10% Tax, No Promos Deducted? Missouri vs. Neighboring States

2018 was a turning point for legal sports betting in the US. This was the year when the Professional and Amateur Sports Protection Act (PASPA) was overturned by a decision from the Supreme Court, which affected all states, including Missouri.

As a result, sports betting experienced a boom. While Missouri wasn’t among the first to legalize, it will join the market on December 1, 2025, offering bettors new opportunities. In this article, we compare Missouri’s sports betting tax to those of its neighbors - Kansas, Illinois, Iowa, and Tennessee - to explore its impact on bettors and operators.

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Missouri’s Sports Betting Tax: Laying a Foundation for Growth

Did you know that the national average tax rate on adjusted gross revenue (AGR) is 19%? When legal sportsbooks start operating in Missouri on December 1, 2025, they can expect a more than reasonable 10% tax rate.

The intention is obvious – attracting well-established operators like FanDuel, DraftKings, and BetMGM. But that’s not all. Promotional deductions, such as “bonus play” bonuses, can further reduce taxable revenue, potentially letting bookies owe no tax in high-promotion months. So, this is the second advantage that enables the growth of this industry.

The best part is that the tax revenue collected from MO sports betting sites is primarily used to fund education and public welfare in general.

So far, 14 sports betting platforms have confirmed their entry into this market. This number includes mobile and retail platforms.

Compared to neighbors like Illinois (20%-40 %) and Tennessee (1.85% of the total amount of money wagered by bettors), Missouri’s balanced 10% rate offers a competitive edge. If the state guarantees this rate for a more extended period, some operators and bettors from states with higher taxes will likely relocate to MO.

Additionally, bettors will likely benefit from the operator-friendly environment, which will enable sportsbooks to create attractive promotions with enhanced odds and bonuses.

Kansas: A 10% Tax for an Excellent Comparison

Kansas legalized sports betting in September 2022 and decided to impose a 10% tax on sports betting adjusted gross revenue. This means that Missouri might have used Kansas’ example, at least when it comes to taxes. One of the reasons for this might be the stellar growth of this activity, which resulted in a 406% increase in tax revenue from 2022 to 2023.

Both Kansas and Missouri permit retail and mobile betting, enabling big brands like Caesars and BetMGM to thrive. It goes without saying that promotional deductions are also available in Kansas. MO will likely follow a similar path to KS, but we’ll have to see if it can take the leading position as a sports betting hub in the Midwest.

Illinois: High Taxes and a Progressive Scale

Illinois was one of the first states to legalize sports betting in this region (June 2019). Still, the authorities here thought it was better to create a more complex tax system. Instead of a flat tax rate, Illinois employs a progressive scale. Operators pay a 20% tax on AGR under $30 million and 40% above $200 million.

Additionally, sports betting operators pay a per-bet tax of 25 cents on the first 20 million wagers and 50 cents thereafter. Unlike Missouri, Illinois doesn’t allow promotional deductions, which further amplifies the tax burden for operators.

Given these numbers, it won’t surprise us if some bettors, especially those in the border area, move to Missouri, a lower-tax market with a simpler system.

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Iowa: The Lowest Tax Rate at 6.75%

The Hawkeye State has one of the lowest sports betting tax rates not only in the Midwest but also in the United States. The 6.75% tax on adjusted gross revenue is difficult to beat, even for newcomers to the sports betting scene, such as Missouri.

So, Iowa has an operator-friendly rate, which is combined with promotional deductions, such as the aforementioned “bonus play.” It’s no wonder that Iowa is among the top three states with the most online sportsbooks.

Iowa made sports betting legal in May 2019, and sportsbooks started operating just three months later. It’s definitely attractive for operators and bettors, but this is still a relatively small market compared to Missouri.

Tennessee: A Unique Tax Model

Lastly, we have Tennessee, with its unique tax structure. Even though it started like most states in 2020 (with a 20% tax on AGR), it switched to a 1.85% tax on the total amount of money wagered by bettors. This is actually beneficial for sportsbooks in the long run, but the lack of promotional deductions keeps the expenses high. That’s especially true for platforms with high betting volumes.

Another unique aspect of sports betting in Tennessee is that it permits mobile-only betting. As noted, Missouri has a hybrid retail-mobile approach, which ultimately makes it more appealing to operators.

Comparing Sports Betting Taxes in MO, KS, IL, IA, and TN

The sports betting taxes in Missouri have a few things in common with some of its neighboring states. However, there are also some significant differences between them. We created this comparison table to help you get a clearer picture of these things.

Pros and Cons of Missouri Sports Betting Tax Vs Neighboring States

Pros & Cons

• Below-average tax rate
• Promotional deductions are available
• Tax revenue is mainly allocated to education

• Higher than Iowa’s tax rate of 6.75%

Conclusion – Missouri’s Operator-Friendly Taxes Pave the Way for Fast Growth

When sports betting platforms start operating in Missouri in December 2025, they can expect a reasonable sports betting tax rate of 10%. Compared to its neighbors, Missouri strikes a balance between Iowa’s low 6.75% and Illinois’s high 20 – 40 % or Tennessee’s 1.85% handle-based tax. It matches Kansas at 10%, though.

When we add the promotional deductions into the equation, it’s not difficult to predict that sports betting should thrive in the Show-Me State. Stay up-to-date with the latest information about sports betting in Missouri by visiting our site for reviews, bonus codes, and guides.

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