Actions

Sports betting in Ohio: What will it look like?

'Good for everybody' or 'unintended consequences?'
SportsBettingTerminal.jpg
Posted at 10:02 AM, Mar 31, 2022
and last updated 2022-03-31 23:39:10-04

CINCINNATI — It takes less than 15 minutes to drive from Scoreboard Sports Bar in Miami Township to the Indiana state line.

Co-proprietor Kevin Olthaus knows that because his customers leave his bar regularly to place sports bets on their phones. That’s why Olthaus is eager to install sports-betting kiosks as soon as possible.

“I’ll take as many as they’ll let me have,” Olthaus said. “I don’t know if people are going all the way from Blue Ash and going across to Indiana. But certainly, from the west side of Cincinnati. Absolutely. There’s a trail. No question.”

Ohio is blazing its own trail with a free-market approach to sports betting that one expert calls “the best in the country.”

Eric Ramsey, lead market analyst for the PlayUSA Network, said Ohio could produce $12 billion a year in total bets, or handle, once the industry fully develops. That’s nearly three times the official state estimate, which says the industry will generate $3.35 billion in total bets and $243 million in taxable revenue. If Ohio’s conservative estimate is correct, $24 million will flow to state coffers annually. If Ramsey’s right, the tax windfall could approach $90 million.

Ramsey thinks a bigger number is possible because Ohio combined ideas from other states to offer more kinds of licenses. That approach will accommodate online giants like FanDuel and Draft Kings, along with casinos, racinos, sports teams and bar owners like Olthaus, who already offers gambling with Ohio Lottery terminals.

“Every operator you can think of is going to look for a license in Ohio,” Ramsey said. “It’s easier to obtain a license as a smaller company, a smaller operator in Ohio, which is good for everybody. That’s good for the customer, good for the industry. It drives things forward. Innovation is always great.”

The Ohio Casino Control Commission is writing the rules now for three types of sports gaming licenses that will allow 25 online operators to compete against and partner with 40 retail, or brick-and-mortar sports books. Another 20 licenses will be offered to sports book proprietors that operate kiosks in bars and restaurants.

KevinOlthaus.jpg
Kevin Olthaus is hoping to land three to five sports-betting kiosks for his 180-seat Scoreboard Sports Bar.

The lottery factor
“I am offering everything I possibly can,” said Olthaus, whose Miami Township bar has been an Ohio Lottery partner since 2007, offering KENO and Touch & Win terminals that play like slot machines.

“It doesn’t move the needle revenue-wise, but the overall picture is, we’re offering it,” Olthaus said. “They’ll come here and they may stick around longer to watch KENO or they may come here just because we offer it and someone else does not. I know that happens for a fact.”

The Ohio Lottery Commission estimates 2,500 bars and restaurants will secure sports-gaming host licenses. That’s about 25% of the 10,111 lottery retailers statewide. To qualify for a host license, business owners must be an existing lottery partner with a D-1, D-2 or D-5 liquor license. And they must partner with a licensed sports-book proprietor to run their kiosks, with state-mandated limits on the amount and nature of bets offered.

The Ohio Casino Control Commission will start taking license applications in late summer and is mandated by state law to launch Ohio sports betting by January 1, 2023.

“I believe many new players will evolve out of this,” Olthaus said. “Not crazy gamblers, just people that (say), ‘Oh, the Bengals game is coming on. I just put $10 on the Bengals game.’”

Retail sports books
Ohio’s 40 retail licenses will be spread across the state based on population and a state-mandated preference awarded to sports teams, casinos and horse tracks. Hamilton, Franklin and Cuyahoga counties are each expected to claim five locations. Warren County would get two, Butler and Clermont would get one each.

OhioSportsBettingMap.jpg
This map shows the maximum number of brick-and-mortar sports books that each county could have, under Ohio's new sports-wagering legislation.

Ohio’s four casinos and 11 racinos will have preferred access to retail licenses, including Hard Rock Casino downtown, Belterra Park in Anderson Township and Miami Valley Gaming in Monroe.

