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Missouri Sports Betting Set for Final Debate Over Taxes

Missouri Sports Betting Set for Final Debate Over Taxes article feature image
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A Missouri Senate committee advanced sports betting legislation Tuesday, opting to settle discrepancies with House lawmakers later on.

The Senate Appropriations Committee voted 8-1 to advance HB 2502 and HB 2556. However, before the full-chamber takes up either, Sen. Dan Hegeman (R) will produce a substitute bill that ups the 8% tax rate passed by the House.

“This is still a work in progress,” said Hegeman, adding he’d like to see more funding earmarked for problem gambling.

The rest of the enacting legislation will likely remain the same: legal retail and online sports betting, with up to 39 separate sportsbooks for the state’s 13 casinos and six professional sports teams. Under bills passed by the House in March, each casino would be eligible for up to three online skins.

The House bills also allow operators to deduct revenue from promotional bets from their taxable revenue, phased out over five years. That likely stays.

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Settling on a Tax

Passing sports betting in 2022 was always going to come down whether lawmakers could compromise on a tax rate.

A Senate bill from earlier this year would tax sports betting at a 21% rate, the same rate as the state’s tax on casino table games. That’s still low compared to top betting states like New York and Pennsylvania, which tax at 51% and 36% rates.

Whatever the Senate passes the House will also need to agree on. It’s reasonable to expect the final rate ends up somewhere between 8-21%.

The House-backed 8% tax rate would be the third-lowest of any state with legal sports betting. It’s even lower than the tax rate casinos and teams had pushed for. It comes by way of an amendment from Rep. Rogers (D), of Kansas City, who says he wants to keep Missouri’s tax rate lower than Kansas.

Competing with Kansas and for an NFL Team

Kansas is expected to legalize sports betting next week, under a 10% tax rate.

Its lawmakers have also been vocal about beating their next-door neighbor to sports betting. They’ve even proposed spending 80% of the tax revenue on a new NFL stadium to lure the Kansas City Chiefs away from Missouri.

During a Missouri bill hearing one lawmaker asked Chiefs representatives why they should grant the team a sports betting license if they plan on leaving the state.

Anne Scharf, the Chiefs’ Vice President of Civic Affairs, answered that their license would be contingent on them staying in Missouri.

A Path Toward Compromise

A few more minor changes will likely get added to whatever the Senate brings to the table, but those shouldn’t be deal breakers like a stalemate on tax rates would be.

Senators floated upping annual revenue earmarked for problem gambling from the House’s proposed $500,000 to $1 million. Alternatively they could earmark 1-2% of gross gaming revenue for addiction services.

They’ve also proposed letting the state lottery run a sportsbook, which in annual license fees alone, would up state revenue compared to the House’s plan.

A senate vote is not currently on the state’s legislative calendar, but House leadership will likely ask for a conference committee once the Senate passes its version.

Lawmakers have until May 13, the last day of Missouri’s 2022 session, to agree on and pass an identical bill.

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