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Sports betting back on table in Missouri

JEFFERSON CITY, Mo. — As neighboring states such as Iowa, Illinois and Arkansas legalize sports betting, some state lawmakers hope this is the year Missouri gets in the game.

Since the U.S. Supreme Court lifted a nationwide ban on sports betting outside of Nevada in 2018, 20 states have legalized sports books in some form. Some Missouri lawmakers started pushing for legalization as soon as the ruling came down but haven’t been able to get it over the legislative finish line in the past two sessions.

Legalization is back on the table again this year. Two bills that would legalize sports betting in Missouri were heard by the House Committee on Government Oversight this week. While most lawmakers and witnesses who spoke were in favor of legalizing betting, there are still some points of contention for casinos, sports leagues and some lawmakers.

The bills, proposed by Rep. Cody Smith, R-Carthage, and Rep. Phil Christofanelli, R-St. Peters, would allow sports betting both online and in casinos and would establish similar regulations. Still, the bills divided sports leagues, which preferred Smith’s bill, and casinos, which preferred Christofanelli’s.

A key difference between Smith’s and Christofanelli’s bills is that Smith’s requires sports books to use official league data for bets that aren’t based on the final outcome or score of a game, such as prop bets, if the league asks the books to use official data. Christofanelli argued books should be able to negotiate in an open market what data they want to use.

Jeremy Kudon, a lobbyist representing MLB, NBA and the PGA tour, said the one-source data provision in Smith’s bill would protect the integrity of the games. Kudon said Christofanelli’s bill was a “love letter to casinos,” while Smith’s bill recognized all stakeholders in the process, including the leagues. The St. Louis Blues and St. Louis Cardinals also sent lobbyists in support of Smith’s bill.

“Data is to sports betting what cards are to blackjack or what that little metal ball is to roulette,” Kudon said.

He said the leagues supported Smith’s bill even though it does not include a 5% royalty to the leagues that MLB and NBA have been pushing in Missouri and other states considering legal sports books.

“I just hope the casinos are as open to a compromise,” Kudon said.

Mike Winter, executive director of the Missouri Gaming Association, which represents the state’s casinos, said that of the 20 states with legal sports books, only three require them to use official league data. The other companies that provide sports data, such as Sportradar, already contract with the leagues in order to collect that data.

“We’d prefer to be able to negotiate those arrangements independently rather than having a statutory mandate,” Winter said.

Nevada, which has allowed sports betting since 1949, doesn’t require official league data, and there haven’t been problems there, Winter said.

“I think what we’ve seen is this is an effort by the leagues to generate another revenue stream,” Winter said. “They’ve pivoted from the royalty fee to now trying to make the case that league data is necessary.”

Andy Hume, an executive associate athletic director at the University of Missouri, said sports betting is a unique challenge to college athletics because there are people wagering a lot of money on games played by athletes “that don’t make a lot of money.”

MU has advocated for an “integrity fee,” a royalty payment to sports leagues out of betting revenues. Hume said the university will have to take on additional costs monitoring betting and training student athletes about the dangers of getting involved in betting.

Merideth argued the NCAA will generate more revenue as a result of gambling, noting that the March Madness tournament draws attention from people who aren’t fans of basketball but who have bet on a bracket pool.

The other major difference between the two bills is the taxes and fees. Smith’s bill would set the tax rate at 9%, while Christofanelli would set it at 6.75% to be competitive with states such as Iowa and Nevada. The tax would be applied to adjusted gross revenue, so the books would pay it, not the bettor.

Smith, who has been working on his bill for three years, said his rate was set based on other states and that he’s open to changing it.

“Generally speaking, I am a proponent of lower taxes, so I feel a little awkward on the other side of this,” Smith said.

The casino representatives said a lower tax rate benefits them and also helps states compete with other states. The one state in which Penn National operates with a high tax rate is Pennsylvania, George said, which taxes a total of 34%. Sports gaming is volatile month to month, so there are some months books will lose money even before tax. Still, with a lower tax rate, books will be profitable over time, he said.

Tax rates among Missouri’s neighbors vary, but even Illinois’ 15% and Arkansas’ 13% rates are well below Pennsylvania and Eastern states such as Delaware and Rhode Island that tax half of sports betting revenues. Iowa has one of the lowest rates in the nation, matching Nevada’s 6.75% rate, according to the National Conference on State Legislatures.

In the six months since Iowa has had legal sports betting, the state has seen $270 million in wagers, generating $1.5 million in tax revenue. Legislative research estimated that Smith’s bill, with the higher tax rate, would generate between $8,423,447 to $20,919,845 in gaming funds when it’s fully implemented in 2025, while Christofanelli’s bill could cost the state $310,307 or generate revenues up to $15,010,520.

Some lawmakers on the committee were critical of parts of the bill, specifically that it didn’t include funding for gambling addiction treatment and that it required people to register in person at a casino before betting online.

Some states, including Iowa and Illinois, require people to register for online sports betting accounts in person at a casino. Both Smith and Christofanelli’s bills would require the same. George said the casino industry considers that “best practice,” but Rep. Dirk Deaton, R-Noel, saw it as an unnecessary burden for Missourians who don’t live near a casino.

“There’s Missourians that live three and a half, four hours from a casino, so you’re necessarily excluding those,” Deaton said. “There’s something that’s going to be allowed in the state, it seems the opportunity ought to be equally accessible to all Missourians.”

Reps. Peter Merideth, D-St. Louis, and Maria Chappelle-Nadal, D-University City, both insisted that any sports betting system should set aside funds for gambling addiction treatment similar to how money is set aside from casino admission fees. Sports betting would be even less regulated than casino gambling because people could place bets from their couches instead of having to go to a casino, Merideth said.

Source

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