Pushing for expansion of gambling in Missouri puts casinos and video operators on opposite sides • Missouri Independent
Video lottery approval would generate more than 10 times the state’s new revenue from sports betting and driving cash prize video games legality debated outside of Missouri, according to a recently updated report.
The report, prepared by Morowitz Gaming Advisors LLC and Global Gaming & Hospitality Capital Advisors LLC and paid for by companies hoping to become game sellers, estimates net government revenue at $1.1 billion over the first five years. The latest version is an updated estimate originally produced before the 2021 legislative session.
By comparison, sports betting, supporters said last week at a House Select Committee on Public Policy hearing, will generate $10 million to $15 million a year, or less than $100 million over five years. .
This is the conclusion of the report commissioned by the MO Coalition for Video Lottery.
“Based on the experience of other states that have legalized (video lottery terminals) or (video game terminals), as well as sports betting, almost all additional taxes would come from the VLT program,” the report said.
The video lottery revenue report is the latest evidence that a difficult marriage last year, which combined proposals to expand legal betting through sports betting and a state-run video lottery is now a messy divorce of solitary efforts.
It’s hard to know which idea currently has an edge with lawmakers. The sports betting bills were heard for the first time, but a vote scheduled for Monday was postponed due to issues committee members are having with some of the provisions that favor casinos and professional sports teams backing the proposal.
The vote was postponed until Wednesday.
Changes that need to be made include more money to help problem gamblers, fees on transactions that would benefit the communities where gamblers live, and caps on deductions taken before casino profits are taxed, said the representative Scott Cupps, chair of the committee.
“Any promotions can be removed before earnings are calculated, and we’d like to see some checks and balances on that,” Cupps, R-Shell Knob, said.
This year’s sports betting proposals are supported by every major sports team in the state and by all but one casino operator. The promoters didn’t want their issue to be video lottery-related and certainly want separate bills this year, St. Louis Cardinals president Bill DeWitt III said during the hearing.
“Generally what’s happened in the legislature here is that the sports betting legislation has been combined with the VLT legislation, which relates to video lottery terminals, slot machines, aka, and our friends in the casinos are very convinced that any form of VLT expansion would harm their business, and they and others have worked to kill these combined bills in previous sessions,” DeWitt said.
And video lottery proponents are doing everything they can to kill the sports betting bill.
“The legislation is a big money grab for professional sports teams, casinos and sports operators,” said Andy Arnold, lobbyist for J&J Ventures, one of the game vendors.
Proponents of video lottery games want to convince lawmakers that they are the best choice if the question is what produces the most money for state education programs. An added benefit of legal video lottery, the report says, will drive untaxed “pre-disclosure” or “gray market” machines out of business.
“We consider full-featured VLTs to be much more attractive than these ‘luckless’ machines,” the report said.
Sports betting supporters also tout legalization as a way to end illegal gambling and collect betting revenue from Missourians who travel to Illinois or other states for big events like the Super Bowl. .
“I think many of you know and are aware that sports betting takes place with impunity in the state of Missouri and much of it happens on unlicensed and unregulated apps,” said Rep. Phil Christofanelli, R-St. Peters.
Revenues from the Missouri Lottery and the state’s 13 casinos, used for public schools and higher education programs, have been nearly equal for the past five years. The lottery brought in $1.61 billion and the casinos brought in $1.56 billion.
Annual lottery revenue increased, up 11.6% in fiscal year 2021 compared with in fiscal year 2016while casino revenues remained nearly flat, up just 0.7% over the same period.
Missouri voters approved a lottery and bet on horse racing in 1984 but only the lottery succeeded. At first, profits from the lottery went to the general state revenue fund.
In 1992, voters approved a constitutional amendment direct revenue to education programs and, that same year, voted legalize casino betting along the Missouri and Mississippi rivers.
There are now thousands of lottery retailers offering a variety of games, but all games have a physical ticket.
Missouri voters also legalized other forms of gambling, bingo and rafflesto support charities and fraternal organizations.
In fiscal year 2021, which ended June 30, the lottery sold $1.8 billion worth of tickets and casinos said he took $1.7 billion in bets.
Push to add sports betting to casino offerings started after US Supreme Court struck down the federal law against betting on sports events in 2018. More than 30 states have legalized some form of gambling. These include all but Kentucky and Kansas among the eight states that border Missouri.
Under the bill being considered by the House committee, the tax rate on sports betting profits would be 10%. The tax on casino profits generated from other games of chance is 21%.
The effort to bring video lottery to the state has been spurred in part by the proliferation of unregulated machines currently in operation across the state.
Bills authorizing video lottery reserved 32% of net after prize money for state education programs and 4% for local governments. The rest is shared between game operators and sellers, after payment of administrative costs.
The report by Morowitz Gaming Advisors LLC and Global Gaming & Hospitality Capital Advisors LLC estimates that 14,000 to 20,000 “grey market” machines are in the state.
The Missouri State Highway Patrol investigated hundreds of cases, but only about 20 criminal charges were filed. The last, the St. Louis Post-Dispatch reportedwas filed in Lincoln County and charges Warrenton Oil Company Vice President Mark Baker with three counts of possession of a gambling device.
Warrenton Oil operates Fast Lane convenience stores. Baker is slated for a first appearance on April 12.
While there was a conviction at trial and a guilty plea in criminal gambling cases before the revelation, many prosecutors refused to file a complaint. Warrenton Oil, along with game vendor Torch Electronics, filed a trial last year in Cole County to prevent the patrol from continuing its law enforcement efforts.
The problem with gray market machines, Arnold said in an interview, is that they don’t generate money for education and there’s no regulation of how much of the money wagered must be returned as winnings.
“If a (video lottery bill) passes, we expect that virtually all gray area machines will be removed from the state within one year of VLT operation,” the report said.