Ohio’s sports betting landscape, barely two years old, faces a potential transformation. House Bill 971, introduced in the state legislature, proposes a dramatic restructuring of how sports wagering operates across Ohio, touching everything from tax rates and licensing structures to the types of bets permitted. If enacted, the bill would mark one of the most aggressive legislative interventions in a U.S. sports betting market since the post-PASPA expansion began. For operators, regulators, and bettors alike, the implications stretch well beyond Columbus.
What HB 971 Signals for Ohio’s Betting Industry
The bill arrives at a moment when Ohio’s market is still finding its footing. Revenue figures have grown since the January 2023 launch, but legislative frustration with certain structural outcomes (particularly around promotional credit deductions and perceived tax shortfalls) has been building. Here’s what matters most from a strategic standpoint:
- Tax rate adjustments: The bill proposes raising the effective tax rate on sports betting revenue, a move that could compress operator margins and force a recalculation of marketing spend across the state.
- Promotional credit treatment: Operators may lose the ability to deduct promotional credits from taxable revenue, a provision that has allowed companies to significantly reduce their tax obligations in Ohio’s early years.
- Licensing categories could be restructured, potentially opening or restricting access depending on the type of entity involved.
- Bet type restrictions: Certain wagering formats, including some prop bet categories, may face new limitations or outright prohibitions under the proposed framework.
- Regulatory authority expansion: The Ohio Casino Control Commission would likely see its enforcement toolkit broadened, with new compliance requirements for licensed operators.
Why Promotional Credit Deductions Are the Real Battleground
Strip away the political framing and one issue sits at the center of HB 971: promotional credits. Since Ohio launched legal sports betting, operators have used bonus offers and free-bet promotions aggressively to acquire customers. That’s standard practice across nearly every U.S. jurisdiction. But in Ohio, the deductibility of those credits from taxable gross revenue has meant the state collects far less than headline tax rates suggest.
Legislators have grown vocal about the gap between projected and actual tax receipts. And while operators argue that promotional spending drives market growth and consumer engagement, the counterargument is straightforward: the state structured its market expecting a certain revenue floor, and deductions have eroded it. Whether HB 971’s proposed fix is the right mechanism is a separate question entirely.
Other states have wrestled with this same tension. New York’s 51% tax rate, for instance, effectively limits promotional generosity by making it financially punitive. Illinois recently moved to a graduated tax structure. Ohio’s approach, at least on paper, attempts something in between.
Operator Margins and the Domino Effect
Higher taxes and restricted deductions don’t exist in a vacuum. They ripple outward. Major sportsbook operators like DraftKings, FanDuel, and BetMGM have built their Ohio strategies around current economics. A material change to the tax framework forces recalibration across several dimensions simultaneously: marketing budgets shrink, promotional offers become less generous, and smaller operators face existential pressure on already thin margins.
That last point deserves emphasis. Ohio’s market includes a mix of large national brands and smaller, locally tied operators. The DraftKings sportsbook platform can absorb a tax increase across its multi-state portfolio in ways that a single-state operator simply cannot. HB 971, depending on its final form, could accelerate market consolidation.
Still, not every operator views the bill as purely negative. Some see regulatory clarity and a level playing field (particularly around promotional spending) as a net positive for long-term sustainability.
How Ohio Compares to Other State Regulatory Shifts
| State | Tax Rate Model | Promo Credit Deductions | Recent Legislative Action |
|---|---|---|---|
| Ohio (proposed) | Flat rate increase under HB 971 | Elimination or significant reduction proposed | HB 971 introduced in 2024–2025 session |
| New York | 51% flat | Not permitted | No major changes pending |
| Illinois | Graduated (up to 40%) | Limited | Graduated structure enacted in 2024 |
| Pennsylvania | 36% flat | Permitted with limits | Stable regulatory environment |
| New Jersey | 13% online / 8.5% retail | Permitted | Revenue discussions ongoing but no bill filed |
Prop Bet Restrictions: A Quieter but Significant Provision
Less discussed but arguably just as consequential are the bill’s proposed restrictions on certain prop bet categories. Player-level proposition wagers have become enormously popular, particularly among younger demographics, and they generate significant handle volume for operators. But they also carry higher regulatory risk, including concerns about integrity monitoring and the potential for manipulation in lower-profile sporting events.
HB 971 appears to draw a line around specific prop bet types (a distinction regulators in other states have been slow to enforce). The precise contours remain subject to committee negotiation, but any restriction on prop betting would directly affect handle composition and, by extension, operator revenue mix.
What Bettors and Stakeholders Should Watch For
Legislative proposals of this scope rarely pass unchanged. The committee process in Ohio’s General Assembly will shape HB 971’s final language, and lobbying from both operator groups and consumer advocacy organizations is already underway. Several questions remain unresolved:
- Will the tax rate increase apply retroactively or only to future revenue periods?
- How will the bill define and categorize restricted bet types?
- Does the Ohio Casino Control Commission’s expanded authority include new responsible gambling mandates?
- What transition period, if any, will operators receive to adjust their business models?
Frequently Asked Questions
What is Ohio House Bill 971?
HB 971 is proposed legislation that would restructure Ohio’s sports betting market by adjusting tax rates, limiting promotional credit deductions, restricting certain bet types, and expanding the regulatory authority of the Ohio Casino Control Commission.
When did Ohio launch legal sports betting?
Ohio’s legal sports betting market went live in January 2023, offering mobile, retail, and kiosk-based wagering across the state.
How would HB 971 affect sportsbook promotions?
The bill targets the deductibility of promotional credits from taxable revenue. If passed, operators would likely scale back bonus offers and free-bet promotions because those costs could no longer offset their tax burden. Bettors would almost certainly see fewer and less generous sign-up incentives.
Could smaller sportsbook operators be forced out of Ohio?
That’s a real possibility. Higher effective tax rates disproportionately affect operators without multi-state portfolios to absorb the cost, though the final impact depends on the bill’s enacted provisions.
Is HB 971 likely to pass?
The bill faces a full committee review and floor votes in both chambers. Significant lobbying is expected from all sides. Its trajectory will depend heavily on how legislators weigh tax revenue goals against market competitiveness, and that balance has proven difficult to strike in every state that has tried.
