Will Ohio join neighboring states in offering online instant lottery games?

Ohio Senator Will Add Online Lottery Clause To Sports Betting Bill

If Sen. Bill Coley gets his way, Ohio could become the latest US state to sell lottery tickets online. He would like to add a provision to that effect to a sports betting bill currently making its way through the Senate.

House Bill 194, the state’s most promising attempt to legalize sports betting to date, passed its branch of the legislature back in May. Since then, some work has been done to reconcile it with last year’s Senate bill, which made it to committee and no further. Now, with only three months left in the year — and Ohio’s legislative session — it’s time for some more concrete movement.

Sen. Coley chairs the Senate Committee on Government Oversight and Reform and hopes that will be the bill’s next stop. Should it go to another committee, however, he will propose the online lottery amendment on the floor later.

Online sales of draw tickets are generally uncontroversial. Many states, like New York, sell draw tickets online by offering subscriptions, circumventing the need for a special law. However, a full online lottery includes so-called eInstants, which feature similar payouts to scratch-off tickets, but with interactive gameplay that can feel more similar to a slot machine.

If Ohio were to adopt a full set of online options, including such instant games, it would become the eighth state to do so. This is a recent phenomenon in the US, with two states having joined the list only this year: Virginia and Rhode Island. The first was Georgia, in 2012.

“You can buy a car on a cellphone in Ohio but not a lottery ticket,” Coley told PlayOhio last week. “We need to look at that. I want to make sure that, if we do a legalized bill, offerings under the bill are maximized to everybody’s satisfaction.”

Online lottery clause could get pushback from the House

Opinions vary about how likely the bill is to make it into law and how attaching online lottery provisions would affect that. Naturally, Sen. Coley is optimistic, as is the bill’s sponsor in the Senate, Sen. John Eklund.

Generally speaking, online lotteries are one of the easiest forms of gambling to legalize and are outpacing online casinos for that reason. In many cases, it’s as simple as adding the words “including sales over the internet” to the section of the legal code detailing the lottery board’s responsibilities.

Indeed, Sens. Eklund and Coley see the permission as being a mere formality. By their interpretation of current law, the Lottery Commission could unilaterally decide to start selling tickets online, or even to offer sports betting.

As recently as last year, the commission was considering doing exactly that. Ultimately, however, it elected to wait for explicit direction from lawmakers rather than risk a legal battle.

There’s a jurisdictional issue at play now, however. The bill’s original sponsor in the House, Rep. Dave Greenspan, doesn’t think it’s appropriate to include lottery provisions in the bill now that sports betting would be regulated by the Casino Control Commission (CCC).

Ironically, that’s a change that took place in the Senate. Greenspan’s version of the bill granted that power to the Lottery Commission. Having agreed to let the CCC regulate instead, he would prefer to keep the lottery out of it entirely.

Still a long road ahead for HB 194

Even if the House and Senate manage to see eye to eye on including iLottery, there’s no guarantee that the bill will pass. Eklund himself acknowledges that there’s a lot of work to do. In particular, he sees a lot of the specifics in the bill as being a starting point for discussion rather than a take-it-or-leave-it proposition.

“[The details] are all subject to conversation with other senators, state reps, and other interested parties,” Eklund told LegalSportsReport earlier in the month. “To one degree or another, all of those things are placeholders.”

That includes such fundamental decisions as the tax rate — currently set at 8% — license fees, and the number of skins per operator. It’s on the latter front that the current draft of the bill is most problematic. It specifies three skins per license, which is normal enough, but contains the unusual provision that all three must be used.

The intent, presumably, is to ensure the casinos don’t abuse their position to keep competitors out of the market. However, it means some eligible licensees could end up left out of the market due to being unable to find enough brands to partner with.

There’s enough interest in Ohio sports betting that these details would get sorted out if time weren’t a factor. However, Eklund foresees a bit of a race just to get a committee hearing on the bill before the November election. That would leave only a month for a floor vote before the end of the legislative session. Worse, there are bound to be numerous political distractions happening at that time.

Peer pressure is strong for Ohio

On the positive side, Ohio legislators are likely feeling pressure from neighboring states to expand gambling. The Buckeye State shares borders with five others. All of them are ahead of it on at least some forms of gambling:

Michigan and Pennsylvania have gone whole hog, having legalized online casinos, poker, sportsbooks, and iLotteries. West Virginia has all of these minus the online lottery. Indiana has set an example for how much tax revenue sports betting can generate even in a conservative-leaning state. Finally, Kentucky has an online lottery and has made several attempts at sports betting and online poker.

The neighbor effect is powerful, because residents will often cross state lines in order to gamble. Once a given type of gambling is available nearby, there’s less incentive to prohibit it and more to legalize it.

Ohio can’t prevent its citizens from traveling to gamble. More importantly, it fails to collect any tax revenue when they do so. Whether or not HB 194 passes this year, it’s only a matter of time before Ohio lawmakers decide to give residents those options at home, to stop their gambling dollars from leaving the state.

In time, that may apply as much to online casinos and online poker as it does to sports betting and iLottery. Those verticals aren’t up for consideration this year. However, Pennsylvania and New Jersey have already shown how lucrative they can be. Moreover, this year has demonstrated their importance when an external event like COVID-19 threatens land-based gambling.

Establishing an online lottery could be a helpful first step in the meantime. After all, states that have done so have generally been more likely to embrace further expansion in subsequent years.

- Alex is a journalist from Dartmouth, Nova Scotia, Canada. Now site runner for Online Poker Report, he has been writing about poker and the online gambling industry in various capacities since 2014.
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