As the U.S. absorbs the result of this week’s election, the country looks set to add one more state to the list of those where sports betting, including online, is legal.
On Tuesday, Missourians voted in favor of an amendment to legalize sports betting, by the narrowest of margins.
Just 50.1% voted in favor of Amendment 2, which gives the Missouri Gambling Commission the power to license operators to offer online sports wagering to individuals over the age of 21 located in the state, on gambling boats, or at any location within each sports district.
The vote makes Missouri the thirty-ninth state to legalize sports betting, with just 11 outliers still holding out.
The law stipulates that sports wagering must be established in the state no later than December 1, 2025, but the MGC is reported to have pledged a roll out as soon as next summer.
A relatively low 10 per cent wagering tax will be levied on revenues and used to fund education, including public schools and higher education.
It will also provide funding for the Compulsive Gambling Prevention Fund, which includes researching compulsive gambling, implementing treatment and recovery programs.
Under the new law, tax will be collected on operators’ adjusted gross revenue, which means that alongside the usual tax deductible costs, operators will be able to deduct the cost of “free play or promotional credits” offered to customers, provided that this does not exceed 25% of all cash and cash equivalents received in that month.
The state estimates that the change in law will incur a onetime cost of $660,000, and ongoing annual costs of at least $5.2m, however initial license fee revenue is expected to be $11.75m.
Modelling by Legal Sports Report anticipates that Missouri will quickly ramp up to speed – much like the states that have legalized before it – achieving annual revenues in the region of $518m and handle of around $4.59bn. This would put the state just outside the top 10 states by legalized gambling revenue.
Tax incomes will depend on how much is deducted as promotional credits or free play. That figure is certainly likely to start high, as operators kick off the battle to acquire customers. Eilers & Krejcik Gaming predict it will be around 8% of total wagers in the first year, declining as the market matures.
LSR’s reporting pointed to a range of tax income estimates from $0 to $35m depending on the extent of the promotions in the first year. With the vote coming down to such a tiny margin in favor, let’s hope tax revenues are far from that bottom estimate.
Local reporting suggests that it was voters in Kansas City that got the vote over the line. According to NBC’s local KSHB 41 television station, 58.4% voted in favor in Kansas City.
Winning for Missouri Education spokesperson Jack Cardetti told the news outlet that this was because Kansas City residents were already crossing the state line into Kansas to vote, where it has been legal to do so since September 2022.
“We know 10s of 1,000s of Missourians are actively heading over there every month to go place bets on sports then coming back to the state of Missouri,” he said. “That didn’t make any sense from a public policy standpoint.”
With just half a percentage point in it, there is a slim chance that the result of the vote could be challenged. However, when KSHB 41 put this to Caesars Entertainment-backed opposition group Missourians Against the Deceptive Online Gambling Amendment, it said it does not intend to request a recount. It may be too soon to know whether any other relevant party would have cause too.
The fact the amendment was passed by such a narrow margin is surprising given the financial backing it had from DraftKings and FanDuel, who put more than $40m behind the initiative, which Caesars opposed with its $14m campaign against the amendment.
Caesars’, which owns three casinos in Missouri, was concerned by the wording of the amendment, which it interpreted as meaning just one license could be awarded per operator. However, the regulator has since confirmed that operators will be allowed a license per location.
Perhaps this clarification on the details is why Caesars has not called for a recount, but it seems odd that such clarity wasn’t sought prior to the votes being cast, or more than $14m being spent. Perhaps this is evidence once again that the relationship between regulators and operators is still too distant to be in the best interests of any stakeholders, least of all the voters that finally just managed to get this amendment across the line.
