Missouri Sports Betting Update With Sen. Denny Hoskins: Will the Show-Me State Get Wagering in 2024?

For the past several years, sports betting legislation in Missouri has largely hinged on the state’s legal status of video lottery terminals (VLTs). These electronic gaming machines offer various games (like slots) and are usually located in establishments like bars and convenience stores.

While most Missouri state senators and local professional sports franchises advocate for a sports betting bill that does not include a clause legalizing VLTs, Sen. Denny Hoskins has pushed back — asserting that the state is missing a $250 million opportunity.

Lineups sat down with Hoskins — author of SB824 — to get his insights on why the legalization of VLTs is so important for Missouri.

What Do VLTs Have To Do With Sports Betting

The two competing sports betting bills in Missouri right now are Sen. Tony Luetkemeyer’s SB852 and Hoskins’ SB824. There is also a sports betting ballot initiative backed by Missouri’s sports teams currently collecting signatures in hopes of getting sports betting on the ballot in November. While all three proposals would legalize online and retail sports betting at the state’s riverboat casinos, only Hoskins’ SB824 would legalize VLTs.

With Luetkemeyer and other Missouri senators unwilling to embrace VLTs and Hoskins unwilling to exclude them, sports betting legislation has stalled in the Show-Me state.

There are various reasons for resistance to VLTs, ranging from accessibility concerns to a lack of supervision. Some lawmakers simply say that the two subjects should be considered separately. No group, however, has been more outspoken about their opposition to VLTs than casinos.

Casinos’ primary concern is that VLTs would function as a direct competitor to their business model by allowing people to access casino-style games in casual establishments.

There are likely too many opponents of VLTs for them to pass on their own, meaning that sports betting legislation likely serves as the best vehicle for Hoskins and other VLT proponents to create this regulated market.

Hoskins’ Case For VLTs, What it Means For Missouri

Hoskins’ support for VLTs largely derives from the tax opportunity it presents.

Currently, thousands of VLT-type machines, commonly called “gray market machines,” can be found in truck stops, convenience stores, bars, taverns, and fraternal organizations throughout Missouri.

“Some people believe that these are legal, and then some people believe that they are illegal, but they have definitely proliferated the state,” Hoskins told Lineups in an interview.

Hoskins proposes replacing these unregulated machines with regulated ones that could be taxed at a market rate.

“There are some estimates that there might be 20,000 of these machines, that are unregulated by the state of Missouri, currently floating around in these types of businesses.” Missouri does not get any revenue without proper regulations like they would for traditional state-regulated lottery games.

“If we were to legalize some sort of video lottery terminals, tax them at 32%, and put some reasonable regulations on them, they would bring in over $250 million to the state of Missouri,” Hoskins said.

Can VLTs Prevent Missouri Taxpayer Liability?

All tax revenue generated from gaming in the state of Missouri is required to go towards education, per the Missouri Constitution. However, Hoskins believes that sports betting by itself will have minimal impact from a tax revenue standpoint. He said that Missouri sportsbooks could bring in as much as $30 million in revenue to the state or as little as $0.

Whether a casino or sportsbook gives $30 million to the state or $0, they would still walk away with millions in their pocket, which is something Hoskins takes issue with.

“There are some instances, in some of these bills, where basically the state – or these casinos and other entities affiliated – would, by the time they took off the business deductions, would pay $0 in taxes to the state,” Hoskins said. It’s worth noting that in Luetkemeyer’s bill, operators can deduct 100% of their promotional spending from their gross gaming revenue in their first year; however, this will be scaled down to zero percent by the fifth year of operation.

That specifically becomes a problem when addressing the issue of problem gambling in the state, which Hoskins said needs a minimum of $10 million in funding according to professionals and professional organizations that he has spoken to. According to Hoskins, Missouri taxpayers would be liable to fund that $10 million if sportsbooks don’t generate enough money to do so.

“Unfortunately, it appears that this version is meant to make the casinos richer and put a burden of dealing with problem-compulsive gamblers back on Missouri taxpayers,” Hoskins said. Casinos “need to have some skin in the game, too, and make sure that they address any problems that they create.”

With the addition of VLTs, Hoskins thinks, the revenue generated will be so much greater that Missouri taxpayers won’t be on the hook for something they otherwise would be. He also would like to see more funding for veterans, which the other two initiatives do not include.

Missouri Veterans, A Big Motivator

“Veterans are very important to me and very important to my district,” Hoskins, a resident of Johnson County, said. Johnson County is home to the Whiteman Air Force Base, which houses the B-2 Stealth Bomber.

Hoskins’ bill is called the Honoring Missouri Veterans and Supporting Missouri Education Act, and he intends to do just that. While any tax income or revenue from gaming must be attributed toward education, license application fees, and other administrative fees can be collected and put toward veteran-related causes. He believes that around $30 million of the estimated $250 million in revenue from VLTs can be used to fund veterans’ homes and cemeteries.

This revenue stream has steadily declined over the last few years.

The Missouri Gaming Commission collects a minimum two-dollar admission fee from the casino anytime a patron walks through one of the 13 riverboat casinos in the state. Veterans’ homes and cemeteries get a percentage of these admission fees. Accordingly, the more people that come to casinos, the more money veterans receive. But it also works the other way.

“We’ve seen a decline in the number of people that have actually gone into the casino,” says Hoskins. “And so in the current year, we had to supplement the veterans’ homes and cemeteries budget by about $50 million of general revenue because the amount of revenue coming in from the dedicated funding source of those fees has declined.”

Were Hoskins’ SB824 to pass sports betting bill/VLT to be passed — legalizing sports betting and VLTs in the process — funding for the veterans home would no longer need to come from the general fund. Until a compromise can be reached, however, things will likely remain as they are for the rest of 2024