Missouri is a strong candidate to legalize sports betting this year, and its prospects rose after a bill, HB 2088, authorizing sports betting at casinos and online advanced to the House floor after passing the House Special Committee on Government with a 5-1 vote.
In addition to sports betting, the bill also authorizes the Missouri Lottery to place VGTs in designated areas of St. Louis and Kansas City.
The Missouri Sports Betting Opportunity
With a population of more than 6.1 million and a strong sports fanbase, Missouri would be a strong sports betting market, on par with Indiana or Colorado. And if full-scale mobile betting is authorized, Missouri would likely pull from heavy population centers near its borders, particularly Kansas City.
Furthermore, the state is gradually becoming surrounded by states with legal sports betting. Neighboring Iowa, Arkansas, Illinois, and Tennessee have already legalized sports betting, and Kentucky is a strong candidate to pass a bill this year.
Another reason to act is to bolster the state’s casino industry.
After a prolonged downswing, the Missouri casino industry has experienced several years of growth, but at $1.75 billion in 2018, revenue is still slightly below the industry’s peak of $1.8 billion in 2011. Unfortunately, the revenue growth is coming from higher patron spending, as visitation is still trending down according to AGA reports. The addition of sports betting would provide a shot in the arm to the industry on both the revenue and visitation fronts.
Dreaded Integrity Fee Resurfaces in an Otherwise Good Bill
Missouri’s sports betting bill is a mixed bag.
On the plus side, the bill would authorize retail and online betting and has a modest tax rate of 9%. Most of the money is earmarked for education.
The bad news is the bill contains an integrity fee, which means the sports leagues would receive 0.25% of handle. That amounts to an added tax of around 5%.
VGTs Likely to Become a Sticking Point
Presently, the bill allows bars to operate up to five VGTs. Truck stops and fraternal and veterans’ organizations could operate as many as ten machines. The bill’s sponsor, Rep. Dan Shaul, said amendments to allow more machines at each location aren’t out of the question.
As was the case in Pennsylvania, the VGT part of the bill is being juxtaposed against the existing illegal VGT market, which is currently unregulated and untaxed. Licensed VGTs would be taxed at 36% under Shaul’s bill.
VGTs were a hot-button issue when Pennsylvania passed its expanded gambling package in late-2017. Evidence in other locales points to VGTs cannibalizing existing gaming revenue. As such, expect the same concerns and pushback from casino operators in Missouri, especially if the legislature tries to increase the number of machines allowed.
The House Special Committee on Government also passed an alternative bill, HB 2030, that exclusively deals with VGTs. The legislature is scheduled to adjourn on May 15, so there’s plenty of time to get something done, and there’s always the possibility that a sports betting-exclusive bill gains some momentum at some point.