Millions to Be Made Through Mississippi Online Sports Betting, But Task Force Remains Split

Oct 1, 2022; Starkville, Mississippi, USA; Mississippi State Bulldogs quarterback Will Rogers (2) makes a pass against the Texas A&M Aggies during the fourth quarter at Davis Wade Stadium at Scott Field. Mandatory Credit: Matt Bush-USA TODAY SportsThe Mississippi Mobile-Online Sports Betting Task Force released its report on online sports bettingBased on various tax rates, Mississippi could see upwards of $27.1 million in online sports betting revenue by FY 2029Members of the task force are split on whether online sports betting should be legalized in the Magnolia State

A Mississippi online sports betting bill will be introduced during the state’s 2024 legislative session, but members of the state’s online sports betting task force are split on whether or not the new form of gaming should be legalized.

The 13-member task force completed work on a 95-page online sports betting report last week, estimating Mississippi could see upwards of $27.1 million in tax revenue by FY 2029.

While sports betting revenues would increase if legalization occurs, several members of the task force are still speaking out on the potential dangers of online sports betting legislation for local businesses and casinos.

Would A Flat Tax Rate Be Considered?

Rep. Casey Eure (R) revealed at the first task force meeting in October that he will be introducing an online sports betting bill when the state’s session begins on Jan. 2, 2024. Eure introduced an online sports betting bill last year, HB 606, which was amended and passed to simply create the Mississippi mobile-sports betting task force to investigate the impact of online sports betting on the state.

Eure’s original bill, HB 606, attempted to legalize online sports betting in the state. Mississippi currently has retail sports betting, legalizing the practice in August 2018, but has struggled over the last several years to pass an online sports betting bill.

HB 606 failed to legalize online sports betting, but was amended by the legislature and passed to create the task force to investigate the impact of online sports betting on Mississippi.

The 13-member task forced presented several potential revenue models if online sports betting were to be legalized next year. Currently, Mississippi institutes an 8% tax rate on retail sports betting gross revenue totals. If online sports betting is taxed at the same rate, the task force estimates that tax revenues will increase from $5.1 million in FY 2025 to $12.6 million in FY 2029.

If the online sports betting tax rate is set at 12%, the task force estimates revenue will increase from $6.5 million in FY 2025 to $15.9 million in FY 2029. If the rate is set at 15%, the estimates increase from $6.9 million in FY 2025 to $18.6 million in FY 2029.

The task force also presented a non-traditional tax scenario where it could set a tax rate based on each operator’s total sports betting handle. If a flat tax of 1% of handle for both retail and online sports betting is adopted, the task force report estimates that tax revenues will increase from $5.4 million in FY 2025 to $13.5 million in FY 2029. If a flat tax rate of 2% is adopted, revenues would increase from $10.9 million in FY 2025 to $27.1 million in FY 2029.

A hybrid model was also presented in which the retail sports betting tax rate remains at 8% of gross revenue and online sports betting is set at 1% of handle. Estimates show tax revenues will increase from $5.1 million in NY 2024 to $13.2 million in FY 2029.

Will Retail Sports Betting Be Hurt by Online Betting?

Several members of the Mississippi mobile-sports betting task force associated with retail casinos expressed concerns in the report that online sports betting will harm their business. Michael Bruffey, task force representative for Island View Casino Resort, wrote that stand-alone Mississippi casino operators have concerns over online gaming and “large corporations based outside of Mississippi assertion positions in favor of online gaming.”

“The Mississippi gaming market operates on low margins. Anything that will reduce or lessen our revenues will harm our businesses and it will harm Mississippi. To state it succinctly, statewide online sports betting will reduce our revenue, it will reduce jobs, and it will harm Mississippi,” he wrote.

Sport betting has been an important part of Island View Casino Resort’s business, Bruffey wrote, and once a state legalizes online sports betting then 90% to 95% of bets are made through online sports betting operators. If legalized, Island View “will lose its retail sports betting business and the ancillary revenue and jobs that go along with it.”

Donn Mitchell, Principal and CFO, Foundation Gaming & Entertainment, echoed Bruffey’s concerns over online sports betting taking money away from Mississippi casinos. Commercial casinos invested billions into brick-and-mortar casinos in the state to increase tourism and bring outside money into the economy. If online sports betting is legalized, it will “undermine the existing commercial casinos in the state.”

It will not add meaningful jobs in the state, will not result in “meaningful investment of capital in the state,” and will not bring in any outside tourism dollars to the state, he wrote.

Not all retail casino representatives on the task force were against online sports betting. Jonathan Jones, task force member and SVP/General Manager of Harrah’s Gulf Coast, noted that Mississippi sports bettors are eager to participate in online sports betting.

Online sports betting will allow casinos to reach a different audience of customer in the state, he noted.

“Sports betting applications provide an opportunity for casinos to reach a new audience that is different from their current demographics, thus provide new avenues for engagement with customers that will drive business to brick-and-mortar casinos. For example, this new line of communication can be utilized to attract an OSB customer to the brick-and-mortar casino for special events or via an offer to redeem reward points earned on the mobile app,” Jones wrote.

Legislators will take the task force’s finding and member comments into consideration when discussing online sports betting bills in the upcoming 2024 session.