Missouri lawmakers pulled discussion on a sports betting tax increase bill during a scheduled hearing Tuesday in a move that could further diminish the legislation’s chances of passing.
- State's potential tax dollars have been capped by its 10% tax rate and sportsbooks' ability to deduct promotional free bets.
- Sportsbooks have been able to deduct more than $1.2 billion from their tax liabilities since legal wagering began Dec. 1.
- Lawmakers did not explain why the bill was pulled from discussion ahead of Tuesday’s scheduled public hearing.
The bill would add an extra 24% tax on sportsbook operators’ gross gaming revenue in addition to the 10% included in the state constitution as part of a 2024 ballot measure that legalized sports betting. Missouri’s current rate is below the national median average; the proposed 34% effective rate would make it among the highest of the 31 states with legal mobile sports betting.
The legislation also reduces sportsbooks’ ability to deduct promotional free bets from their tax liabilities. The state’s eight legal sportsbooks have been able to deduct more than $1.2 billion from their tax liabilities since legal wagering began Dec. 1, compared to slightly less than $1.2 billion wagered, severely capping the state’s potential tax dollars.
Missouri on Dec. 1 became the most recent state to launch legal mobile and in-person sportsbooks.
FanDuel and DraftKings, which have each accounted for roughly 37% of the state’s total sports wagering handle, have an adjusted net tax loss of $2.1 million and $15.8 million, respectively. Because of the deductions, the nation’s two largest sportsbooks were not required to pay any taxes in Missouri’s first two months with legal wagering.
Sportsbook promotional spending was expected in conjunction with the launch and has significantly tapered in each successive month. The state has now generated $1.7 million in taxes over the first three months of legal betting, with nearly $1.2 million coming in February, the most recent month reported.
Missouri is expected to see increasing tax revenues going forward, with industry estimates of more than $2 million each month by September. The state’s per capita sports betting handle totals have been among the nation’s highest for a state in its first three months of operation, and officials from major sportsbooks have publicly praised the initial market participation figures.
Tax questions remain
But the paltry early tax sums have alarmed critics of the state’s sports betting model.
The approved ballot language, enshrined in the state’s constitution, includes the 10% tax rate and promotional deductions, both provisions that bolster sportsbooks financially but curtail the state’s potential tax revenues. DraftKings and FanDuel contributed nearly $30 million to support the measure.
The tax increase bill introduced by House Rep. Jeff Knight would alter those provisions with the additional tax and new limits on deductions. Knight did not explain why he pulled the bill from discussion ahead of Tuesday’s scheduled public hearing.
There is no timeline for when the bill could be discussed publicly or advanced out of committee. The Missouri sports betting bill has not received a vote out of committee, a key first legislative step, and still needs to advance from the full House and Senate before it can pass into law.
Missouri’s 2026 legislative session is set to conclude next month.
Proponents of a tax increase and promotional deduction limitation would point to the early tax figures as justification for an increase. The sportsbooks ran a campaign that promoted millions of dollars in additional tax revenues for schools, but those monetary contributions have not materialized so far.
One of the latest ads for the DraftKings and FanDuel-backed Missouri sports betting legalization measure; like the others, it focuses on the tax revenue that would generated for public education https://t.co/7tnWCT3oIt
— Ryan Butler (@ButlerBets) October 3, 2024
Sportsbook tax increase opponents, including the sportsbooks themselves, have argued before lawmakers in other states considering similar moves that disproportionate fees hurt companies’ ability to offer competitive products against hundreds of offshore purveyors that take bets without a license. Promotional deductions are also set to decrease significantly as the sportsbooks cut back on their free bet offerings from the first few months after launch.
After years of rapid sports betting expansion in statehouses nationwide, many of the same legislative bodies have considered restriction measures during the 2026 legislative season. Few radical proposals introduced this year – such as blanket advertising or in-play betting bans – have gained traction, but several states have increased sports betting taxes and reduced promotional deductions in recent years.
It’s unclear if Missouri will follow suit, and Tuesday’s removal of the bill from public discussion likely impedes its chances of passage. But the bill’s existence underscores rising concern about sportsbooks’ tax structures in Missouri and nationwide.
