Ohio Gov. Mike DeWine wants to raise the sports gaming tax to 40% from 20% to pay for stadium construction in the state. And DeWine does not want the state to issue bonds to finance stadium development, the governor told an editorial board this week.
DeWine also wants to use the new sports gaming revenue stream to fund youth sports and other extracurricular activities. Ohio has seen a wave of school districts across the state trying to balance their budgets by requiring students who participate in sports and other activities to pay a participation fee, DeWine's spokesman told The Bond Buyer.
"The governor believes this could also help offset the costs to families," DeWine Press Secretary Dan Tierney said.
"These sports gaming [companies] are extremely aggressive, they're in your face all the time … and it seems to me only fair that some portion of our stadiums be paid for by them," DeWine said at the press conference. "These are companies that are draining all this money out of the state of Ohio. … They ought to pay their fair share."
Tierney noted that Ohio bettors lost $577 million to the sports gaming industry in calendar year 2024. Almost all of the betting is done online, and of the 13 proprietors Ohioans placed bets with, only one is domiciled in Ohio, Tierney said. The bulk of the market goes to the major players — DraftKings, MGM, etc., he said.
"Most of that money is pure profit," Tierney said. "The idea that was attractive to [the governor] is … you can create a fund that's being funded by something with a very similar nexus, and it could generate a significant amount of money. We realized that the amount of money could fund multiple stadium needs," including major league sports, minor league sports, women's sports leagues and youth sports.
The governor believes the gaming tax hike would generate about $150 million a year, which "could go higher" as the market matures, Tierney said.
But DeWine told
"The biggest thing here is that this would not affect other areas that do utilize bonds," such as the infrastructure surrounding stadium developments, Tierney said. "This is more about addressing the stadium issue … and addressing it in a way that will create a permanent source of funding for it."
He said the proposal by the governor to forgo state bonds for stadiums would also apply to mixed-use developments surrounding most modern facilities.
"A team that is engaged in a construction plan … the knowledge of this cash, they would be able to develop a financing plan with cash as collateral," he said. "So it's a different financing plan than a bond … or it could be a local bond. Local bonding is an option, private financing is an option."
"Sports gambling can have a negative externality to the public, so I have no problem with taxing it," College of the Holy Cross economics professor Robert Baumann said. "It's the same reason we tax cigarettes. But the tax revenue doesn't have to go to stadium construction. It could go to schools, roads, police, or just simply lower taxes from other sources.
"It's half of a good idea — I like the taxation but dislike the use of the funds," he added. "After all, what does Ohio need more — support for its citizens via schools and roads, or a domed stadium in the suburbs for a team that already has a downtown stadium that is 25 years old? Budgetary choices matter."
Asked whether pro sports team owners would likely be satisfied with sharing a roughly $150 million pot of money, Baumann said, "No. Sports owners do not share. Ohioans know this — wasn't one reason that Art Modell got so frustrated with Cleveland was because of its investment in Jacobs Field for the baseball team?"
Baumann has researched the
"This action is a subsidy to ownership," Baumann said. "These businesses — Browns, Bengals, and so on — have seen their valuations rise substantially. And in the case of the Browns, the Haslams were already enormously wealthy before buying the team. So why is the state … so interested in a subsidy to some of the wealthiest people in the state?"
On the state funding issue, Tierney did not rule out incentives like state tax credits for economic development projects. And he said the state has certainly made infrastructure improvements around projects like Intel's Silicon Heartland campus, where the state
"So that is not off the table," Tierney said. "I don't think that this proposal changes how we fund surrounding infrastructure, if bonds are used in other ways — and the state does issue bonds [for road projects]. ... We do not anticipate this proposal affecting other areas of the budget that do use bonds."
The proposal has met with skepticism from Republican state legislators,
But the governor's stadium plan does contain a provision requiring major league teams who take state funds to play most of their home games at the site for the next 30 years — in effect, barring teams from leaving the state for a better deal, a threat some sports teams have leveraged to push for more public funding from politicians.
Ultimately, DeWine still supports public funding for pro sports teams, Tierney said.
"The governor believes that these are economic development issues," he said, pointing to conversations the governor has had with major employers, who he said want to know about quality-of-life in the state. And pro sports is part of that, along with Ohio's museums, state parks, theaters and symphonies, he said.
"There is zero evidence of this," Baumann said. "Why would a CEO be motivated to move jobs to the Cleveland area simply because a team that already has a stadium now has a new one?"
"We've done this for about 50 years, and [the governor] does not see a change in the market in terms of what pro sports teams are seeking in terms of cost-sharing," Tierney said.
"Given that this will be an ongoing need, having a dedicated, ongoing source of funding — that also has the ability to cover other needs — you have the opportunity to take care of those needs without competing with education [and other] funding" from the general fund, he said.
