Missouri Lawmakers Want to Raise Casino Taxes and Cap Sports Betting Deductions — Here’s the Full Fight
HB 3533 would hike casino admission fees and add new gambling taxes as Missouri's income tax elimination push forces lawmakers to find new revenue. The sports betting rate increase was pulled — for now.
Missouri’s sports betting market launched in December 2025 with enormous handle but almost no taxable revenue. In its first two months, sportsbooks wrote off a combined $158.1 million in promotional free-play wagers, leaving the state with just $659,120 in total tax revenue across December and January. That number triggered an immediate legislative response in the form of House Bill 3533, sponsored by Rep. Jeff Knight (R-Camden County), and set off one of the more consequential gambling tax fights playing out in any state legislature right now.
What HB 3533 Actually Proposes
The bill has several distinct components, each with different legal and practical stakes. The most visible provision is an increase in the per-person casino admission fee from $2 — a rate unchanged since Missouri’s riverboat casinos began in 1994 — to $5.50 per two-hour period. Starting in fiscal year 2027, the Missouri Gaming Commission would adjust this fee annually for inflation using the Consumer Price Index for the Midwest Region. Over time, that indexing mechanism could produce significant revenue growth from Missouri’s 13 land-based casinos without requiring legislative action each cycle.
The original bill also included a dramatic increase in the sports betting tax rate, from the current 10% — one of the lowest in the country — to 24% on adjusted gross receipts, applied before promotional deductions. Some analyses suggested the effective combined rate under earlier draft language could reach as high as 34%. More consequentially, the bill would cap how much promotional spending operators can deduct from their monthly taxable revenue, directly targeting the mechanism that drove the near-zero tax returns in December and January. The bill would also impose a new 13% additional tax on adjusted gross receipts from traditional casino gambling games, layered on top of existing state and local taxes that already run approximately 21%.
The Sports Betting Tax Increase Gets Pulled — For Now
At a public hearing in the Crime and Public Safety Committee on April 28, 2026, Committee Chairman Jeff Myers stated plainly that the sports betting tax increase “has been taken out of this.” That came in response to testimony from the Missouri Gaming Association, which argued that changing the sports betting rate through legislation would be legally problematic. The constitutional amendment approved by voters in November 2024 that legalized sports betting specified the 10% rate and allowed for promotional deductions. The Gaming Association’s representative argued that altering those terms would require a return to voters rather than a simple legislative action. No one testified in favor of the bill, and representatives from both the Missouri Gaming Association and the Missouri Chamber of Commerce opposed it.
Despite the pullback on sports betting, the casino admission fee increase and the new gambling receipt taxes remain in the bill. HB 3533 is not on the House floor calendar, and with the legislative session winding down it faces long odds of passage this session. However, its sponsors have made clear the underlying revenue pressure that created it has not gone away.
The Income Tax Elimination Problem
The deeper story behind HB 3533 is Governor Mike Kehoe’s proposal to eliminate the Missouri state income tax entirely. Income tax currently accounts for roughly two-thirds of the state’s general revenue. If voters approve that elimination, Missouri would need to find hundreds of millions — ultimately billions — in replacement revenue. The options are largely constrained to sales taxes, property taxes, and sin taxes. Sports betting and casino gambling are politically easier targets than food or medicine.
One gaming analyst quoted in media coverage framed the situation directly: “The ballot measure would give the legislature broad leeway to tax anything. So sportsbooks would be the very first thing I’d tax, if I’m a politician.” That dynamic means even if HB 3533 dies this session, versions of it will return in future sessions with more urgency and potentially broader political support.
Missouri sports betting launched with strong handle — over $543 million in handle in December alone — but the early tax picture has been bleak. The state saw $521,000 in tax revenue in December 2025 despite that volume, and the situation only marginally improved in subsequent months as promotional deduction allowances began to normalize. For operators, the generous promotional deduction structure they secured in the ballot campaign is now the central political liability.
Operator and Bettor Implications
For bettors in Missouri, the most direct implication of a successful tax hike would be reduced promotional generosity. Operators facing higher effective tax rates reduce costs where they can, and promotional budgets are typically the first adjustment. The generous welcome offers and ongoing reload promotions that characterized Missouri’s launch period would likely compress significantly if the effective tax burden increases. Bettors who want to understand the current sports betting landscape in Missouri should watch this legislation closely — it is the single biggest variable in how the market develops over the next two years.
For operators, the legal question around constitutional constraints on legislative changes to voter-approved ballot terms is the more existential concern. If legislators can modify tax rates and deduction rules through simple majority votes, the security operators thought they negotiated into the ballot language evaporates. That precedent, if established in Missouri, would put ballot-approved sports betting frameworks in other states at risk as well. The Missouri Gaming Association’s argument — that changes would require another voter referendum — is the position the industry will fight hard to maintain.
The casino admission fee increase is a separate, less legally complicated matter and is more likely to advance. A $2 fee last set in 1994 is an easy inflation-adjustment argument to make. Whether the broader tax package survives, the admission fee hike may well represent Missouri’s first significant revenue extraction from its gambling sector in decades, with more almost certainly to follow as the income tax debate intensifies.