Unlike sports betting, which is legal in the majority of the US states, online gambling activities are legal in only seven states. The list where iGaming is legal includes major markets, such as Pennsylvania, Michigan and West Virginia. The three aforementioned states border Ohio, where efforts toward the legalization of online gambling activities have reignited debate about the pros and cons of iGaming.
While supporters claim legal online gambling will generate additional tax revenue, the land-based gambling sector fears the potential detrimental effect of the activity on the industry. A study by the Innovation Group revealed that land-based casinos in Pennsylvania, Michigan and West Virginia posted a decrease of more than 10% in their revenues ever since online gambling started.
A similar concern was expressed by the SVP of government affairs for JACK Entertainment, Daniel Reinharda. The company is a Cleveland-based gambling operator with a strong presence in the brick-and-mortar gambling sector across Ohio. The executive, who was recently quoted by Crain’s Cleveland Business, testified during a recent committee meeting focusing on the future of online gambling in Ohio.
The expert compared the impact of online businesses on local retail businesses to the potential detrimental impact of legal iGaming on brick-and-mortar casinos. “Just like online retail has decimated local retail, iGaming will do the same under any logical scenario,” explained Reinhard. He predicted a grim outcome for the retail gambling sector in case iGaming is legalized in Ohio.
According to the executive, a statewide iGaming legalization may cause massive losses to brick-and-mortar gambling venues such as casinos and racinos. Addressing predictions that iGaming may bring between $200 million and $400 million in extra gambling tax revenue, Reinhard said that such expansion would be against the state laws and may result in the cannibalization of the local economy.
The Company Supports Betting Tax Decrease
Besides standing in opposition to the online gambling legalization in Ohio, JACK Entertainment’s executive supported the idea of reducing the tax applicable for sports betting operators. “JACK encourages the legislature to reconsider and reduce the tax increase placed on the industry, or at minimum, consider reducing the tax on retail operations based on the significant Ohio capital investments and Ohio employment,” he explained.
When Ohio initially legalized sports betting the activity was subject to a 10% tax. However, this changed once lawmakers imposed changes to the regulations, effectively increasing the tax rate. Reinhard said that while lowering the taxes may positively impact the sector, it still wouldn’t address some concerns related to the small share of retail bets when compared to mobile wagering.