Missouri Lawmakers End Proposed Sports Betting Tax Increase

Missouri bill moves forward minus sports betting tax increase

The proposed tax increase was part of Missouri House Bill 3533 (HB 3533). It would have hiked taxation on sports betting by more than three times the original rate.

"There will be a tax imposed on the adjusted gross receipts from sports wagering at 24%," the bill originally read. "The taxes imposed will be returned to the Commission in accordance with the Commission’s rules and regulations, who will then transfer those taxes to the Director of the Department of Revenue."

In dropping the tax increase, some state lawmakers suggested that the reasoning behind the decision was that they wanted a greater available database to analyze before making such a dramatic change to the sports betting tax rate. It's only been five months since Missouri began offering legal and regulated sports betting.

Tax revenue taken from Missouri sports betting sites goes to help fund public education in the state.

A sportsbook can deduct promotional funds from tax revenue

The Missouri Gaming Commission recently filed its fiscal year report for 2026. That report showed the total sports betting handle in the state to be in excess of $1.5 billion. Yet taxes paid by sports betting sites during this time frame only added up to $3.6 million, which is just 0.24% of $1.5 billion.

So what gives?

Under Missouri regulations, offering legal and regulated sports betting, sportsbooks are permitted to deduct all bonus bets offered as a promotional tool from their tax liabilities. When a state is new to sports betting, like Missouri, with its December 1, 2025, launch, promotional activity among sports betting sites is plentiful. Bonus bet incentives are a key method for getting new players to sign up with a sports betting site.

Minus the sports betting tax increase, the Missouri gaming bill passed

After eliminating the sports betting tax hike from HB 3533, the bill moved forward. The Missouri Crime and Public Safety Committee voted 9-7 in favor of HB 3533.

Missouri's government leaders are looking at a sports betting tax increase as a method of offsetting lost federal funding. Cuts are coming in key areas such as Medicare and Medicaid. Illinois, Ohio, and Massachusetts have already increased the sports betting tax in those states. Michigan has proposed doing likewise.

However, some lawmakers questioned whether the state General Assembly had the power to arbitrarily increase the tax on sports betting. They noted it was legalized via statewide referendum.

“I’m becoming increasingly concerned with gambling,” Democrat Senator Stephen Webber told the Missouri Independent. “I think that sports gambling is probably more impactful in a negative way than, five or six years ago, I thought it might be.

"I certainly am sympathetic to the revenue argument, but at some point, like, the state can’t just be built on sin taxes.”

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