Ohio, the Grass is Greener: Neighboring States Set the Example in iGaming 

By: Jordan Briggs

Ohio has a budget problem. This is not an uncommon problem among states right now, but Ohio has the opportunity to fix it without the major cuts other states are considering by introducing a new vertical—online gaming (iGaming). Neighboring states Michigan and Pennsylvania introduced iGaming several years ago and have recently recognized record revenues. iGaming in Michigan generated $451.4 million in tax revenue and fees last year,[1] and Pennsylvania pulled in $2.66 billion in tax revenue across all gaming in the state, which it attributed to a 25% increase in iGaming revenue.[2] There are other ways to fix Ohio’s budget problem, which it appears the Ohio legislature will explore because both houses chose not to include iGaming revenue in their budget proposal for the upcoming year.

However, when Ohio circles back to iGaming, it will need to create a system that incentivizes casinos to actually participate—otherwise the state will not see all of the potential benefits. Ohio has two proposed bills on iGaming in front of the legislature, but the requested licensing fee is too high. By comparison, Michigan requires a $150,000 application and licensing fee, while the proposed Ohio bills would require a $50,000,000 licensing fee. Such high startup costs discourage casino support for the bill, discourage participation from the casinos if the bills pass, and encourage casinos to raise consumer prices.

Both bills would legalize internet gambling, including through mobile phone apps, in Ohio pursuant to a licensing structure and were introduced in May. The bills are not identical, but both have high initial costs and maintenance fees and would restrict licensing to current casinos and racinos—making entry technically possible, but not exactly throwing out the welcome mat.

Ohio currently allows in-person casino gaming and sports gaming (both online and in physical locations). Casino gross revenue is taxed at 33%, and sports gaming gross receipts are taxed at a rate of 20%.[3]

HB 298 would create a license for internet gambling operators, management companies, suppliers, and certain employees—and then allow only current casinos and racinos to apply for the operator license.[4] The licensing fee for operators would be set at a hefty $50 million with a $10 million renewal fee annually, and if the license goes unused for a year, the Ohio Casino Control Commission could revoke it entirely. In addition to the upfront costs, the state would apply a 28% tax.

SB 197 is very similar, creating a license for internet gambling operators, management companies, and suppliers with a $50 million licensing fee and a $5 million annual renewal fee that is only open to Ohio casinos and racetracks. After these upfront costs, the state would impose an additional 36% tax on the operator’s internet gambling receipts.

The main issues with these bills are the upfront cost to the casinos and the uncertainty that substantial revenue could be generated for the state if casinos decide entering the market is not worth that cost. The licensing cost is a prohibitively high barrier to entry, which could result in lower revenues to the state, especially in the beginning years of the licensing structure. Based on casino revenue data from last year,[5] the $50 million licensing fee would be close to 18% of the total gross casino revenue for the casino with the highest revenue in the state.

The Senate bill would stack a 36% tax—higher even than in-person casino taxes—on top of this startup cost. Meanwhile, the Ohio House’s lower tax rate seems inspired by its neighboring state. Michigan also imposes a 28% tax on internet gaming (though Michigan only imposes this tax level on adjusted gross receipts of $12,000,000.00 or more).[6] However, Michigan’s application fees for operators are much lower: $50,000 on application, $100,000 on issuance of the license, and $50,000 renewal fee annually.[7] While there is likely some middle ground between $50,000,000 and $150,000, Ohio’s proposed licensing fees and taxes, especially in combination, are aggressive and potentially cost prohibitive.

If casinos are disincentivized to invest in an internet gambling license, then the state will see less revenue than the legislature anticipates—potentially much less since each casino that does not pay a licensing fee under the current proposed structure is $50 million the state is “missing out on.” Under less substantial startup costs, the state could see a steadier income stream into its general fund.

Both proposed licensing structures do already include some positive aspects. First are those benefits inherent to a licensing scheme, like a point of contact and administrative procedure for licensees to clarify what they are allowed to do under their licenses in the state. Second are specific consumer protections, such as a twenty-one plus age restriction, voluntary exclusion programs, advertising requirements, possible independent testing of internet gambling software, and key employee background checks.

