An eight percent tax on sports betting revenue seems just right for Missouri, say the six professional teams behind a bill to legalize sportsbooks in the state this year.
At a Senate Appropriations Committee hearing today, all six teams indicated that an eight percent rate on adjusted gross receipts (AGR) proposed in House Bill 2502 would help Missouri compete in a sports betting market where Illinois, Iowa, and Tennessee already have a foothold – with Kansas possibly next in line.
Iowa has the lowest rate on sports betting AGR regionally at 6.75 percent across the board. Tennessee sports betting AGR is taxed at 20 percent. A rate of 10 percent is being proposed in Kansas.
“The tax rate was discussed as ‘let’s try to do something in Missouri that reflects our bordering states’ policies…’ We felt that sort of the Goldilocks zone was around 10 percent,” said St. Louis Cardinals President Bill DeWitt, speaking on behalf of a sports betting coalition made up of the six teams. “Obviously that’s still an issue that’s in play,” he said, with eight percent even more competitive.
The teams — the Chiefs, Cardinals, Royals, Blues, KC Current, and St. Louis FC — have joined with the state’s casinos this year in support of HB 2502. Both the casinos and teams hope that a broad-based push will encourage state lawmakers to legalize sports betting in Missouri after years of unsuccessful attempts.
Proposed Tax Rate Was Lowered By Missouri House
HB 2502 didn’t always propose a tax rate of eight percent, however. The bill sponsored by Rep. Dan Houx, R-Warrensburg, originally proposed taxing sports betting operators at a rate of 10 percent.
The 10 percent rate was amended out of the bill before it advanced to the Senate by a wide vote margin on March 24.
Sen. Denny Hoskins, R-Warrensburg, is proposing a 21 percent tax rate on sports betting operators in his Senate Bill 643. Hoskins testified today that HB 2502 would generate about $150 million less for the state than his proposal, which he estimated could net the state $163 million per year.
Hoskins said mobile sports betting skins (industry speak for mobile apps) are “a golden ticket” worth millions of dollars each for the teams and Missouri’s 13 riverboat casinos, each of which would be allowed to operate both mobile and in-person sports betting under HB 2502.
The teams would be allowed one mobile skin each, with up to three skins and in-person sports betting allowed for casinos.
“It gives me pause,” said Hoskins of the House bill. “Are we doing the best we can do?”
Lower Tax Rate ‘Beneficial’ In Missouri, Says Penn National Exec
Penn National Executive VP Todd George testified before the committee on behalf of his company’s Missouri casino operations. George didn’t say whether or not an eight percent tax on sports betting is the best for Missouri. But he did say a tax rate of eight percent — rather than, say, 10 percent — would help operators get bettors off illegal websites and into a state-regulated market.
“It would be beneficial to have a somewhat lower tax rate to be more aggressive from a marketing standpoint to convince people to stay here in Missouri and not go across the border,” said George.
Penn National, with at least two casino operations in Missouri, launched the first retail sportsbook in Pennsylvania after a federal sports betting ban was repealed in 2018. The company operates mobile sports betting through its Barstool app in at least 10 states.
Next Steps For Missouri Sports Betting
If HB 2502 is voted out of committee soon, legal sports betting could become reality in Missouri later this year.
The bill does appear to be the state’s best chance at legalization in the current session, which ends on May 13. It has not only passed the Missouri House but has already cleared two of three “readings,” procedural steps required for a bill to be called to a final vote in the Senate.
Committee approval could put HB 2502 on the Senate calendar for floor debate, with final passage possible in a matter of days. But the bill must be brought to a committee vote before that can happen.
A committee vote could come as early as next week.