Sports betting tax rates have been a major discussion topic this year. The potential Missouri sports betting tax rate adds another twist, one that is a polar opposite of the rates in many other states.
If a ballot initiative is approved this coming Election Day, Missouri sports betting will launch with a 10% tax rate. That would be one of the lowest rates in the country.
More on the 10% Missouri sports betting tax rate
Tax revenue from Missouri sports betting would result in tens of millions of dollars annually for in-state public schools. That’s according to Winning for Missouri Education, the group behind the ballot initiative.
That aspect of the legislation has been criticized by a familiar face. Sen. Denny Hoskins, whose actions in his chamber have killed multiple relevant bills, blasted the measure at a press conference earlier this year.
“I’ve consistently said that the ballot language they are using, I don’t believe, best serves the people of Missouri,” he said. “The tax rate is very low, the fees are very low, and there’s not enough money in there for problem compulsive gambling, which is going to be caused by a legalization of sports betting here in the state.”
Missouri goes low, other states go high
Missouri would launch with a very low tax rate at a time when multiple states are weighing raising their own rates. Illinois sports betting operators, for instance, saw a new tax rate go into effect in July. Top-end online sportsbooks may now pay a 40% tax rate on revenue, which is the second-highest rate in the country behind NY sports betting and its 51% clip.
Operators are mulling over ways to deal with these numbers. Last month, DraftKings Sportsbook announced a plan to implement a surcharge on winning bets in high-tax states (in addition to New York and Illinois, Pennsylvania sports betting customers would have also had to deal with this). However, after FanDuel Sportsbook signaled its intent to not do this on a recent earnings call, DraftKings reversed course.
Low tax rates often mean an increased willingness from operators to spend more marketing money. This means better sportsbook bonuses for customers and a more competitive marketplace. The tradeoff, of course, is less money for government programs than what exists in other states.
