Missouri Lawmaker Criticizes Casino/Team Sports Betting Proposal Over Low Revenue Projections

Written By Matthew Kredell on March 10, 2022
Missouri sports betting senate committee

The Missouri sports betting proposal from sports teams and casinos faced stiff criticism from one lawmaker on Wednesday.

Over the four years the state has considered Missouri sports betting legislation, Sen. Denny Hoskins has been a key legislative proponent.

But after telling PlayMissouri that he did not appreciate how sports teams and casinos didn’t bring their compromise to him before seeking sponsorship, Hoskins took a critical eye toward their proposal.

He grilled its legislative sponsors, sports team spokespeople and casino representatives in a Senate Appropriations Committee hearing.

At the center of his argument was a huge difference in revenue projections between the casino/team proposal and his bill.

Stark contrast in fiscal notes for sports betting bills

Wednesday marked the first public hearing in the Senate for the team/casino compromise language. It’s represented by the identical Senate Bill 1046 from committee chairman Sen. Dan Hegeman and SB 1061 from committee member Sen. Tony Luetkemeyer.

Hoskins brought up the substantial differences in revenue projections from fiscal notes on their proposal and his bill. Hoskins’ SB 643 also was addressed at the hearing. It’s a re-filing of a bill he introduced last session.

The Committee on Legislative Research Oversight Division projected a high of $21.3 million in annual net revenue to the state from the team/casino proposal. This compares to $163.5 million projected from SB 643.

“So obviously that’s a huge difference in the amount of money to go toward education, up to $21 million versus up to $163 million,” Hoskins said. “It’s troublesome to see that the net revenue generated would only be $21 million when we talk about some of the things that they’re able to deduct in your bill.”

Most of the disparity comes from Hoskins’ bill allows Missouri Lottery terminals to take parlay bets on the outcomes of two or more sporting events. The fiscal note includes $116 million projected from including the lottery.

The other increase comes from Hoskins more than doubling (21%) the tax rate of 10% asked for by casinos/teams.

Defense of sports betting tax rate

Bill DeWitt III, president of the St. Louis Cardinals, explained that a lower tax rate will help Missouri sportsbooks take bettors away from the black market and stop them from crossing the borders into neighboring states.

“We want to make sure that there’s no temptation for fans to go to other states for better prices or otherwise have taxes choke the economics of the operators who we need to be successful to create a robust set of choices for Missouri consumers.”

Jeremy Kudon, president of the Sports Betting Alliance made of sportsbook operators, asserted that his clients’ biggest competition is not each other but illegal offshore sportsbooks.

He provided members from a handout indicating that Missourians bet an estimated $2.8 billion on sports each year through illegal channels. And that Missourians conduct internet searches for well-known illegal websites as frequently as they do legal operators.

“It just shows how prevalent it is and how hard it is for us, which is one of the reasons I think you see a tax rate of 10%,” Kudon said. “It’s less than Illinois’ 15%, but we’re four years later than Illinois.”

Additional concerns from Hoskins

In addition to criticizing the financial aspects, Hoskins brought up:

  • Online sports wagering licenses could be worth more than the $100,000 licensing fee in the bills.
  • Concerns on how Missouri bettors would be made whole if improprieties occur, particularly in prop bets. He brought up recent allegations of the Miami Dolphins offering the head coach a bonus to lose games and Atlanta Falcons receiver Calvin Ridley getting suspended for betting on NFL games.
  • Sports team skins could open up to potential PGA Tour events, NASCAR tracks and esports arenas.

DeWitt shared Hoskins’ concerns about prop bets and explained how they would be addressed:

“You’re right, particularly in baseball, you can imagine a prop bet ripe for monkey business. Where let’s say I’m going to throw a ball on the first pitch. It may not affect the outcome of the game, but somebody’s cousin in the Dominican Republic might have a million dollars on that. Those are the kind of things that the leagues and the gaming commission will talk about at length … and make sure that only prob bets least likely to be manipulated in that form are allowed to be made.”

He added that data companies will look at any data that might be suspicious, the way the Securities and Exchange Commission does for stock trades.

Jeff Morris of Penn National Gaming responded that Ridley’s suspension actually is an example of the system working.

“Calvin placed his wagers on the Hard Rock app in Florida, which was identified by the Hard Rock team, which they communicated to Genius Sports and the NFL, identified that there was a problem and halted the bet. Had he made that bet in an illegal online site, there’s no way anybody would have known.”

Companion sports betting bill advances to House floor

The team/casino proposal advanced to the House floor this week through HB 2502, sponsored by Rep. Dan Houx.

House lawmakers expressed similar concerns about the tax rate and financial impact for the state, and the House Special Committee on Public Policy made several 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.

Future of Missouri sports betting legalization effort

The Missouri House could take up the sports betting bill the week of March 21, after taking next week off. More changes could be proposed on the House floor.

The Senate doesn’t appear to have the same urgency as the House on the issue. But since a Senate sponsor chairs Appropriations, the bill figures to get out of committee in good shape.

It remains to be seen whether the sports teams and casinos coming together on a compromise can overcome some lawmaker concerns.

Industry representatives hope to get Missouri online sports betting into the end zone on fourth down.

Kudon pointed out that, in the four years since the Missouri legislature held its first hearing on the issue, 17 states have passed laws allowing residents to legally wager online. That includes neighboring states such as Illinois, Tennessee, Iowa and Arkansas.

“Since that hearing, we’ve had a global pandemic,” Kudon said. “Patrick Mahomes has not only won an MVP, he’s gotten engaged, he’s had a baby, and by this time next week he’ll be married. And the Chiefs have won the Super Bowl. So all this is to say that the time to legalize mobile sports betting in Missouri is now.”

The Missouri legislature adjourns May 13.

Photo by Ed Zurga / Associated Press
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Written by
Matthew Kredell

Matthew has covered efforts to legalize and regulate online gambling since 2007. His reporting on the legalization of sports betting began in 2010 with an article for Playboy Magazine on how the NFL was pushing US money overseas by fighting the expansion of regulated sports betting. A USC journalism alum, Matt started his career as a sportswriter at the Los Angeles Daily News and has written on a variety of topics for Playboy, Men’s Journal, Los Angeles magazine, LA Weekly and ESPN.com.

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