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Missouri sports betting is already facing tax questions only months after launch. Early revenue for the state came in lower than some critics expected, and a proposal to raise the tax rate is now stuck after lawmakers removed it from a scheduled hearing.
Good to Know
Missouri launched legal mobile and retail sports betting on Dec. 1, becoming the newest state to open a regulated market. Betting volume came out strong. Per-capita handle has ranked among the highest seen for a new market in its first three months, and major sportsbook executives have spoken positively about early customer participation.
Yet the tax story looks very different.
A bill that would raise taxes on sportsbook revenue lost ground Tuesday after lawmakers pulled it from a scheduled hearing. That leaves the proposal in a weak spot, especially with the 2026 legislative session set to end next month.
Rep. Jeff Knight introduced the measure. It would add another 24% tax on sportsbook gross gaming revenue on top of the 10% rate already written into the Missouri constitution through the 2024 ballot measure that legalized sports betting. If passed, Missouri would jump to a 34% effective rate, putting it near the top tier among the 31 states with legal mobile sports betting.
The bill also targets promotional deductions, which sit at the center of the debate. Missouri operators can subtract free bet offers from taxable revenue, and that has cut deeply into what the state can collect. Since launch, the eight legal sportsbooks have deducted more than $1.2 billion from tax calculations, a figure that sits just above the amount wagered over the same period.
That setup helped keep early tax returns low. FanDuel posted an adjusted net tax loss of $2.1 million, while DraftKings posted an adjusted net tax loss of $15.8 million. Together, those two brands handled about 74% of all betting in Missouri, but deductions meant neither owed taxes in the first two months of legal wagering.
Critics now point to those numbers as proof that the market structure gives too much room for operators to lower tax bills during launch. Supporters of the current setup argue that heavy promo spending is normal in the early stage of a new sports betting market and usually fades after the customer acquisition race cools down.
So far, the trend supports that argument at least in part. Promotional spend has dropped each month since launch. February, the latest month reported, brought in nearly $1.2 million in tax revenue by itself. Industry projections now point to monthly tax revenue topping $2 million by September.
Still, that has not settled the political issue. Missouri voters approved ballot language that locked in the 10% tax rate and preserved promotional deductions. DraftKings and FanDuel spent nearly $30 million to support that campaign, and opponents of the current model keep using that figure to question how the law was designed.
Knight did not explain why the bill was pulled before the public hearing. No new public timeline exists for when the measure could return. Before any change can become law, the bill still needs a committee vote, then approval from the full House and Senate.