COLUMBUS, Ohio — Lawmakers in Columbus heard testimony Tuesday in support of House Bill 298, one of two bills in the legislature aimed at clearing the way for Ohioans to play casino games, such as poker, roulette, and slots, online.
Those testifying were in agreement that this would be a tax revenue generator for the state, which voters essentially cut out of the tax revenue stream when they legalized casinos in 2009.
"With Ohio's large, growing market, we believe that iGaming can contribute more than $600 million in annual tax revenue," said FanDuel's head of government relations, Cesar Fernandez. "And that's net new tax revenue for the state."
The question is at whose expense? Critics argue that the ability to play casino games anytime, anywhere on your phone will add to the problem of problem gambling. Those testifying in favor of House Bill 298 argued they are the ones gambling illegally online already in Ohio right now, at an estimated two dozen illegal sites.
"The vast majority of the people that are going to do this are currently doing it," said Scott Ward of the Sports Betting Alliance. "$5 billion being bet currently in the state of Ohio today in illegal online casino gaming."
The disagreement centers on the impact on the state's brick-and-mortar casinos. Given the option, won't gamblers simply choose to play online, as they have with sports betting, where nearly 98% of bets are wagered online?
Ryan Soultz with Boyd Gaming, which operates 28 properties in 11 states, including both online and brick-and-mortar locations in Pennsylvania, said no.
"I can tell you that if we thought this was a threat to our brick and mortar business, I wouldn't be here today to speak on this bill. In fact, we'd be opposing it," Soultz said.
But just last week, we introduced you to Mark Stewart, head of the National Association Against IGaming, a group that lists Cleveland's JACK Entertainment among its members. They're opposed to legalized online gambling in part because of its negative impact on existing casinos. He's also an executive vice president with the Cordish Companies, which operates several casinos, including two in Pennsylvania, where they also hold an online gambling license.
"To build two casinos, we employ over 3,000 people, and we invested a billion dollars in Pennsylvania. We're supporting literally thousands of small businesses every day. On the iGaming side, we needed to hire one person and we invested $500,000," Stewart said.
The bill would also tax online gambling at 28%, which is five points lower than the state's four casinos. Scott Ward defended the difference, saying, "iGaming is different from brick and mortar casinos. Brick and mortar casinos have other revenue streams, iGaming is simply gambling."
"A casino is going to have hotel revenue, food revenue, entertainment revenue, all of those things which are taxed at much lower rates by the way than 33% and iGaming simply doesn't have that," Ward said.
Something that opponent Stewart took issue with.
"Online supports no employment, they don't have to run a casino, they're not paying debt service, they're not expanding and growing and adding amenities and building new restaurants and yet they would be taxed at a lower rate," he said.
The first hearing of the bill featured those in favor of iGaming. What they all opposed, though, was the $50 million license fee, the highest in the nation. And yes, while that was what the state's four casinos paid more than a decade ago, what they got in return, they argued, was a geographic monopoly where they didn't have to compete for customers.
"Online, that is not the case, online you're competing for customers from every corner of the state, everybody is," said John Pappas of iDevelopment and Economic Association. "So the idea of a $50 million fee for a land-based casino may make sense, but for an online operation who would have to compete against everybody else, plus the illegal market, it doesn't make any sense at all."
The state with the highest fee for an online license is Pennsylvania, at $10 million; Michigan sets its fee at $250,000.
The bill, like S.B. 197, would limit licenses to those casino and racino owners already operating in Ohio, with the House bill adding a restriction on promotions to help those brick-and-mortar facilities.
"Internet gambling apps under this bill would only be permitted to offer promotions that can be redeemed at existing brick and mortar sites across Ohio," said Sponsor Rep. Brian Stewart, R-Asheville. "Such as free bets in person, meals, hotels and other perks at those facilities."
However, some argue that this ends up hurting the online operators, especially if they're tied to, say, the Hard Rock Casino in Cincinnati and are looking to attract customers in Cleveland who would be unlikely to redeem a promotion that far away.
"We do recommend that you all revisit that provision," said FanDuel's Cesar Fernandez. "Ultimately, this makes us less competitive with the illegal market.
