April 14, 2026 · Select Committee on Gaming · 4,774 words · 6 speakers · 35 segments
Senator Gavron? Yes. Senator Reineke? Yes. Senator Timken? Yes. Senator Blackshear? Yes. We do have a quorum present. We'll proceed as a full committee. Members, please review the minutes from the May 28th meeting in 2025 on your iPads. If there are any additions or deletions, your memory is better than mine. But without objection, the minutes are approved. The first order of business to call House Bill 476 for its first hearing. And we'll now hear sponsored testimony from Representatives Craig and Thomas.
Welcome. Thank you. Well, Chairman Manning, Vice Chairman Romanchuk, and Ranking Member DeMora, and members of the Senate Select Gaming, I guess Select Committee on Gaming, thank you for the opportunity to present sponsor testimony on House Bill 476, which represents a practical and much-needed modernization of Ohio law. House Bill 476 would allow nonprofit organizations across Ohio to sell raffle tickets online. This is a straightforward solution to a growing problem. Over the past year, local nonprofits, including volunteer fire departments, have received cease and desist notices from the AG's office for conducting online raffles. Current law only allows for the sale of in-person raffle tickets. These groups were not acting in bad faith. They were simply adapting to a new fundraising landscape in which supporters increasingly expect to participate digitally. In fact, even this morning, I saw another raffle that's selling tickets online. And yes, I may have illegally purchased a ticket. The sudden enforcement action left many of them in legal limbo, cutting off a vital source of fundraising revenue that had become essential to sustaining their operations. Raffles have served as one of the most trusted and accessible fundraising tools for nonprofits in our communities, whether to purchase new rescue equipment, support a local scholarship fund, or to keep a community festival alive, these efforts rely on the generosity of neighbors and as of late, supporters who may not live down the street but still care deeply about their hometowns. We recognize that with any modernization of fundraising tools comes the responsibility to ensure transparency and accountability. House Bill 476 is crafted with that in mind. During the committee process in the House, with many potential changes were discussed and carefully considered. We listen to our nonprofits, our sportsman's groups, our first responders, and the Attorney General's office. And the product before you is thoughtful, measured, and respectful of their needs. Let me be clear about what this bill is and what it is not. This legislation does not open the door to online gaming. It simply affirms that local nonprofits may sell raffle tickets online, just as they've already been doing, while maintaining the community-centered nature of fundraising with an in-person component still required for traditional raffles. With that being said, this legislation does include appropriate safeguards. It requires compliance with federal and state restrictions on out-of-state sale tickets and ensures tickets are not sold to anyone under 18. Thank you, Chair, members of the committee for having us today. We really appreciate it. to go off of my joint sponsor, talking about the safeguards with the legislation. How we actually started this bill was simply a very easy bill that just said you can sell and buy online raffle tickets. How we've moved this bill, though, we started with many, many opposition folks and many no votes, frankly. We moved this bill to receive zero no votes in both the committee and on the floor of the House and to add many safeguards that brought all the different stakeholders together. Those safeguards, for example, in addition to the location and the age aspects for online raffle tickets include having only governmental and non-profit entities that can sell tickets online. These entities then must also register with the Ohio Attorney General's office, pay an annual fee, and report expected gross receipts. The non-profits must certify that at least 50% of their gross receipts will go towards a charitable purpose. There will be also penalties for noncompliance that mirror then some of the charitable bingo violations, for example. Registered entities may sell tickets online for raffles for tangible physical goods, things like tools and meat for et cetera, without restriction, but they cannot sell purely online raffle tickets for cash prizes. Those must be done at an in-person event where the ticket is actually pulled for that cash prize. And online sales must end at least 24 hours before an in-person drawing. All those safeguards together brought this bill essentially to an area where how we navigated it, had we moved it a little bit more relaxed or a little bit more restrictive, we would have lost support in the House. The bill before you today was essentially that kind of perfect middle ground where not very many folks are super happy, but also not many folks are very, very frustrated or believe that this will present a non-workable form for them. During proponent testimony, should the committee wish to hear, you will have organizations who have invested time and resources in setting up these online raffles only to be told that they had to stop this past year. In many cases, this halted essential fundraising, which is now costing them thousands of dollars. This is why we included that emergency clause and received full support for it. At a time when the state continues to address, for example, property tax reform, we should be removing any bureaucratic hurdle, preventing local