Ever heard of a new way to fund schools? Missouri is voting on it! They want to legalize sports betting and use the taxes for education. Sounds great, right? But hold on, there's a catch. Some of the money sportsbooks use to attract bettors won't be taxed. That's what policymakers are debating right now.

Nearly 40 states already have some form of sports betting. Since 2018, when it became legal, states have been figuring out how to best tax this new industry. Tax rates vary wildly, from 6. 75% in Iowa to 51% in New York. Some states allow credits for promotional bets, which helps draw people in but reduces tax revenue in the short term.

Missouri's plan is to tax sports betting revenue at 10%, below the national average. But promotional bets might cut into that. The ballot measure allows up to 25% of wagers to be deducted as promotional credits, though it's unlikely this cap will be hit.

Colorado started with a similar plan and adjustments along the way. They started with a 10% tax rate and full deductions for promotional bets. But now, they’re capping those deductions. The opposite view, like what Richard Auxier from the Tax Policy Center thinks, is why not tax these promotional bets at all? Should the government encourage people to gamble through tax breaks?

The measure in Missouri was pushed by DraftKings and FanDuel, dominating the sports betting market. Caesars Entertainment, which operates some Missouri casinos, is against it. They think it'll shift betting from casinos to online apps.

Different states show different results from their tax rates. New Jersey and Illinois, both having around $12 billion in bets last year, have very different tax revenues. Illinois took in more but was still not satisfied, increasing their tax rates.

The main point is, sports betting is new, and figuring out the best way to tax it is tricky. The real question is, will Missouri's plan do what it promises—fund schools better?

Betting on a Better School? How Missouri's Sports Betting Tax Plan Measures Up

Actions