How lucrative would sports betting be in Missouri?

In May 2018, a 6-3 decision from the Supreme Court of the United States struck down a 1992 law that banned sports betting in every state except Nevada, which was grandfathered in.

The ruling now lets states decide how to handle sports betting, and some were quick to legalize the practice.

But Missouri was not of those fast-acting states.

While some Missourians have participated in sports betting throughout the state, it is still illegal because the state has not passed legislation to allow it.

State Sen. Denny Hoskins, R-Warrensburg, is sponsoring Senate Bill 44 that would allow people to place bets on the Chiefs, Royals, Cardinals and other sports teams.

According to Hoskins, "Revenues for the state would include a total of $12.5 to $30.9 million dollars." Hoskins has told the estimated revenue amount to several news outlets across Missouri.

In that total, he included revenue from sports betting on mobile devices, something not all states with legalized sports betting allow.

We wanted to know what supported Hoskins’ statement that his bill would bring up to $31 million in state revenue.

Because sports betting has not been legalized in the state, it’s not clear how many people would participate.

"It’s a gamble on how many people bet, how much they bet and how often they bet," Hoskins said.

"The reality is people are going to gamble whether it's legal or not," sports betting expert and author of The Predictive Casinos and The Predictive Sports Book, Andrew Pearson said. "However, centralizing the gambling makes for a better product."

When we asked Hoskins about his figures, he directed us to the fiscal note for the bill. Hoskins is a member of the Committee on Legislative Research Oversight Division that drafted the fiscal note.

To estimate how much money sports betting would bring in, the committee used data from Mississippi to see how it would translate to Missouri. According to Betting USA, Mississippi houses the third largest betting region in the country, behind Las Vegas and Atlantic City, despite not allowing online sports betting.

The fiscal note provided by Hoskins said that Missouri Gaming Commission officials annualized Mississippi's total revenue from sports betting and found the sports betting revenue was 2 percent of its total gaming revenue.

The committee assumed that Missouri’s sports betting would also be 2 percent of its gaming revenue. If Missouri includes mobile sports betting, the revenue would more than double. Looking at Mississippi’s projections, the committee anticipates the state would "bring home" $13 million, but it did not address the $30.9 million Hoskins estimated.

Officials from the Missouri Gaming Commission also estimated this bill would "increase total state revenue by approximately $13 million annually," but did not include the higher number Hoskins estimated.

Based on the committee’s estimates and the proposed bill, the state would make $6.7 million on fees and $6.3 million in taxes on wagers with a tax rate of 12 percent, plus fees of 2.5 percent — bringing the total revenue to $13 million for Missouri.

However, the committee estimates that number will drop to $12.7 million every year after because casinos only pay "initial license fees" the first time they decide to operate as a sports betting facility.

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Officials from the Department of Revenue also gave an estimate of how much revenue sports betting would bring in to Missouri, assuming online sports betting is legalized, using a study, Economic Impact of Legalized Sports Betting, from Oxford Economics. The American Gaming Association hired Oxford Economics to study the potential economic impacts of legalized sports betting in the US. The DOR used this study to measure the impact for all 50 states. The study takes into account illegal sports betting that is already happening in Missouri, along with how many places in Missouri are available to house sports betting if it’s legalized.

This study estimates Missouri would make an estimated $29,319,000 to $36,728,500. These numbers support Hoskins higher-end estimate.

TheLines has a list of the seven states that currently allow sports betting (but not all allow online sports betting):

• Nevada

• Delaware

• New Jersey

• Mississippi

• West Virginia

• Pennsylvania

• Rhode Island

We took a closer look at Pennsylvania’s experience with sports betting so far to see what state revenue is like there. Pennsylvania is a larger state with a higher tax rate on sports betting.

According to PlayPennsylvania, Pennsylvania residents have spent $71.8 million in about four months. The state’s tax rate is 36 percent, triple the rate proposed in Missouri

Doug Harbach, Pennsylvania’s Gaming Control Board’s communications director, said that after paying out winning amounts, Pennsylvania has earned $1.9 million in about four months with six places across the state for people to gamble. The fiscal note estimates there will be at least five locations that would allow sports betting.

Harbach said Pennsylvania’s figures are expected to jump because they "are working on a launch of online sports wagering. So, these early revenue figures are expected to escalate significantly this year."

He also said he cannot make a judgment on if Hoskins’ projected figures are reasonable, but suggested looking at Pennsylvania’s figures for an idea.

If Pennsylvania’s figures do not jump as Harbach explained, the state would make $5.7 million from sports betting in one year.

This experience casts doubt on the estimates from Missouri. Pennsylvania’s population is two times Missouri’s and the tax rate is three times the proposed rate for Missouri, but the total estimates for the first year of sports betting are less than half of Hoskins’.

Hoskins said, "Revenues for the state would include a total of $12.5 (million) to $30.9 million dollars," if sports betting were allowed in Missouri.

While it is unclear exactly how many people would participate or how much revenue sports betting could bring in, estimates from other states don’t support the higher end of Hoskins’ range. However, calculations including online sports betting do support the higher estimate.

We rate this statement as Half True.