Missouri Considers Tax Change As Sports Betting Disappoints

The Show-Me State may be done waiting to see the promised economic windfall from the new Missouri online sports betting market.

Missouri Representative Jeff Knight introduced HB 3533 into the House this week, which aims to deliver the tax revenue the state expected to see after legalizing the industry. The bill proposes a 24% tax on adjusted gross receipts, which is a sportsbook’s revenue after winnings are paid out. 

Knight’s proposal comes after Missouri saw just $659,120 in tax revenue after two months with a legal sports betting market. The low total was due to the state’s sportsbook-friendly market, which allows operators to deduct promotional wagers. 

With the first two months seeing a flood of promos, sportsbooks were able keep most of their revenue. Below is the revenue data the Missouri Gaming Commission has provided for December and January.

While January did see an adjusted gross revenue of over $19 million, that number drops after December’s deficit is factored in.

Missouri should see more tax revenue after February, but there is reason to worry that the market will never live up to its high expectations.

The new tax would be in addition to the existing 10% rate, making it an expensive change for operators.

Is Missouri Putting Its Young Market at Risk?

When Missouri legalized sports betting, it created one of the most sportsbook-friendly markets in the US. The 10% tax rate is one of the lowest in the US, with the average around 19%. The state also rejected adding tighter limits on deductions, which they are now literally paying for.

Given that the market launched just over three months ago, sportsbook operators won’t be willing to accept a drastic tax change without a fight. Expect an effort to sway the public and lawmakers to reject the idea, claiming that supporters of the new bill aren’t letting the market grow naturally. 

Sportsbooks could also threaten to impose fees or higher minimum bet requirements on customers in the state, as they did in Illinois after a controversial tax change.