Missouri sports betting ballot measure highlights national debate about tax rates
Missouri voters are considering whether to make the state the 40th jurisdiction to legalize sports betting
JEFFERSON CITY, Mo. — The ads promoting a ballot measure to legalize sports betting in Missouri tout the potential for millions of new tax dollars devoted to schools. If voters approve the measure, it's a good bet they will see even more ads offering special promotions for bettors.
Many of those promotional costs — in which sportsbooks provide cash-like credits for customers to place bets — will be exempt from state taxes, effectively limiting the new revenue for education.
The Missouri ballot measure highlights an emerging debate among policymakers over how to tax the rapidly growing industry, which has spread from one state — Nevada — to 38 states and Washington, D.C., since the U.S. Supreme Court opened the door to legalized sports wagering in 2018.
“It’s a fledging industry,” said Brent Evans, an assistant finance professor at Georgia College & State University who has taught classes on gambling. «So nobody really knows what is a reasonable tax.”
Since authorizing sports betting, Illinois, Ohio, Tennessee and Washington, D.C., all have already raised or restructured their tax rates. And Colorado and Virginia have pared back the tax deductions they originally allowed.
Tax rates range from a low of 6.75% in states such Iowa to 51% in states such as New York. That tax gap is even wider, because Iowa allows promotional bets to be deducted from taxable revenue while New York does not.
About half the states allow tax deductions for promotional costs. It's a common way of enticing people to start — or continue — making bets. But in the short-term, it also can decrease the tax revenue available for governments and
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