entities from raising funds without placing that burden on the property taxpayer. Some of the biggest entities that were most harmed from this change in practice, essentially, were our fire departments, especially on the eastern side of the state, losing tens if not hundreds of thousands of dollars, now looking at going to their taxpayers for those essential services. At its core, this legislation is about modernizing, and it's about having common sense in our law. Ohio's nonprofit sector provides indispensable services, often stepping in where government cannot. These organizations really, they want clarity above all else, and this bill gives them black and white rules for the road for how to perform these types of fundraisers. They deserve a law that reflects the world, that we live in today, where many things are online, and where digital tools are part of everyday life. House Bill 476 simply gives them the flexibility to meet those supporters where they're at. And to piggyback off of Rep. Craig's comment, on the floor when we passed this, I actually joked, that weekend I was asked to buy tickets from four different organizations online. My local high school Band Boosters, my local Catholic school, Whitetails Unlimited, and one of my local fire departments. This is part of our everyday life, and they looking for other sources for this type of revenue and our residents are looking for ways to support them more so than just your pancake breakfast on a Saturday or a drive event for example getting spaghetti So Chair Manning, members of the committee, we respectfully ask for you to join the House with no no votes, all supporting in favorable consideration of House Bill 476 that will strengthen Oakland nonprofits and give clear road guidance for the future. Thank you.
Thank you, Represents. The first question goes to the ranking member, DeMora.
Thank you, Mr. Chair. My first question is going to be, how will our residency and age requirements actually be enforced? Because, I mean, we've been grappling with age stuff for all kinds of things, including apps, which are three more bills I'm hearing later today. But how can you be on a computer and say the person buying the ticket is going to be 18? and if we are restricted to our residency, why when other states don't?
Chair, member, very good question. So we tried to kill two birds with one stone with part of the issue of the age piece, but also the idea that it's actually federal law where you cannot sell across those state lines. That's actually how this issue came to be. entity in West Virginia actually made a complaint because entities were selling tickets in West Virginia. So the law before you actually lays out one simple way to get both of those. To receive the prize, the winner would have to show their Ohio driver's license with the age of the winner. So the winner then would be over 18 and then would also be an Ohio resident with that driver's license as one way to not have overly restrictive and expensive online verification, but more of an in-person, direct way. And then real quick, just to add one comment to it, Chairman, the systems that we had to include, the registration, so some of these bigger online raffles that are taking place that we've seen some of these cease and desist letters go out for, they are operating, they already currently have a license for bingo, where you have to use a registered platform that is licensed through the AG's office. We are going to do it in this sub bill that we passed by the House. We're including a similar setup for an online platform for these larger organizations or these larger raffles that organizations are using. And there will be a simple sort of check the box when you go online. If you go to like, you know, an alcohol website or a liquor website, you've got to check that you're of age. So there will be certain safeguards in place with the platform that these folks also are going to be required to use. That was something that our committee wanted to see. Thank you, Mr. Chair.
So another one, has a double deduction issue in the proceeds formula been intentional or is it a drafting error? The bill appears to allow certain expenses like platform fees and property taxes to be both deducted when calculating net profit. And again, when determining how much organization may retain, is that intentional? Was that something that I'm pointing out that you didn't realize occurred?
Chair, member, great question. We copied current law regarding that piece of how much goes towards a charitable amount. We can definitely take a look at it. You're the first one that's kind of asked that specific question regarding deduction. So we will look and can get back to the committee.
Next question goes to Senator Ranke.
Thank you, Mr. Chair. Thank you both for being here. I think I have the same question Senator DeMora had. Could you, the nonprofits must certify that 50% of their gross receipts, how do you verify that? And wouldn't all of it go to the charitable purpose? Just curious.
Sure. Again, that was through the chairman. That was something that was raised in committee by members in the House and also raised by the Attorney General's office. Again, that's something that they will have to submit, right? We're requiring now a registration with the AG's office, so all of this has to be included in the information given to them. Again, they're going to be the checks and balances of this operation, very similar. We tried to mimic as best we could the charitable bingo law, so that's where a lot of this came from. Again, if there's nuances that we are not aware of, we're happy to talk through those. but that's where a lot of those came from.
