A representative of Penn National Gaming raised some eyebrows at a hearing on Missouri sports betting on Tuesday by referring to in-person registration requirements as a good practice he recommends for the state.
Penn National recently spent $163 million to buy a 36% stake in Barstool Sports. The deal provides sole rights to use the Barstool Sports brand for online and retail sports betting and online casino products.
Requiring people to trek into a casino to create a mobile MO sports betting account would seem to limit the potential advantage of having a popular online brand.
“That is something that we’ve seen work really well,” said Todd George, executive vice president of operations for Penn National. “It’s a middle ground for us.”
In-person registration is currently required only in Nevada and Iowa, while pending in Illinois. Illinois and Iowa have a sunset period of around 18 months on the requirement. Penn National operates casinos in all three states.
Lawmaker pushes back on in-person registration
Rep. Dirk Deaton pointed out that some Missourians live up to four hours from one of the riverboat casinos, which would create a significant burden for them to participate in a legal activity.
“So you’re unnecessarily excluding those people from something that’s going to be allowed within the state,” Deaton said. “It seems like the opportunity ought to be equally accessible to all Missourians that are eligible.”
Deaton pressed that if Penn National would oppose a Missouri sports betting bill without an in-person requirement. George said the company would not.
“That’s an absolutely excellent point, and I think every jurisdiction is going to be different based just on geographic dispersion,” George said.
Although there was some confusion in the committee, neither bill discussed at Tuesday’s hearing in the House Special Committee on Government Oversight appears to have language requiring in-person registration.
Missouri sports betting bills become more alike
The two MO sports betting bills discussed in the committee were H 2318, Rep. Phil Christofanelli’s legislation that is the most industry-friendly of six sports betting bills introduced in the state, and Rep. Cody Smith’s H 2284.
Smith, who chairs the House Committee on Budget, offered one of the few bills nationally to include both an integrity fee and official league data mandate to give professional sports leagues two pieces of the pie.
However, he indicated that a committee substitute would remove the integrity fee.
This leaves the only major differences between the two bills as the tax rate (9% for H 2284 and 6.75% for H 2318) and official league data. Fiscal notes released by the Committee on Legislative Research Oversight Division projected that legal sports betting would generate between $202 million and $253 million in adjusted gross receipts.
The report estimated Smith’s bill would produce between $16.3 million and $20.5 million for the state and an additional $1.8 million to $2.2 million for local dock cities annually. Christofanelli’s lower tax rate is estimated to bring between $12.2 million and $15.3 million to the state and $1.3 million to $1.7 million to local dock cities.
Industry supports Christofanelli sports betting bill
Both George and Mike Winter, the executive director of the Missouri Gaming Association, spoke in favor of H 2318 and against H 2284.
Winter indicated that removal of the integrity fee took away a great deal of their opposition toward H 2284. However, they still found the data provisions problematic.
George indicated that he wasn’t aware of any problems related to data in states that don’t require the use of data from one source. He noted that Nevada has been offering sports betting for decades without such a requirement.
Winter’s concerns were not appeased by the caveat for data to be offered on “commercially reasonable” terms.
“I think we end up litigating things like that to try to determine what is a reasonable rate,” Winter said.
Teams and leagues testify for official data
Representatives for Major League Baseball, the NBA, PGA, St. Louis Blues, St. Louis Cardinals, and the Kansas City Chiefs offered their support for H 2284, citing its inclusion of the official league data mandate.
Christofanelli explained why he did not include such a requirement in his bill.
“It’s my belief that the free market can figure out how to distribute data across the casinos,” Christofanelli said. “And I think if you look at casinos across the country, most of them are using this official league data anyway.”
Other MO sports betting issues discussed at hearing
Rep. Jon Carpenter asked if the industry representatives would be comfortable with the tax rate increase to between 12%–15%.
Neighboring Iowa taxes sports betting at 6.75%. However, Illinois plans to be at 15% and Tennessee will begin at 20%.
George said a lower tax rate will help Missouri be competitive with other states. He noted that some Missourians do have the option to conveniently cross a border to place their bets.
“What typically happens is the higher-tax state cannot engage in marketing battles so they will lose out to the lower-tax states,” George said.
Rep. Peter Merideth contended that every other major expansion of gambling in the state has gone in front of voters. Merideth said he needs to be convinced why sports betting in Missouri shouldn’t also require a referendum.
The hearing ended without any action taken on the bills.