Senator Nathan Manning from Ohio has just introduced a brand-new gaming proposal that includes a hefty licensing fee of $50 million plus a tax rate of nearly 40%. The bill has already reached the Senate in spite of having the highest tax rate ever seen for the Buckeye State.

A new effort to legalize online casinos in Ohio is gaining traction in the state legislature. Senator Nathan Manning introduced Senate Bill 197 this week, a sweeping piece of legislation aimed at authorizing iGaming for licensed operators in the Buckeye State. The bill comes amid growing interest among Ohio lawmakers in expanding gaming revenues and follows a failed attempt by Governor Mike DeWine to double the state’s sports betting tax in the current budget cycle.

Manning's proposal would not only legalize online casino gambling but also introduce one of the highest iGaming tax rates in the United States, alongside a significant $50 million licensing fee.

High tax rates could set national precedent

At the heart of SB 197 is an aggressive tax structure that would position Ohio among the most heavily taxed iGaming markets in the country. Under the bill, operators who run their own iGaming platforms would be taxed at 36%. However, those who contract with third-party providers - such as national giants DraftKings or FanDuel - would face a steeper 40% rate.

If passed, Ohio would become the state with the highest iGaming tax rate among open markets. Only New Hampshire and Rhode Island currently feature higher rates, but those states operate under exclusive contracts with a single operator - DraftKings and Bally's, respectively - effectively limiting market competition.

In comparison, Pennsylvania has the current highest rate for an open iGaming market at 36%, while Michigan employs a progressive tax structure ranging from 20% to 28% depending on revenue levels. New Jersey taxes online casinos at just 15%, though Governor Phil Murphy has proposed raising that figure to 25%.

Licensing comes with a $50 million price tag

The cost of entering Ohio's iGaming market would be significant. Under SB 197, each iGaming license would cost $50 million and remain valid for five years. Renewal fees are set at $5 million, signaling a high barrier to entry for potential operators.

Revenue distribution from iGaming would largely benefit the state's general fund. According to the bill, 99% of tax revenues collected from iGaming would be deposited into the general revenue fund, with the remaining 1% allocated to Ohio's problem gambling initiatives.

The legislation also includes a notable incentive for brick-and-mortar sportsbooks: a proposed reduction in the retail sports betting tax rate from 20% to 10%, offering relief to in-person operators.

Expanded gaming options also on the table

In addition to iGaming, SB 197 would legalize other online gaming formats, including iLottery games and mobile betting on horse racing. The inclusion of online lottery games is aimed at boosting funding for education programs, as those revenues would be earmarked specifically for schools.

If passed, the bill could mark a transformative expansion of Ohio’s gaming landscape, turning it into one of the most robust digital gaming markets in the Midwest.

Another iGaming bill likely to follow

Sen. Manning's bill may not be the only proposal to legalize iGaming in Ohio. Representative Brian Stewart, chair of the House Finance Committee, has also expressed intent to introduce separate iGaming legislation. While details on Stewart’s bill have not yet been disclosed, his leadership position within the House budget process could give his proposal significant influence.

Stewart notably led the House's charge to remove Governor DeWine's proposed sports betting tax hike from 20% to 40% during the latest budget negotiations, signaling a more moderate approach to gaming taxation.