Video summary

Ohio Sports Gaming Receipts and Withholding Webinar 12 8 22

Main summary

Key takeaways

Finance

Finance / Tax-Focused Summary (Sports Gaming in Ohio)

Presenters / Sources

  • Cody Fitch — Sports gaming receipts tax
  • Edward Duesenberry — Sports gaming receipts tax; referenced “Gateway/Gateway items”
  • Marina King — Administrator, Employment Tax Division; sports gaming withholding
  • Asa Tia Richardson — Employment Tax supervisor; Gateway/fileing steps for withholding
  • Alan Moore — Assistant Administrator, Employment Tax Division; answered some Q&A on withholding

1) Sports Gaming Receipts Tax (Receipts Tax)

Scope & Timeline

  • Legal basis: Ohio House Bill 29 (passed last December).
  • Start date rule: Ohio Casino Control Commission establishes a universal start date; no later than Jan 1, 2023.
  • Operational start referenced: Jan 1, 2023 (described as “right around the corner” / “January 1, 23”).

Taxpayer & Licensing Types

  • Taxpayer (general): the sports gaming proprietor for receipts tax purposes.
  • Exception: professional sports organizations may designate a service provider as the taxpayer.
  • Types referenced:
    • Type A: mobile online proprietors
    • Type B: brick-and-mortar proprietors
    • Type C: governed by the Lottery Commission
      • Clarified later: Type C proprietors are not subject to receipts tax

Registration / Ohio Business Gateway

  • Registration letters: expected near the end of December; include:
    • start date
    • account number
    • filing frequency
  • Discrepancy handling:
    • If the license effective date is 1/1/23 but operations begin later, taxpayers must send back the correct account start date.
    • If not corrected, expect a January 2023 return due to defaulting to 1/1.

Tax Base, Deductions, and Threshold Notes

  • Sports gaming receipts definition: total gross receipts received from operating sports gaming in Ohio.
  • Promotional credits: included in gross receipts, but deductions apply with time-based phasing:
    • Cash / cash equivalents paid as winnings: deductible
    • Voided wagers: deductible
    • Promotional gaming credits:
      • Not deductible until 1/1/2027
      • Deduction rate increases:
        • 10% beginning 1/1/2027
        • 20% beginning 1/1/2028
  • Negative tax months: if returns result in a negative, liability is treated as zero
    • Caution: negatives cannot be carried forward

Return Frequency and Submission Rules

  • Filing method: through Ohio Business Gateway.
  • Due dates: monthly, due on the 15th day of the following month.
  • Type A vs. Type B accounts:
    • Type A and Type B proprietors typically have separate accounts → often two returns per month.
    • If a Type A proprietor contracts with more than one Mobile Management Service Provider (MSP):
      • typically one Type A return per month is expected
      • figures may be gathered/combined and submitted in a single return (depending on the proprietor/service-provider arrangement)

Explicit Procedural Framework (Receipts Tax via Gateway)

  1. Create/verify Ohio Business Gateway account: gateway.ohio.gov
  2. Add service area: sports gaming receipt tax
  3. Add correct transaction types:
    • ensure Type A vs. Type B return selection matches license type
  4. Optional (service provider access):
    • grant permission to service providers to file on behalf of the proprietor via Gateway business access/account maintenance/user authorization
  5. File the return:
    • select correct acknowledgment
    • select correct account number
    • set reporting period
    • select type of filing
    • enter wagering/winnings/promotional credits fields
      • note promotional credits are not deductible until 2027+
    • submit → receive filing confirmation number and amount owed
  6. Pay via Gateway:
    • ACH debit referenced
    • option to defer payment date to the due date if paying early
  7. Use Gateway history and receipts:
    • history tab stores receipts for returns/payments
    • PDFs include payment receipt and a “sports gaming receipts tax return” PDF
  8. Access disclosure:
    • if a proprietor grants permissions, service providers can view transaction history for that proprietor’s filings/payments

2) Sports Gaming Withholding (Employment Tax Division)

Legal Framework & Trigger

  • Governing authorities referenced:
    • House Bill 29
    • Ohio Revised Code 57 47.063 and 57.47.064
    • linked to IRS Code §6041
  • Key concept: if reporting is required to the IRS, then Ohio withholding applies.