Chair, member, quick follow-up. Why 50%, for example, even in our campaigns, we may purchase things with our dollars for then either a raffle or to be sold at an event, for example. So there are expenses that may not contribute directly towards the charitable purpose but actually go towards the fundraising of that purpose.
Senator Blackshear? Thank you so much, Mr. Chair, Thank you, too, for your testimony. Just a quick question. Will additional resources be allocated to the Attorney General's office to handle this new regulatory workload?
Sure. Through the Chairman, to the Senator, yeah. So we've been chatting, we've been in direct communication with the Attorney General's office. That's also part of why that new fee structure is included in the bill that we passed out of the House.
I do have a couple of questions. Going back to the 50%, I think that's a good safeguard. You see some of these charities that certainly their CEOs making 90% of what they're bringing in. I guess my concern on that is there are, whether it's the pro sports teams or some of these really big raffles are bringing in a lot of money. Is there maybe some thought or did you guys think about putting kind of a cap there rather than maybe 50 percent for the lower ones? That certainly makes sense. But maybe some of those really high money ones. I didn't know if there should be a cap on how much can go towards running the raffle, something along those lines.
Chairman, not something that we have discussed so far. Certainly open to discussing what that may look like. I think that was brought up during testimony in the House was the fact that the Cleveland Guardians operate, you know, a raffle. And then they, you know, they get tickets. They purchase tickets, right? You, like, scan the QR code on the, what do you call it, the big screen? It's not a billboard, but you know what I'm talking about. Scoreboard.
Scoreboard.
There we go. They scan the QR code. They can buy tickets that way. well, then the guardians are going back and they actually drawing a ticket is how they kind of circumvented this law And so that was raised We didn necessarily get into should we look at you know
how much is that bringing in and what percentages should go to what.
I will say where we did address sort of how much money is raised is to the point of licensure and registration, those that are exceeding. Do you remember the dollar amount?
If you exceed a certain dollar amount, maybe...
$250,000. If you exceed a certain dollar amount, you have to get registered with the AG. That was part of it. So if you're using these, which some of these folks, if you have proponent coming in, I mean, they're raising quite a bit of money. And again, they're licensed with charitable bingo, and so they understand and were comfortable making sure that they're licensed and registering in the same way, knowing that they are raising quite a bit of money. So that is where that price number came into factor.
Another question, as somebody that supports iGaming, I don't have an issue with this, but some of these raffles, like you brought up the Guardians, I can sit in Columbus or Cincinnati and buy a raffle ticket online for the Guardians, and it's pretty significant money. That doesn't seem like a traditional raffle. Was there any concerns about any of that? Like I said, I don't necessarily have an issue with that, but some other people have brought up concerns that you can buy this anywhere in the state. It doesn't really feel like a raffle. Certainly online, technology, everything else people seem supportive of, but that's a little bit of a concern for some people.
Sure, and I'll first go back, Chairman, to your, it is $250,000. That was the limit that we established here. In terms of that, that's also why during the House committee process we wanted to make sure that if you are conducting an online raffle, there is still an in-person component. And so you can sell tickets online. You can do all that. If you want to do a cash prize or cash prize equivalent, you have to conduct the drawing of that at an in-person event. That was something that we wanted to make sure the community is still part of. They can show up. They can support. That was something that was raised, and we wanted to see that addressed. And, Chair, just to follow up as well, I think a lot of some of the restrictions that we have were to make sure that potential bad actors would not come into Ohio, but at the same time copy current law so that it was a little bit more of a level playing field, to rep Craig's point. So that type of online raffle can still occur. It occurs now. We allow it to occur moving forward with a little bit more information and a little bit more of those safeguards. But your bad actor, for example, coming to Ohio, if they want to put on Facebook an ad for a raffle for $100,000, buy a $50 ticket now, they've got to have some type of event, just like the sports teams do. The event where they pull, they actually award it there. That bad actor has to have some type of large event where people are there, it's present, working with the Attorney General's office. So walking that fine line between not ending any current raffle that's happening now, but also not opening the floodgates for Ohio for the bad actors to come in.
