Missouri sportsbooks generated more tax revenue in the state's third month of legal betting than they did in the first two months combined, according to new Missouri Gaming Commission data.
The state collected just over $1.2 million in sports betting taxes in February after bringing in a total of about $660,000 in December and January.
That was despite bettors wagering their lowest total yet in February, $277 million, which was down 49% from December and off 28% from January.
Sportsbooks can use promotional bets to reduce taxable income, which contributed to low or no tax payments for some sportsbooks in December and January.
The amount of tax revenue generated came as a surprise to some experts. Neil Schwartz, president of sports analytics and market research company SBRnet, said there is typically a period of four to six months after a state first legalizes sports wagering that sportsbooks lose money on promotional bets, with the goal of getting bettors on the platforms.
“Two months is actually short,” Schwartz said. “A lot of other (states), they've been four to six months where they've been losing money.”
Alan Feldman, director of strategic initiatives at the International Gaming Institute at the University of Nevada, Las Vegas, said that once a state sees positive revenue for the first time, it can expect that trend to continue.
“Many of the other states have started slow, to be sure, but it's picked up very quickly, and some of them are doing very, very well,” Feldman said. “In the slower seasons, there may be a couple of promotional opportunities that operators may want to take advantage of, but, by and large, the whole idea of these promotional windows is to get more players.”
Parlays, or bets that rely on a bettor selecting multiple correct outcomes, were the most profitable type of wager for sportsbooks in February. Operators walked away with over $21 million in total wagers minus payouts on parlays. Basketball was next highest, making almost $6 million.
“Parlays have always been among the most popular features of sportsbooks,” Schwartz said. “They're also among the most profitable features of sportsbooks.”
The top three earning sportsbooks in February were FanDuel, DraftKings and BetMGM, making $5.9 million, $4.8 million and over $400,000, respectively.
The bottom three earners were Fanatics, Bet365 and Century Casino - Cape Girardeau. Fanatics adjusted gross revenue was negative $1.3 million. Bet365 had negative $300,000. Century Casino - Cape Girardeau was down over $100,000.
Feldman said that the first month with a positive adjusted gross revenue is a good indicator of what's to come in the next two to three years for the state.
“They should anticipate a generally positive increase quarter over quarter,” Feldman said.