Withholding Rate and Reporting Threshold

  • Withholding rate: 4% of winnings.
  • Threshold (two-prong test): withhold only when both are met:
    1. winnings are $600 or more
    2. proceeds are at least 300× the wager
  • Examples summarized:
    • Not reportable: $1 wager at 300:1 → $300 win (fails $600 threshold)
    • Report & withhold: $2 wager at 300:1 → $600 win (meets both)
    • Not reportable: $25 wager at 40:1 → $1,000 win (fails 300× wager rule)
    • Report & withhold: $10 wager at 500:1 → $5,000 win (meets both)

Who Is the Taxpayer for Withholding?

  • Type A (mobile) and Type B (brick-and-mortar):
    • proprietor can allow an MSP/MMSP to serve as the taxpayer for withholding
    • effect: W-2G winners are filed under the MSP/MMSP’s identity/Federal EIN (FDIN/FBI referenced)
  • If proprietor wants their own name/EIN on W-2Gs but still prefers MSP/MMSP filing:
    • filing permissions can be granted (details not fully expanded in the summary)
  • Type C:
    • proprietor is the designated taxpayer (on the withholding side)

Registration / Account Setup Instructions (with cautions)

  • Do not register a withholding account via Gateway for the new withholding account number.
  • Ohio Taxation will register/set up a separate withholding account based on the registration application.
  • Separate account requirement:
    • do not commingle
    • existing employer withholding account for employees is separate from the new sports gaming winners withholding account
  • Account communications:
    • the division sends an email with the withholding account number
    • if not received, email: ewt@tax.state.oh.us (referenced as the provided inbox)

Where / What to File (and Due Dates)

  • IT-501 (monthly employer withholding return)
    • Not required if there is no Ohio income tax to remit
    • due: 10th day of the month following the end of the reporting period
  • IT-941 (annual reconciliation)
    • due: Jan 31 following year
  • W-2G winners report
    • required monthly
    • due: 10th day of the month following the end of the reporting period
    • also due annual: Jan 31
    • file layout: referenced as a link “w2g winners report specification” (~7 pages)
    • optional: test file uploads can be scheduled by emailing for format verification

Explicit Procedural Framework (Withholding via Gateway)

  1. Confirm/add service area and transaction types:
    • same Gateway mechanism, but for withholding:
      • service area: employer withholding
      • transaction types: IT-501, IT-941, W2G/1099 upload (W-2G winners report upload)
  2. IT-501 workflow:
    • start IT-501 return from dashboard
    • verify entity + employer withholding account number
    • enter filing period and amount withheld
    • summary review + perjury acknowledgment
    • choose Gateway payment method (ACH debit or ACH credit)
      • note: ACH credit implies a card fee
    • add to cart → checkout → confirmation receipt
  3. IT-941 workflow:
    • start annual reconciliation (IT-941)
    • specify return type (original/amended) and account handling
    • enter Ohio gross winnings and Ohio tax withheld by month
    • enter total payments made throughout the year
    • summary review + perjury acknowledgment; accept
    • if amount due: add to card for payment
  4. W-2G winners report upload:
    • select W2G winners report from “type of income statement” dropdown
    • enter/confirm email address
    • upload file (browse)
    • check upload history for success/errors

Key Disclosures / Notices

  • No continuing education credits offered.
  • Webinar is recorded and will be posted with tutorials/job aids (informational posting note).
  • Access disclosure (important): service providers with permissions can view history of transactions in the proprietor’s account.
  • Cautionary statements:
    • promo credit deductions begin no earlier than 1/1/2027
    • negative tax months cannot be carried forward
    • do not register a new withholding account through Gateway; Ohio Taxation registers it separately

Tickers / Financial Instruments / Markets Mentioned

  • None. The content is administrative/tax procedure for sports gaming receipts and withholding (no investing instruments referenced).

Original video