors must use this data match program to determine if a bettor owes money to the state or any political subdivision, or if the bettor owes money on a support order.31 If the bettor owes $600 or more, the proprietor must withhold the winnings necessary to satisfy the amount owed.32 The proprietor must send that money to the Attorney General.33
No matter one’s view of legal sports betting, it is already big business in Ohio. Whether participating or advising participants, it is important to recognize the many complex issues involved.
Abes is a Partner at Dinsmore & Shohl LLP. He co-chairs the firm’s Commercial Litigation Practice Group and the 2022-2023 CBA Secretary. Otis is an attorney in Dinsmore’s Commercial Litigation Practice Group. He has been a CBA member since 2022.
1 See generally 2021 Ohio House Bill 29.
2 R.C. 3775.02(A).
3 R.C. 3775.02(B); see Ohio Admin. Code 3775.
4 R.C. 3775.99(A).
5 R.C. 3775.11; 3775.12.
6 See, e.g., https://www.transunion.com/blog/credit-advice/online-sports-betting-and-your-credit; https://www.experian.com/blogs/ask-experian/does-gambling-affect-credit-score.
7 IRS Topic No. 419; https://www.irs.gov/taxtopics/tc419.
8 Ohio Admin. Code 3775-16-2.
10 R.C. 3775.99.
11 R.C. 3775.04(A).
14 R.C. 3775.05.
15 R.C. 3775.04(B).
18 R.C. 3775.041.
19 R.C. 3775.04(C).
20 R.C. 3775.10(C).
21 R.C. 3775.10(D)
22 R.C. 5753.021.
24 R.C. 3775.02.
26 Ohio Admin. Code 3775-16-08.
29 Press Release, Ohio Casino Control Commission, Sports Gaming Companies Issued Notices of Violation by the Ohio Casino Control Commission, https://casinocontrol.ohio.gov/About/MediaCenter.aspx#921185-2023; Ohio Admin. Code 3775-16-09.
30 R.C. 3775.16.