I think one last question for me. Any thought? I know this seemed to be the AG's office, obviously, that sent out cease and desist letters. It looked like there was a lot of illegal raffles all across the state that weren't getting these letters. And then it sounds like these raffles are now back up and running. And again, with this bill kind of pending out there, is there any thought to maybe removing it from a statewide elected officials office and going and putting this enforcement under the Casino Control Commission? And was that discussed? If you don't have any strong thoughts on that right now, we can certainly discuss offline.
I mean, yeah, Chairman, I think it was discussed, I think, ultimately going back to we tried to mimic the charitable bingo statute as much as we could and keep it all within the same purview of the Attorney General's office. So that's ultimately where we landed. We wanted to give their office the same discretion that they have with these other licenses for bingo that these same organizations are using. And Chair, to follow up on Rep. Craig, on that point, I know that there are some who believe essentially wait out the current Attorney General, maybe opinions on legislation will change, on legal interpretations will change, and these will be allowed again. And I would encourage, to your kind of point, that if there's gray area in the law, it's our responsibility to try to clean it up as best possible, no matter who's actually looking at it. Whether it is the AG or if it is the casino or whoever actually oversees, there's clearly some ambiguity with our text that we need to make sure is cleaned up, and that's why the bill.
Yeah. Seeing no...
Senator Blackshear? And I think you already answered this. Thank you, Chair. How did you come up with the $250,000 threshold?
Compromise. Yeah.
Compromise. Okay. That's it.
Seeing no further questions, thank you so much for your testimony. And this will stand as the first hearing on House Bill 476. The next and last order of business is called Senate Bill 199 for its first hearing, and we'll hear sponsored testimony from Senator Blessing. Welcome.
Thank you, Mr. Chairman. Chair Manning, Vice Chair Romanchuk, and Ranking Member DeMora, thank you for the opportunity to offer sponsored testimony on Senate Bill 199, legislation that would levy a 2% tax on sports betting wagers to fund stadium construction in this state. I pitched this during the budget as an alternative to using unclaimed funds. And you can guess how that went. Still, the tax part of this legislation has merit in all cases. While the expenditure side of this might, should the lawsuits against using unclaimed funds for stadium construction prevail. For now, it's worth focusing on the taxation side. As you know, Ohio already has a 20% tax on sports gaming receipts to help fund K-12 education, primarily intrascholastic sports and extracurricular activities, as well as treatment for gambling addiction. The receipts are essentially a 20% tax on the profits. The 2% tax is in addition to this and applies to the wagers. In terms of how much this might raise, it was comparable to the governor's proposed tax of 40% on receipts, roughly $200 million per fiscal year in additional revenue on top of the initial 20%. I would be remiss if I didn't point out that this could be improved with a more progressive tax structure. Doing so would foster competition, and most of the burden would fall on the big platforms anyway By progressive I mean dollar thresholds above which the tax goes up This is a good tax what economists would call a Pogovian tax What that means is that not only does it raise revenue, but discourages bad behavior at the same time. Ask yourself this. Why should Ohio have a low sports betting tax rate? do we want to become the sports betting capital of America with low tax rates? I heard a number of legislators actually want to lower the tax. I hope we can appreciate how truly insane that is. Like it or not, sports betting is here. It was here before we legalized it, albeit illegally through Louis the Leg Breaker, Bill Seitz's creation, not mine, and otherwise, guys, And it will be here even if the General Assembly, as the House is exploring, decides to try to make it illegal again. As it currently stands, the General Assembly could enact the taxation part of House Bill, or excuse me, Senate Bill 199, and throw it into the inputs of the fair school funding formula. In fact, if you combine it with the governor's tobacco tax in the budget, I'd be remiss if I didn't point out Indiana literally just did this, and they're a more Republican legislature than we are. A severance tax is found in Senate Bill 190, which incidentally modeled the tax after Texas, North Dakota, and Alaska, all red states, instituting a 25% excise tax on kratom, as per Mississippi, and increasing the marijuana excise tax to 15%, which would still be less than Montana, and we'd be at roughly $1.5 billion per fiscal year in revenue, all while discouraging bad behavior in ways that are still more conservative than other red states. We could close the book on school funding for the foreseeable future, but it seems we're afraid of anti-tax zealots who have no quarter in mainstream economics camps and will just continue leaving money on the table. Perhaps we're afraid of the big-money folks in the sports betting industry, as a recent news article highlighted their big spending in the upcoming midterm election. Whether you want to further income tax cuts in this state, I don't, but you knew that. Or fund our public goods like public education, I do, and you knew that as well. You cannot ignore these other taxes that are insultingly low. You can say I'm wrong and you wouldn't be the first, but at some point, these taxes will have to play a role. In fact, I'll bet you they do. Thank you for your time and consideration of this legislation. I ask for your favorable support of Senate Bill 199. I'm happy to answer any questions the committee may have. Thank you, Mr. Chairman.
