After five years of discussion, the Missouri House approved sports betting legislation Wednesday, March 23.
It did so by unraveling sports betting from other gambling considerations in a compromise bill proposed by casinos and sports teams last month.
House Bill 2502 from Rep. Dan Houx and mirror HB 2556 passed Wednesday on second reading in an informal verbal vote. The House made it official Thursday, passing the bill 115-33 and sending it to the Senate.
Rep. Dan Shaul, who in previous years fought for a bill tying together regulation of sports betting with video lottery terminals (VLTs), described why he came around to doing a standalone sports wagering bill.
“I think we learned over the years … If history taught us anything, don’t keep beating our head against the same wall the same way. Let’s at least take a different approach.”
Houx, who also carried a VLT bill in the past, urged the Senate to also run the issues separately and get sports betting done this session.
“We’re right now in the middle of March, March Madness,” Houx said. “I can’t even tell you how many bets are happening today in the state of Missouri and we’re not able to collect.”
Bordering states put pressure on Missouri
The House began discussing Missouri sports betting legalization in 2018, soon before the US Supreme Court overturned the Professional and Amateur Sports Protection Act.
That action opened the door for states around the country to regulate sports betting. Now, 33 states have legalized sports betting. Among the eight states surrounding Missouri, only Kansas and Kentucky haven’t authorized some form of sports betting. And both are working on it this year.
In fact, Houx and Rep. Wes Rogers spoke on the floor about how each had heard from lawmakers across the border that Kansas will pass sports betting legislation next week.
Rogers told the story of how he went to Council Bluffs, Iowa, with friends last week to bet on the NCAA Tournament. While in line to make a wager, he overheard a Missourian behind him complain about having to drive from Kansas City to bet. And he saw a lot of Missouri license plates in the parking lot.
“If people are willing to go to Council Bluffs, Iowa, in March for vacation, I think that’s a pretty good reason that we ought to look at this legislation,” Rogers said.
Rep. Jim Murphy talked about how residents in his district drive across the Jefferson Barracks Bridge into Illinois, place a bet over their phones while still over the Mississippi River, and turn around at the next exit and come back.
“So Missourians can gamble,” Murphy said. “We haven’t denied them the right to gamble. What we have done is deny us the right to collect that revenue. We instead give it to the communist state of Illinois.”
Details of Missouri sports betting bill
Eleven of the 13 Missouri casinos and six sports teams worked with Houx to agree on the main sports betting parameters. Important points to the deal include:
- Retail sportsbooks to be allowed only at Missouri’s 13 riverboat casinos.
- Casinos get three online sportsbook skins each, with a maximum of six per casino company.
- The six sports teams may each offer one online sportsbook. Fans at the stadium can use any of the regulated mobile apps in the state.
- Casinos may not advertise within 400 yards of sports stadiums without team approval.
- Sportsbooks must use official league data on in-game betting.
The House Special Committee on Public Policy made several small adjustments to the bill:
- Increased application fee for an interactive sports wagering platform license from $100,000 to $150,000. Annual renewal increased from $50,000 to $125,000.
- Added a five-year phase out was for promotional deductions. In the first year of implementation, licensees can deduct 100% of the costs of free promotional play redeemed by patrons. That decreases by 25% each year until reaching zero in year five.
- Increased the amount of tax revenue going to problem gambling programs from $250,000 annually to $500,000.
There was talk in committee that the tax rate of 10% proposed by the casinos and sports teams should be higher. In Illinois, the rate is 15%. However, on the floor Rogers actually got approved an amendment to lower the tax rate to 8%.
“Missouri is a better state than Kansas in every possible way,” Rogers said. “Our tax rate should be lower.”
Problem gambling focus of amendment
Rep. Ben Baker got an amendment approved that strengthens how the state would address problem gambling issues.
Baker explained why the amendment was needed:
“With this proposition of legalizing sports betting in Missouri, there will be an increase in problem gambling, both for new individuals coming into this utilizing the platforms with sports wagering and those who are currently struggling. I made an amendment on the amount in committee, but the more I looked into it I realized we needed to put some best practices in place to make sure we do this right out of the gate.”
The amendment makes the following additions to the bill:
- Requires operators offer a voluntary self-exclusion program in person and via app.
- State must provide recovery services for gambling addiction.
- Annual research report examining the prevalence of problem gambling in the state and the effectiveness of programs.
- Gambling hotline number on all promotional materials and ads.
- Requires that esports wagers only be placed on adult participants.
- Outlines procedures for the legislature to review the report and consider changes and funding increases needed.
Online casino, VLTs could run separately next session
This year, Murphy filed legislation previously carried by Houx to legalize online casino gambling in Missouri.
Murphy said he hoped that, after passing sports betting, the legislature would look more seriously at iGaming, including online poker and VLT legislation next session.
“I look forward to in the future looking at all those other issues and really solving those,” Murphy said. “I don’t think there’s a law against people gambling, but we’ve got a fence around it in Missouri. We’re just not reaping any of the benefits from it.”
Houx added that iGaming “is something in the future that I believe will probably take care of the VLT issue on its own just because you can sit at your house and do the same thing instead of going somewhere else.”
Prospects for passage in Senate
Sports betting has a more difficult path to passage in the Senate.
Sen. Denny Hoskins agreed to run sports betting legislation separate from VLTs this year. But he still wants legislation and regulation for the gray machine industry proliferating across the state passed this year.
The issues remain at odds in the Senate.
Hoskins also has been working on the sports betting issue for years and has strong opinions on it that run contrary to the casino/sports team bill.
At a committee hearing, he highlighted the substantial difference in fiscal projections between the casino/sports team proposal and his bill, which has a 21% tax rate and includes lottery retailers.
The Senate has until May 13 to pass sports betting legislation. And it’s likely that, if the Senate does pass a bill, it won’t be the same as the House bill. This means the Senate and House will need time for a conference committee to work out the differences between the bills.
Christofanelli urged Senate to act on sports betting this year
“I’m just hopeful that we can get this over to the Senate and they will be productive for this issue before the end of session, because the reality is, whether we like it or not, sports gaming is occurring with impunity on unlicensed, unregulated apps that people can download on their cellphone. Probably by the time I’m done giving my talk here, one of you can download one of those apps and place a sports bet. I believe that we should have a system that has protections for consumers and allows the state to share in the benefits of this activity so that we can invest in some of our priorities as well.”
