Missouri lawmakers should proceed carefully as they consider bringing sports gambling to the state.
They should learn from the mistakes in Kansas, which, as most readers know, enabled sports betting earlier this year. The results have been mixed: Residents and visitors have placed wagers as expected, but revenue to the state has fallen far short of predictions.
That’s in part because the tax rate of 10% is far smaller than in many other states. Additionally, Kansas allows gambling companies to deduct some promotions, including “free” introductory wagers, from their revenue. That further reduces the state’s take.
Kansas legislators wanted to use some of the revenue to lure the Chiefs across the state line. The sound you hear is the state giggling at the paltry amount of money available for that endeavor.
We have supported sports wagering in the region. But there should be no doubt: Missouri should not follow the Kansas example when it considers gaming next year.
The primary gambling bill in the Missouri Senate, introduced by state Sen. Denny Hoskins of Warrensburg, sets the tax rate at “10% on the adjusted gross receipts,” the same as Kansas. That’s too low.
It’s half the potential rate in Nebraska, according to the Tax Foundation, and it’s also less than the 15% rate in nearby Illinois. The sports gambling tax rate in Pennsylvania is 36%.
(Nebraska has authorized sports gambling, but the rules haven’t been finalized, so widespread legal sports wagering there is still months away.)
Most of Missouri’s gambling revenue would be earmarked for education spending. A higher tax rate could provide additional funds for school districts, including more pay for teachers. Paying teachers more money might alleviate pressure to reduce the school week, or to take other steps to meet the shortfall in educators in the state.
Missouri legislators are also likely to face concerns that weren’t an issue in Kansas. Bills that legalize sports betting may be combined with measures authorizing video lottery terminals or VLTs, the small machines that often pop up in fraternal and veterans’ organizations, truck stops, bars and restaurants.
The tax rate for the machines would be set at 36%. Again, much of the revenue would be used for education costs, including student transportation, which is a big issue in rural areas.
We have not opposed gambling on VLTs, and believe the tax rate would provide some funds for schools while helping small businesses with revenue. They may be a good idea in the state.
But it isn’t clear that VLTs and sports gaming should be included in the same bill. The challenges with each are different, and individual consideration makes sense. “I’ve always been a believer that VLTs and sports gambling are separate,” state Rep. Dan Houx, a Republican, told The Star in early December.
One other note: Missouri’s debate on these issues should be open, transparent, and conducted where the public can watch. In late November, The New York Times published a devastating account of the Kansas debate on sports gaming — a history that included parties and cigars for lawmakers and last-minute deals that pushed gaming across the finish line.
Kansans should be deeply embarrassed by the revelations. Missouri should not repeat those errors.
The moral case against gambling is compelling. But the matter was settled long ago by Missouri’s voters, who embraced a state lottery and riverboat casino wagering a generation ago. Sports gambling, and VLTs, seem the next logical step.
But lawmakers should make sure all Missouri benefits from the practice. That means a reasonable tax rate, reasonable state revenue, and better schools for everyone.
This story was originally published December 22, 2022 7:00 AM.