A Missouri House committee became the first in the nation on Monday to advance a sports betting bill that includes a “royalty” benefiting the professional leagues and the NCAA — an off-the-top cut off all wagers that Major League Baseball and the National Basketball Association called at one time an “integrity fee.” The amended version also adds in a 0.6 percent “entry and facilities infrastructure fee.”
The House General Laws Committee voted 7-3 to advance the amended version of the bill, which will now move onto the House floor, though it’s not on the calendar yet. Missouri’s legislative session ends on May 17.
The bill would also permit state-wide mobile sports wagering and up to three “skins” or online brands for each certificate holder, same as in New Jersey.
Representative Cody Smith (R-District 163) pre-filed HB 119 in December, and it’s one of seven sports betting-related bills working their way through the state legislature. The bill has undergone several revisions, including the amendment altering the “entry and facilities infrastructure fee.” The bill also effectively mandates that sportsbooks pay sports leagues for “official league data” for use in connection with sports wagering.
MO sports betting tax, fees, details
The “royalty” would give professional sports leagues and the NCAA 0.25 percent of all betting handle on leagues’ respective games. The original bill called for a .75 percent royalty to the pro leagues and .25 percent to the NCAA. The “entry and infrastructure” fee would be paid to the facility that is hosting the event.
The bill’s entry and infrastructure fee is essentially taking a page from Senator Denny Hoskin’s SB 44, which requires a 0.5 percent fee to be paid to the state for upkeep and expansion of sports facilities in the state. Monday’s amendment upped the fee to 0.6. percent from an earlier 0.5 percent.
According to the latest version of the bill, the tax rate on sports wagering revenue would be set at 8 percent — up from 6.25 percent in the original version.
Certificate holders would have to pay a pretty modest $10,000 application fee for an interactive sports betting license; compared with $100,000 in New Jersey and $10 million in Pennsylvania.
With respect to data, the bill states that “a sports governing body may notify the commission that it desires to supply official league data to certificate holders,” and also allows the leagues to place restrictions on certain types of bets. Obviously, every league would notify the commission that it wants sportsbooks to pay leagues and their third parties for data, rather than rely on public-domain information and/or working with other providers of their choosing.
Another impingement? The bill prohibits prop bets on college sports events.
Untenable situation?
The combined payments that would amount to .85 percent off the top of betting handle — again, not revenue — which equates to roughly 15-17 percent of a sportsbook’s gross revenue. A sportsbook’s hold is highly variable month-to-month, but in mature markets such as Nevada, it generally will work to about 5 to 6 percent on the year.
Now consider that in other newer states to legalize, sportsbook revenue has dramatically underperformed.
NJ books held 8.3% in March…. YTD they're at 6.2%. pic.twitter.com/vRXWol1geD
— Alfonso Straffon (@astraffon) April 12, 2019
“Essentially [the bill] takes into account some of the testimony that was offered by both the casinos and the major leagues. It does a few things that will probably annoy everybody,” Committee Chair Representative Dean Plocher is quoted as saying in the Missouri Times. “I think this [bill] offers an avenue for sports gaming to be competitive in the United States to be had in Missouri.”
So here, Missouri is looking at a bill that would take .85 percent off the top — about 15-17 percent of gross revenue — to pay sports leagues a “royalty” that no other state has agreed to or found legal basis to pay, and also throw in funds for stadium maintenance projects, again benefiting private leagues and the NCAA. Separate from state taxes. And in a new state with operators still learning the local market, who knows what result.
At least one lawmaker feels the fees are too high.
“Just so that everyone understands, the tax assessment here … between the royalty fee and the stadium fee, 0.85 percent would translate to 17 percent tax rate,” Representative John Carpenter is quoted as saying in the Missouri Times. “I’m willing to support a compromise but this compromise has a 17 percent tax rate that isn’t going to go to the state.”
Stakeholders across the country have pushed back aggressively against the pro leagues’ request for a 1 percent and then the 0.25 percent payout request.
Both SB 44 and SB 222 have been on the Senate’s “Calendar for Perfection” — Missouri’s term for bills that are on the floor of a chamber and can be voted on — for some time, though neither has made it to a vote. SB 222 does not include an “integrity fee” or royalty. It allows for a 6.75 percent tax rate and state-wide mobile sports betting.
According to the fiscal note on HB 119, the state would get $1.9 million in revenue as early as Fiscal Year 2020 should the bill become law.
Correction: The original version of this story stated that the bill that advanced calls for a .75 percent fee to the professional leagues and .25 percent to the NCAA, and incorrectly stated off-site mobile sports wagering would not be permitted. The bill has since been amended to call for a .25 percent royalty to the professional leagues, and the latest version of the bill does in fact permit state-wide wagering.
