New Ohio House Bill Legalizes Online Casinos, Prohibits Sweepstakes
A new bill introduced into the Ohio House of Representatives on May 20 would legalize internet gambling in the state, though under tightly regulated conditions. House Bill 298 would allow the Ohio Casino Control Commission (CAC) to regulate iGaming activities, based on a model similar to the state's existing regulation of sports betting.
The bill authorizes licensed operators to offer online casino-style games, including virtual slots, card games, and dice games, all governed by chance outcomes. Access would be limited to individuals 21 years and older physically in Ohio during play.
However, the bill restricts how players can fund their accounts by banning the use of credit cards and prohibiting promotional gaming credits that are specifically used for online gambling. Promotional credits toward live play at racetracks or casinos and amenities like hotel rooms or entertainment will be allowed.
Perhaps most notably, the bill limits who can receive a license. Only current land-based casino or racetrack operators in Ohio would be eligible. Further, each operator could only run a single online gambling website. If multiple eligible properties are owned by one parent company, only one would be eligible for licensure.
Economically, the bill also sets up high entry fees for potential operators. The licensing fee is $50 million upfront and $10 million on renewal. Such operators can employ third-party management companies to operate their sites, which would themselves have to be licensed independently. It wouldn't be an easy path for the best real-money online casinos to set up shop.
In-state operations
All servers hosting online gambling would need to be physically located in Ohio. Employees who participate in Internet gambling activity would also need to obtain occupational licenses. Temporary licenses could be issued for the first six months of operation to assist in start-up implementation.
House Bill 298 provides the CAC with a March 31 deadline next year to establish a launch date for Internet gambling services. The proposed tax rate on gross receipts from the activity is 28%, of which 99% of the net tax revenues will be deposited into the state's General Revenue Fund and 1% into the Problem Gambling Fund.
Significantly, promotional credits for bricks-and-mortar gaming are excluded from taxable gross receipts. Internet gaming revenues in excess of the taxable base would also be exempt from the Commercial Activity Tax, consistent with current treatment for casinos and sports gaming.
The bill also targets gray-market gaming by banning online sweepstakes games that employ dual-currency systems and simulate gambling without explicit legal permission. By amending Ohio's criminal code, sweepstakes casinos would officially be labeled as illegal gambling activity.
Ohio is one of the latest states to introduce legislation targeting online sweepstakes, following the likes of New York, New Jersey, and Maryland. In contrast, Florida’s anti-sweepstakes bill failed to pass back at the start of the month.
Despite its structured form, the bill has yet to be calendared for the legislative process.
