Hopes fading for Missouri sports wagering bill to pass this year

Dispute over addition of video lottery leads to impasse in Missouri Senate, puts fate of legislation in jeopardy
Sports Betting
Posted at 1:22 PM, Apr 30, 2022
and last updated 2022-04-30 14:22:39-04

The odds are growing longer on whether Missourians will be able to bet on Kansas City Chiefs games from within the state this year. 

And if Kansas Gov. Laura Kelly signs a sports wagering bill passed early Friday, the odds of the Chiefs jumping the state line to a new stadium will grow shorter.

Wednesday began with the Senate galleries jammed with dozens of lobbyists representing casino operators, professional sports teams and video gaming companies. They were primed for a debate but would have to wait seven hours for it to officially begin. 

By the next day, many of those lobbyists, and the legislators working to move a House-passed sports wagering bill through the faction-fractured Senate, were writing its obituary. To be reanimated before the session ends May 13, some path must be found around an impasse over how much new gambling will be allowed in the state.

Casinos don’t like the provisions allowing the Missouri Lottery to place video gambling machines at fraternal clubs, veterans halls and truck stops. Video lottery advocates don’t want the casinos to get a new source of revenue if they aren’t included. And the companies that have placed thousands of unregulated machines targeted as illegal gambling devices by some prosecutors would prefer that nothing pass at all because it might make it tougher for them to do business.

Sen. Denny Hoskins, R-Warrensburg, has filed a bill to authorize video lottery games in each of the six years he has been in the Senate. While the chamber and the interest groups waited Wednesday for the debate, Hoskins and Sen. Dan Hegeman, who is handling the sports wagering bill, negotiated.

What emerged was legislation that includes the sports betting provisions approved in the Missouri House, albeit with a small bump in the tax rate to 10% from 8%. It would also authorize 5,000 video gambling terminals operated by the Missouri Lottery.

“Sen. Hegeman and I worked in good faith to come up with a compromise,” Hoskins said Thursday. “What was in the bill was the minimum I would take.”

When Sen. Mike Bernskoetter, R-Jefferson City, tried to strip out the video lottery provisions, it triggered a filibuster that ended three hours later with tempers frayed and nothing resolved. 

Since the U.S. Supreme Court in 2018 struck down the federal law against wagering on sporting events, more than 30 states have legalized some form of the gambling. If Kelly signs the Kansas bill, which sets aside 80% of new revenue for a professional sports facility to lure the Chiefs, only Kentucky of the eight states adjoining Missouri would not have legal sports wagering.

In the weekly leadership news conference, Senate Majority Leader Caleb Rowden lamented that “we just bring up the rear on a lot of stuff in this state.”

This session has seen the worst factional fighting within a Senate majority in memory, with a seven-member conservative caucus tying up the chamber for weeks on congressional redistricting and blocking or delaying action on numerous other bills.

“It is frustrating and I always say that the common sense stuff in this building, you know, usually has the hardest time getting across the finish line,” Rowden said.

The leaders of both parties agreed Thursday that sports wagering is generating immense public interest. Rowden, who lives in Columbia, said he hears “as much about…sports betting as anything else.” 

It is “the No. 1 question I get at any gathering,” said Senate Minority Leader John Rizzo of Independence. 

Some of the opposition to the bill comes from lawmakers who don’t want to expand gambling at all. But that opposition is not powerful enough to stop the bill. Those who are demanding that the bill include video lottery games argue that sports betting only helps the casinos and major sports teams while their provisions help small businesses, fraternal and veterans organizations.

“Unfortunately, the casinos couldn’t live with anybody else having a piece of the gaming pie as well,” Hoskins said.

Hoskins has also sponsored sports wagering bills in each year since the Supreme Court ruling. But he was not happy with the House-passed bill. 

It is the product of negotiations between the casino operators and professional sports teams. It gives six professional teams a cut of the action with official branded betting platforms and provides up to six betting platforms for each of the licensed casino operators to sign up patrons of their other games.

It is expected to generate about $10 million in additional revenue for the state from the 10% tax.

The state’s net revenue from video lottery is expected to be much larger. Hoskins’ bill, which anticipated up to 12,500 terminals within four years and included bars among the venues that could offer the games, anticipated revenues well in excess of $100 million annually.

Bars could not offer video lottery games under the bill debated Wednesday evening, which limits the terminals to 5,000 in all, with seven per location in truck stops, fraternal and veterans clubs and the entertainment districts around sports venues where the six major professional teams play.

Sen. Karla May, D-St. Louis, helped Hoskins with the filibuster Wednesday against Bernskoetter’s amendment to strip out the video lottery provisions. She wanted more, she said Thursday, because video lottery terminals would be a good new revenue source for small business owners, such as the neighborhood bars in her district.

“Both of them need to be together,” May said in an interview. “We need to do it all at once.”

On the floor, Hoskins accused Bernskoetter of trying to torpedo the bill at the request of casino lobbyists. Bernskoetter said he was trying to restrain the growth of gambling.

“I really don’t think we should be putting slot machines all over the state,” Bernskoetter said.

Sports wagering is the biggest expansion of gambling in Missouri since casinos were authorized by a statewide vote in 1992, May said. There is enough money being spent on gambling for many to share, she said.

“You ain’t going to stop the devil and his vices but what you can do is turn some of it into good,” May said during floor debate.

The biggest unknown in the Missouri gambling economy is how much is being spent on video games that offer cash prizes that have proliferated in bars, truck stops and convenience stores in recent years. The machines are called “no chance gaming” by vendors who claim a feature allowing a player to determine if they will win before risking their money makes them legal.

But opponents consider them illegal and there have been a couple of successful prosecutions, most notably in Platte County where seized machines were publicly destroyed last year. But most prosecutors are reluctant to file charges despite hundreds of cases referred to them by the Missouri State Highway Patrol.

Taxes on legal gambling provided about $670 million to support public schools and higher education in the most recent fiscal year, with the lottery supplying slightly more than half of that amount. 

Both are growing, with the lottery expected to produce almost 13% more in the coming year. Casinos turned over almost 9% more in taxes during the first nine months of the current fiscal year than the same time frame for fiscal 2019, the last comparable period because of the COVID-19 pandemic.

The casinos accept the diversion of money from their slot machines to the ‘“no chance gaming” machines because while admissions are down 21% from the first nine months of fiscal 2019, each person visiting a casino is, on average, losing more money.

The bill debated Wednesday includes provisions barring any location that hosts video lottery games from also offering the “no chance gaming” machines. The owner of any location who did so in violation of that ban would be committing a felony.

Casinos don’t want video lottery because no one knows how much money is being spent in unregulated machines, said Andy Arnold, a lobbyist for J & J Ventures, a vendor for video lottery games.

“They say, ‘we are OK with having that out there because we know the legal option would grow,’” Arnold said. “The legal option would grow and it would replace the illegal machines.”

No sports wagering bill will pass the Senate without video lottery language, Hoskins promised during Wednesday’s debate. His bill for sports wagering, with a 21% tax rate, would produce $163 million in revenue for education, he said.

“I have 153 amendments,” he said, “one for each million dollars difference in revenue that I am prepared to offer on the sportsbook language.”

Missouri Independent is part of States Newsroom, a network of news bureaus supported by grants and a coalition of donors as a 501c(3) public charity. Missouri Independent maintains editorial independence. Contact Editor Jason Hancock for questions: Follow Missouri Independent on Facebook and Twitter.

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