Thank you, Senator Blessing. The first question goes to Ranking Member DeMora.
Thank you, Mr. Chair. And, Senator, normally you and I agree on a lot of things. Before I ask my question, though, I mean, of course, in my mind, we could get rid of vouchers and have back an income tax that's fair to people to fund these things instead of some of the stuff you want to do, but that's just my commentary. But our 20 percent sports tax on gaming is not low. I mean, originally it was 10 percent and then the governor doubled it on his own six months after the program started and we came on it. So I'm not so sure that having this additional 2 percent tax. Again, everybody assumes that when you tax more, you're going to get more revenue from it. But other studies show that the more the tax, the less likely you are to do these forms of gambling. And let's be honest, I'm morally opposed to what the bill that they introduced to the House just is because that's ludicrous. No one's going to bet if you don't have prop bets and parlay betting. And I'm not sure those two sponsors of that bill actually know what those things are. I know our governor doesn't know what they are, actually. So I just don't know by putting a tax on this. I mean, if we want to fund stadiums, why don't we have a tax on the tickets of people to attend events in that stadium to fund their stadiums? I mean, that's more of a people that are using it, they get taxed by it. Write that down. There you go. I gave you half your speech the other day, and I'm giving you this one today, too. So, I mean, that's my two cents. I don't think we have a low wager when it comes to sports gambling. Again, when the governor doubled it on his own, we started at 10%, and they just doubled it, and that kind of hurt our market share as well.
Through the chairman to the senator, and I love how, you know, and I guess I started it here. having things spill into topics other than sports betting and gaming and things like that. But I appreciate you indulging me, Mr. Chairman. But first of all, there are states, admittedly blue states. New York has, I think, a sports betting rate of like 51 percent. Maybe that's New Hampshire. Delaware, not Delaware, Pennsylvania has, I think, 36 percent. And admittedly, there is an argument to be made for a progressive tax structure so you could have and foster more competition for some of the smaller sports books. But that's the whole point of a Pigovian tax here, in the sense that this is one of those things where, you know, the elasticity of sports betting and other addictive behaviors is different than, like, consumer electronics. In other words, if you are to go higher on that tax, people aren't just going to immediately eschew getting involved with sports betting. They're still, to a small degree, going to do it. Maybe not at the rates that they were doing it before, but the fact that a number of them have said, look, the payout isn't there for this, I'm just going to say, screw that. I'm not doing any more sports betting. That's good. We want that in Ohio. We don't really want to be the sports betting capital of the world. And at the same time, we'd be pulling in a lot of revenue from something like this to use to fund our public goods. So if it's 40 percent, I'd be proud of that. if that's on the gross receipt side of things. But this, that 2% on wagers, I mean, it's effectively the same thing, tomato, tomato. I don't see it as a bad thing as long as it's going to fund public goods. But I would be remiss if I didn't point out you did mention the ticket tax. You would not be the only senator to say that. I won't name names. There is, and not on this committee, of course, but there is a Republican senator who wanted exactly that for the budget as a way to pay for the stadiums, and I would agree with that. I think it's a decent way to go about doing something like that. It's a user fee, and the broad populace, if you don't want to go to a sporting event, you don't have to. You don't have to pay the tax. So no complaints from me on that. Maybe just give that Republican senator my name. I think you know each other pretty well.
Seeing no further questions, thank you once again for your testimony. This will stand as the first hearing on Senate Bill 199. And with no further business, we stand adjourned.