CINCINNATI — It’s too early to say whether Paycor Stadium’s renovation will be written into Ohio’s next two-year budget bill, but the odds are increasing that gambling taxes will be part of Ohio’s long-term stadium solution.
“It’s like the conclave,” said Sen. Bill Blessing, R-Colerain Township. “We’re waiting for white smoke.”
Blessing introduced Senate Bill 199 on May 14 to propose a 2% fee on Ohio’s sports betting handle, which is the total dollar value of all bets accepted by state-licensed sportsbooks. Ohio’s handle was $8.9 billion last year, which means the fee could raise about $180 million per year, if approved.
Blessing’s proposal came one day after Sen. Nathan Manning, R-North Ridgeville, proposed the legalization of iGaming in Ohio in Senate Bill 197. It would allow online betting for casino games, including slot machines, poker and Blackjack, along with state lottery games and horse racing. Supporters claim it will raise up to $800 million in new taxes annually, money that could fund a reduction in state income tax or stadium projects.
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The new gambling proposals join other revenue-generating ideas that have been percolating since Gov. Mike DeWine proposed a doubling of Ohio’s sports betting tax to fund stadium improvements statewide. The Ohio House erased the governor’s plan in April, when it proposed a $600 million bond issue for the Cleveland Browns to build a new stadium in Brook Park.
"The legislature is allergic to the word tax," University of Cincinnati Political Science Professor David Niven told the WCPO 9 I-Team at the time. "Its going to cost people money either way but it is a question of, 'Who is going to pay this money?'"
Hamilton County was criticized for being caught flat-footed by the Browns' proposal, which promised not only a domed stadium capable of hosting Super Bowls but a companion entertainment district that convinced lawmakers the project could pay off state-issued bonds without risk to Ohio’s general fund.
But that was before the Ohio Legislative Service Commission called the Browns' tax revenue estimates "overly optimistic" and before Ohio's budget director questioned whether the state had enough debt capacity to issue the bonds.
Ohio's nine Senate Democrats last week proposed an amendment to eliminate the $600 million bond deal. Blessing has sponsored two amendments to do the same thing.
Blessing thinks support is waning for Cleveland’s financing plan, while members of the Senate look for other ways to finance all stadium improvements.
“Just in talking with other members, there's a lot of skepticism over this,” Blessing said. “They don't like the fact that it's bankrolled by state general revenue funds. I think that's probably one of the reasons why there's a mad dash to do iGaming as a potential alternative.”
Ohio contributions are integral to a new lease agreement between the Bengals and Hamilton County, which signed a memorandum of understanding that proposed an $830 million renovation funded by “fair and equitable contributions” from three parties: The state, the county and the team, in partnership with the NFL.
Attorney Tom Gabelman, who was fired last month as special counsel for Hamilton County, told the WCPO 9 I-Team that the county was close to a contract that would last 10 to 20 years, depending on how much the parties were able to obtain from the state.
That’s why Gabelman said he developed the 2% “privilege fee” that Blessing introduced as Senate Bill 199 on May 14. Blessing confirmed the proposal came from Gabelman.
“It’s a no brainer,” Gabelman said. “The governor wants a sports gaming proposal. Whatever percentage it ends up being, he wants a sports gaming proposal.”
Gabelman claims Senate Bill 199 would put Hamilton County in a strong position to attract funding, even though the bill sets up a competitive process for available funding that’s limited to awards totaling about $200 million per year.
“The way we structured it, there were ten factors to allocate funding,” Gabelman said. “The age of the stadium, capacity of the stadium, the public use of it, how many years are left in the term, or the new term. The amount of capital repairs put in by the local entity, by the team and so on. Under those metrics, Paycor gets funded first.”
The Bengals may have caught up with the Browns by providing funding formulas with broader appeal, said Adam Beissel, associate professor for sport leadership and management at Miami University. But he doesn't think either team will walk away poor from this year's budget drama.
“I predict that the state legislature will ultimately approve some financing for the new stadium proposals in Cleveland and Cincinnati, quite simply because people love stadiums," Beissel said. "People love sports. And even though the economics aren’t too kind in terms of the return on investment for these types of facilities, we still live in a particular moment where socially and culturally, we enjoy the type of amenities that they bring."
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