Missouri schools and problem gambling programs should begin to receive tax dollars from sports betting in late 2025 or early 2026.
Missouri sports betting must launch by Dec. 1, though many involved hope an earlier launch in October or November to take advantage of as much of the football season as possible.
Sports betting forecast: $4.6 billion in total annual bet spending
Ten percent of all tax dollars paid by sports betting operators in Missouri will go toward education. According to Legal Sports Report, the total revenue could hit more than $500 million annually at market maturity.
Missouri could be looking at around $35 million in annual tax revenue if the market hits its full potential, which is typically expected around year 5.
That figure comes from a forecast of $4.59 billion in handle and $518 million in gross revenue annually. That should mean $51.8 million, except the state taxes adjusted revenue at 10%, not gross revenue.
Sportsbooks get to deduct 25% of monthly handle in promotional costs, which lowers the taxable base around one-third in the long term. Operators can also deduct the 0.25% federal excise tax paid on handle.
Sportsbooks can also carry losses over from one month to another. That means that if a sportsbook made $4 million in revenue but could deduct $5 million in promotional tax, its adjusted gross revenue for the next month would start at a loss of $1 million.
How Missouri sports betting tax funds are divvied up
Before any funds are handed out, the state ensures it is made whole first.
The tax details from Amendment 2 say the Missouri Gaming Commission must be reimbursed for “reasonable expenses incurred” to regulate sports betting if expenses are not fully covered by the various fees. Up-front licensing fees should bring in $12 million in addition to up to $29 million in tax revenue for the first year, according to predictions from Missouri’s legislature.
After that, the greater of $5 million or 10% of total tax revenue is sent to the Compulsive Gaming Prevention Fund. That fund is overseen by the state treasurer and used to provide problem gambling support services, develop new programs, and provide grants to problem gambling organizations.
One important note is that the Compulsive Gambling Prevention Fund does not have to spend all of the money it is sent: “Notwithstanding any other provision of law to the contrary, any monies remaining in the fund at the end of a biennium shall not revert to the credit of the general revenue fund.”
The remaining tax money is for elementary, secondary, and higher education programs throughout the state.
