Missouri Legislators Want to Triple the Sports Betting Tax Rate — Here’s What Bettors Need to Know

Missouri barely had time to celebrate its sports betting launch before legislators started eyeing the state’s tax structure. The Show-Me State went live with legal sports wagering on December 1, 2025, drawing over 2.6 million login attempts on opening day alone. Now, just a few months in, House Bill 3533 has proposed raising the sports betting tax rate from 10% to a level that could effectively reach 34% — a move that has already generated significant pushback from the industry and prompted a turbulent legislative hearing.

What HB 3533 Actually Proposes

The bill, sponsored by state Rep. Jeff Knight (R-Camden County), takes aim at what some legislators see as a revenue gap between what Missouri voters envisioned when they approved Amendment 2 in November 2024 and what the state is actually collecting. Missouri’s first month of legal sports betting told a stark story: online sportsbooks reported a combined adjusted revenue loss of $21.6 million in December 2025, largely because operators like DraftKings and FanDuel spent aggressively on promotional free bets to acquire customers. Under the current structure, those promotional deductions reduce taxable gross gaming revenue to near zero in early months.

HB 3533 attempts to solve that problem in two ways. First, it would add a 24% tax on adjusted gross receipts from sports wagering on top of the 10% rate already embedded in the state constitution via Amendment 2, bringing the combined effective rate to 34%. Second, it would cap how much operators can deduct for promotional free bets when calculating their taxable revenue — another blow to the promo-heavy acquisition model that currently dominates the market.

The Legislative Reality So Far

The bill has not had smooth sailing. A public hearing before the Crime and Public Safety Committee saw zero witnesses testify in favor of the proposal. Representatives from both the Missouri Gaming Association and the Missouri Chamber of Commerce testified against it. Committee Chairman Jeff Myers indicated at the April 2026 hearing that the sports betting tax increase portion of the bill “has been taken out of this,” suggesting the sports betting-specific provisions are unlikely to advance as written.

There is also a deeper constitutional question at play. The 10% tax rate and promotional deductions were written directly into the Missouri Constitution as part of Amendment 2, which passed by a razor-thin margin of around 50.05% to 49.95%. Any modification to those provisions likely requires another statewide voter referendum, not just a legislative vote. Missouri Gaming Association representatives made exactly that argument in testimony, suggesting that even if the bill advanced, it could face legal challenges.

The Missouri 2026 legislative session is set to conclude next month, leaving very little runway for the bill to move through both chambers even if it were to gain traction.

What It Would Mean for Bettors If It Passed

For context on how dramatic a 34% effective rate would be: Missouri’s current 10% rate already ranks 20th among the 40 states with legal sports betting. If the full proposal took effect, only states like New York, Illinois, Pennsylvania, and a handful of others with rates north of 36% would be higher. In New York, where the effective rate sits at 51%, sportsbooks routinely offer thinner lines, stingier promos, and fewer competitive odds than in lower-tax states.

That comparison matters for everyday Missouri sports betting participants. A higher tax burden gets passed through the system in a few ways. Operators in high-tax states tend to reduce promotional spending on existing customers, widen their vig on standard lines, and pare back loyalty rewards programs. New user welcome bonuses — which were remarkably generous at Missouri’s December 2025 launch — would likely shrink as operators try to protect margins in a market with tighter economics.

Missouri is a brand-new market with enormous growth potential. Analysts project roughly $4 billion in annual handle once the state matures. The major operators, FanDuel and DraftKings, are expected to control approximately 75% of the market between them. If a major tax increase caused either to scale back operations or reduce promotional activity, it could also affect market competition — and when competition softens, the odds bettors receive tend to follow.

The Bottom Line for Missouri Bettors

Right now, this bill appears more likely to die in committee than to become law before the session ends. The sports betting provisions may already have been informally stripped from the proposal, and the constitutional hurdles are real. Missouri bettors should keep an eye on this, but there is no immediate reason to change behavior or rush to lock in bonus offers out of fear that promos are going away tomorrow. The more realistic near-term concern is how the first few months of revenue data shape the state’s next legislative push — because if Missouri is not generating meaningful tax dollars, proposals like HB 3533 will keep coming back in one form or another.