®RM75¯®FC¯COL21.MDH - Missouri's Gaming Tax Trend Focuses On Fantasy
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Final action on major bills is often left until the end of legislative sessions, and this was especially true in Missouri's 2016 session. With a range of pending proposals encompassing issues from photo voter ID to union payroll deductions and a tax boost for highways, some seemed a bit surprised when Gov. Jay Nixon cited regulation of online fantasy sports gambling as his priority going into the last week.
Perhaps it is not so surprising. Nixon called for the regulation of these online wagering gambits in his state-of-the-state message. And, these games present the latest in decades of temptation for Missouri to get a piece of the action when it comes to gambling.
There's an old joke that contends stealing is illegal because government doesn't like the competition. It would be a stretch to equate legalized "gaming" in Missouri to stealing -- but not much of one.
Gaming -- that's what we call it because "gambling" is still illegal in Missouri -- has a long and twisty legislative history that dates to the early 1980s.
Following taxpayer revolts at the state level -- such as Prop. 13 in California and the Hancock Amendment in Missouri -- states found themselves strapped for cash. When one state muscled in on the previously illegal gaming rackets, others followed lest some of their swag be siphoned off by their nefarious neighbors.
In Missouri, it began with legalizing bingo by charitable organizations... then a lottery and pari-mutuel wagering. Most folks call that horse racing and it never paid off here.
Then the state moved into riverboat gambling -- sold to voters in a pitch of romantic steamboats plying the great rivers as in days gone by, all to help the children. The reality was casinos with ditches around them built next to rivers. Imaginary "cruises" required would-be gamblers to wait until the ship returned to a dock it never left, and their losses were limited. It didn't take long for the imaginary cruises and loss limits to go by the way.
Then, Missouri got rid of the restrictions on advertising and jacked up jackpots by joining with other states in multi-state lotteries.
Capitol pundits referred to legalized gambling as a tax on people who are bad at math. They are correct. A statistical trait called "regression of scores toward the mean" dictates that when the odds favor the house -- and in gambling they always do -- the more you play the more you lose.
When voters first approved gaming, all proceeds were to go toward education. Many thought this would solve education's need for additional funding. But it was not enough. Even a subsequent constitutional amendment dictating that all gaming proceeds go to schools still didn't match the growing demand. But it may have actually made it tougher to get more traditional funding methods like property tax levies passed.
Gambling is not a very certain or reliable way to fund important programs -- but it is one way to do it. In Missouri, it just keeps growing.
I recently noticed a gas pump offering not only unleaded regular, but a shot at powerball as well. The pump would pick the numbers, and put any winnings right on my debit card. I thought about how far we'd come, from charitable bingo to turning gas pumps into one-arm bandits.
Now, state officials are turning a regulatory eye toward gambling on online fantasy sports. Fantasy sports involve imaginary teams that win or lose based on the actual performance stats of real players. And people bet money on this. Given that a couple of big online companies have hired an army of lobbyists to keep the state out of the racket, it must be raking in big bucks.
And now, regulating and taxing it is a priority. Maybe there's more truth than we'd like to admit in that old line regarding government not liking competition.
[After a career in journalism, Mark Hughes became a top, non-partisan policy analyst for Missouri government including the state Senate, state Treasurer's Office and the utility-regulating PSC. He has been an observer and analyst of state government since the administration of Gov. Kit Bond.]
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