“It’s not a huge money maker,” said Jon Lucas, chief operating officer for Hard Rock International. “But what it does is, that customer that is betting on sports is obviously a gambler. So, it generates ancillary revenues in the other games that we have on the property.”

In an interview last October, Lucas told the I-Team that its Cincinnati property built a sports-book space as part of a $40 million renovation last year.

“It is to the right of the café, that open space there,” Lucas said. “And behind that wall is where the stations will be. And that little alcove where the drum set is, is where the kiosks will go. So, it’s actually already shelled out. It just has to get the equipment put in. So, the minute they pass it here in Ohio, we’re ready to go.”

Belterra Park and Miami Valley Gaming did not respond to requests for interviews. But each revealed some detail about its sports-book plans in regulatory filings.

Belterra parent Boyd Gaming Corp. is a 5% owner of FanDuel Group, which already operates 13 sports-book locations for Boyd, including Belterra Casino Resort in Florence, Ind. Miami Valley Gaming is 50% owned by Churchill Downs Inc., which owns the TwinSpires betting app. The company announced in February that it will exit online sports gaming but will continue to offer retail sports books.

The Reds, Bengals and FC Cincinnati did not respond to requests for information about sports betting. But two of the teams offered some insight on their plans in testimony to the Senate Select Committee on Gaming last year.

“Our vision would be, assuming we have access to the Type A license, we would partner with a sports book operator who would set up some form of a retail location situated down there on the Banks,” Cincinnati Reds Chief Financial Officer Doug Healy told the panel last May. “A retail presence on that riverfront could be an economic driver that helps generate foot traffic, which further supports these businesses and these restaurants as they continue to recover from the economic devastation of COVID-19.”

FC Cincinnati Co-CEO Jeff Berding said the team hasn’t decided whether to put its sports book in TQL Stadium or a mixed-use development nearby. But he left little doubt that the soccer club wants in on the action.

“Other states are giving our peer teams this extra lift, and we’re not on the coasts,” Berding told the panel last March. “Let’s build a system that puts our Ohio teams on equal or better footing than our league peers. We’re competing for players against teams in other states. Those states are giving those teams advantages. Don’t have us fighting for championships with one hand behind our belt.”

Market leaders
Although retail licenses and kiosks will make sports betting available in many corners of the state, most betters will use their phones to take part in Ohio’s sports betting market.

“We will see people betting on games in the stands for the games they’re at,” Ramsey said. “This represents a pretty big policy shift for the leagues, who for a long time were the biggest opponents of legalized sports gambling and now in this modern era have embraced it.”

In most states, more than 90% of the sports betting market is controlled by online sports books, including FanDuel, Draft Kings, Bet MGM and Caesars. When Ohio’s market opens in January, Ramsey expects these national players to ramp up advertising and promotional offers to lure new Ohio customers.

“New York probably got a little carried away. We saw Caesars offering $3,300 in free bets and account bonuses for new customers,” Ramsey said. “We may not see quite that level of spending in Ohio, but you will see $500 and $1,000 bonuses from several operators.”

Ohio’s free-market approach extends to the kinds of bets that can be offered. Six states prohibit betting on college sports in their own state, according to the American Gaming Association. Not Ohio. Three states mandate the use of official league data, when offering in-play or proposition bets. These are data-driven bets that don’t depend on a game’s final outcome. Examples might include who wins the coin toss or whether Joe Burrow will exceed his average yards receiving in a particular game. Sports teams asked Ohio lawmakers to mandate league data, but it’s not required.

The Reds were among those arguing for league data and other restrictions, including a cap of 20 licenses -not the panoply of choices Ohio ultimately decided to offer.

“Twenty licenses are more than adequate to address initial demand in the marketplace,” testified Healy, the team's CFO. “The open market has unintended consequences like consumer confusion, frustration from over saturation, the presence of less scrupulous and sophisticated operators who can’t make a dent in the market and can’t provide quality customer service, leaving a bad mark on the entire industry and an overwhelmed Casino Control Commission trying to serve as watchdog over too many mobile operators.”

But the free market looks just fine to the man in charge at Scoreboard Sports Bar.

“This is the west side of Cincinnati," Olthaus grinned. "There’s always a need for gambling."