The inclusion of these additional protections treats internet gambling just as seriously as casino gambling by creating analogous safeguards for patrons. Additionally, if the current proposed structure remains in place, and only the casinos can operate internet gambling, then these establishments will be doubly beholden to the Ohio Casino Control Commission and gambling regulatory authorities, further encouraging compliance under all licenses for reputational and business purposes. Accordingly, there seems to be little reason to create such a high barrier to entry to become licensed as an operator.

Another proposal being floated to increase the Ohio tax revenue is to raise taxes on online sports betting. However, this has the same issues as the high taxes proposed for iGaming. As Jeff Ifrah pointed out in a recent opinion about New Jersey’s proposal to raise online sports betting taxes, high cost to consumers—including when that cost is driven by high tax rates—“risks driving people back to unregulated offshore betting sites where there are no state tax revenues, no consumer protection, and no economic benefit” to local businesses, consumers, or the state.[8] Accordingly, even if the Ohio casinos could afford the licensing fees, they may not be able to attract enough players to generate the tax revenue Ohio wants to see because the cost of playing to the consumer would be too high.

Ohio should look to the models from other states with successful and thriving iGaming, like New Jersey’s current model, where a “competitive tax structure and favorable environment for iGaming and sports betting” has “generated billions of dollars in revenue” benefitting the state, locals, and businesses.[9]

It is worth noting that the Senate bill contains many additional changes to Ohio gambling law not discussed here, including authorizing internet lottery gaming. The House bill is much narrower than the Senate bill but would also ban online sweepstakes games with dual-currency systems that allow participants the chance to win cash prizes in Ohio.

Ohio can see a real tax benefit from implementing iGaming, but to do so it will need to develop a proposal that can actually garner support from the casinos and will give iGaming operators in Ohio equal footing to act as a real competitor to its many neighboring states. Otherwise, Ohio will not see the same tax revenue as states like Michigan and Pennsylvania. By engaging with the online industry to align its regulatory scheme with its neighboring states, Ohio could be poised to see a large increase in its tax revenue.

[1] “Michigan iGaming, sports betting operators report $264.2M in December revenue, #2.9B total for 2024” Michigan Gaming Control Board, (Jan. 21, 2025), available at: https://www.michigan.gov/mgcb/news/2025/01/21/december-2024-igaming-revenue.

[2] “PA Gaming Control Board Reports Record High Gaming Revenue for 2024” Pennsylvania Gaming Control Board (Jan. 21, 2025), available at: https://gamingcontrolboard.pa.gov/news-and-transparency/press-release/pa-gaming-control-board-reports-record-high-gaming-revenue-2024. See also Revenue Reports, Pennsylvania Gaming Control Board, available at: https://gamingcontrolboard.pa.gov/news-and-transparency/revenue (last visited Jun. 6, 2025).

[3] Though the Senate bill would reduce the sports gaming tax for in-person gaming to 10%.

[4] According to local news, only nine casinos would be eligible. Dan DeRoos, “New bill to make iGaming legal in Ohio, but only for the current casinos” 19News (May 20, 2025), available at: https://www.cleveland19.com/2025/05/20/new-bill-make-igaming-legal-ohio-only-current-casinos/.

[5] Revenue Reports, Ohio Casino Control Commission, available at: https://casinocontrol.ohio.gov/about/revenue-reports/04-revenue-reports.

[6] See MI LAWFUL INTERNET GAMING ACT, Act 152 of 2019 § 432.307 (f)(v)

[7] Michigan Online Gambling Law: Key Dates and Rules, Play Michigan, available at https://www.playmichigan.com/law/ (last visited Jun 5, 2025).

[8] Id.

[9] Jeff Ifrah, “New Jersey is a national model for iGaming and sports betting; Don’t destroy it | Opinion” Burlington County Times (Jun. 2, 2025, updated Jun. 4, 2025 at 8:39pm), available at: https://www.burlingtoncountytimes.com/story/opinion/2025/06/02/nj-sports-betting-must-not-be-taxed-opinion/83902156007/.