Sports betting ruling opens options in Ohio
A U.S. Supreme Court ruling has paved the way for legal sports betting, and several Ohio lawmakers say they intend to bring it to the state through legislation.
However, the move also could lead to another amendment to the Ohio Constitution if a ballot initiative takes hold.
Rick Lertzman, a gambling advocate, said he wants to use the momentum from the court ruling to see the Ohio Casino Approval and Tax Distribution Amendment “taken apart,” even though he worked on a draft of ballot language that led to the addition of the 2010 Amendment 3 to the state constitution.
“We want to see the mom-and-pop places sharing in the wealth gambling has brought to Ohio. If sports betting were confined to the casinos in the four major metro areas, which skip over places like Warren and Steubenville and Lima, that means small restaurants and bars and bowling alleys will miss out on the new revenue. But we don’t want to just see sports betting allowed. We want to see the amendment taken apart so small business owners can benefit from offering slot machines too,” Lertzman said.
Ohio’s four casinos and seven racinos are taxed at 33 percent and the majority of the revenue goes to Ohio schools and counties. The venues are owned by Penn National Gaming, a Pennsylvania company that operates 29 facilities in the U.S. and Canada, and Jack Entertainment, a subsidiary of Rock Ventures LLC, which operates out of Michigan and owns 110 affiliated companies, including the Cleveland Cavaliers.
Lertzman said he wants to see the “monopoly” the companies have over gambling in Ohio broken up, so he will gather signatures from the public to get the ballot initiative before voters in one of the next few elections. His change of heart comes after realizing the number of small businesses missing out on gambling revenue and the business it can drive to an establishment.
But Bob Tenenbaum, Ohio spokesman for Penn National Gaming Inc., which operates Hollywood Gaming at Mahoning Valley Race Course in Austintown, is adamant the only way to legalize sports betting in Ohio is to limit the wagers to the state’s 11 existing casinos and racinos.
Tenenbaum said the state already regulates the casinos and racinos, and to regulate gambling in dozens or hundreds of new establishments doesn’t make sense.
“I’m sure that’s what Penn Gaming wants to see. They are protecting their business core. But if you want to help Ohioans, this is the way it should be done. We should be spreading the wealth. And it will lead to a bigger cut for the state too,” Lertzman said.
The Ohio Casino Control Commission regulates casinos, the Ohio Lottery Commission regulates video lottery terminals at racinos and the Ohio State Racing Commission regulates horse racing.
Ohio Sen. Sean O’Brien, D-Bazetta, and Rep. Michael O’Brien, D-Warren, said preliminarily at least, they agree with Tenenbaum.
“It is probably best suited to keep it the racinos and casinos, as far as the administration and regulation of the business,” Rep. O’Brien said.
“I am looking into proposing legislation that would keep the betting in the racinos and casinos. They are already established as that type of venue, so it makes sense to put it there. But as we explore other options as the bill moves through committee, that may change,” Sen. O’Brien said.
Sen. O’Brien said he believes Ohio lawmakers can legalize sports betting without tinkering with the state constitution.
Attorney General Mike DeWine said although he hasn’t been a fan of legalized gambling in Ohio, if the state is going to legalize sports betting, it should be Ohio’s lawmakers drafting legislation and holding public hearings.
“We do not want special interest groups to put something on the ballot that benefits them and not the public. We saw that when marijuana was put on the ballot. It would have lined the pockets of a handful of people in Ohio. It is important not to do it that way,” DeWine said, adding that he was not referring to Lertzman’s proposal, which he has not read.
Sen. Joe Schiavoni, D-Boardman, said his office is organizing a meeting of interested parties, including representatives from the casino industry, the state’s casino and lottery commissions and lawmakers to figure out “the best path forward.”
At the meeting they will discuss where the bets should be placed, only in person, or online too; if the facilities licensed to take the wagers should be limited to the racinos and casinos; and at what rate the state should tax the proceeds, Schiavoni said.
Penn National is adamant the tax rate on sports wagering be “reasonable,” Tenenbaum said. Lertzman said he’d like to see the rate somewhere between 25 and 33 percent.
Schiavoni said he has heard talk of allowing any establishment with a Ohio Lottery License to accept bets.
“It is worth a conversation, but I’m not sure if we want it to be that expansive. But it is a conversation we want to have, with people on both sides of the issue, before we move forward. We have a lot of questions to ask,” Schiavoni said.
A bill could be introduced before the Ohio Senate breaks for summer, Schiavoni said.
“I don’t want people to get a false sense of hope that this is going to be a huge boon to the state. Sports betting is a small percentage of the gambling industry. They don’t make a lot of money on the bets, they make money from bringing people into the facility to play other games and buy food and drink,” Schiavoni said.
According to the Cleveland Plain Dealer, in Nevada sports wagers accounted for 2.2 percent of casino gambling revenue in 2017, leading to $248.8 million in profits on the bets. Nevada brought in $20 million in tax revenue, after taxing the profit at 6.75 percent.
The newspaper estimates Ohio could bring in $15 million a year by adding sports wagering if it is taxed at 33 percent.
State Rep. Glenn Holmes, D-Girard, said that is why small businesses across Ohio could benefit from allowing the bets to take place in neighborhood bars.
“I haven’t done an in-depth analysis yet, but gambling takes disposable income out of the community and sends it to a few people. When it is confined to those few facilities it only helps with the insular jobs in those areas and doesn’t cycle through the community. But if we do this, we need to balance it with the needs in the state’s education system and help bolster manufacturing jobs across the state,” Holmes said.
Holmes said he also is concerned about the integrity of the games being bet on and the effect of gambling addiction on families.
The 2009 constitutional amendment that created Ohio’s casino regulatory framework allocates 2 percent of casino tax revenue to problem gambling resources.
Lertzman said a $3 billion illegal betting industry already exists in Ohio.
Anthony Cafaro Jr., co-president of the Cafaro Co., which owns the Eastwood Mall in Niles, said if sports betting becomes legal in Ohio, the Cafaro Co. would be willing to work with companies interested in leasing space in one of its facilities.
“We consider the Eastwood Mall to be the downtown of Trumbull County,” Cafaro said. “We would welcome the opportunity to work with businesses looking to open a facility. The mall is not just a shopping center, but a community center.”
However, he emphasized the company does not have any interest in directly pursuing opening a sports betting operation on its own.
“We are not involved with gaming in any way,” Cafaro said. “If something is legal and is welcomed by the greater community, then we would be interested in exploring what can be done to open their operations. We are property owners and would be interested in working with businesses looking to lease our property.”
Reporter Raymond L. Smith contributed to this story.