Missouri Considers Integrity Fee For Sports Leagues

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Nineteen states and the District of Columbia (D.C.) have introduced legal sports gambling or are in the process of rolling out the operation. Despite efforts by sports leagues, none of these jurisdictions have decided that pro sports deserve the integrity fee that the leagues themselves said they need to keep games fair. It seems that Missouri is the exception.

It’s lawmakers are looking at two different sports betting bills, both before the next legislative session in 2020. Both include wording that would offer a piece of each bet made to the leagues, a move that is misguided and unfair by all other states.

Senate Bill 567 (SB 567) was drawn up by Senator Denny Hoskins and authorises the riverboat casinos of the state to apply for a sportsbook licence. Each licence will cost $25,000 and for an extra $25,000, the 14 properties could also team up with an online sportsbook. Gross gaming revenue (GGR) would be taxed at 9%, and $0.25 would go to the respective league for every $100 spent on sports wagers.

Senate Bill 754 (SB 754) is Senator Tony Luetkemeyer’s brainchild and would also give the riverboats the opportunity to apply for a licence for sports gambling. The sales licence and the permit for digital activities, however, would only set the properties back $10,000 each, not $25,000 like SB 567. The state will take a tax cut of 6.25 percent of the GGR, and while the operators may like the bill’s initial provisions, the fact that SB 754 wants to give leagues a 0.75 percent royalty can stifle their excitement.

It has already been shown that the integrity fee is a losing proposal for the entire sports gambling industry. A study for the American Gaming Association provided by Oxford Economics last year found that, “The League Fee increases the effective tax rate by 16.7 percentage points, assuming a constant hold rate. For example, a state tax of 16 percent of gaming revenue, plus a 0.25 percent federal handle tax, is equivalent to an effective tax on gaming revenue of 20.2 percent. When the League Fee is added, the effective tax rate increases substantially to 36.8 percent.”

Curiously, the wording of the bill’s honesty charge may not be motivated by the pro teams in the state. The NFL’s Kansas City Chiefs, the MLB’s Kansas City Royals, and the NHL’s St. Louis Cardinals, all consider Missouri home and accepted the dignity charge when PASPA was reversed by the U.S. Supreme Court in May last year. Since then, though, they have backed up and are no longer fighting for an action piece.

This raises the question, if the leagues are not pressing for it and every other state has already rejected it, why would Missouri legislators try to include the royalty in the law?

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