Missouri’s Draft Sports Betting Regulations

Missouri’s long-awaited sports betting regulations are taking shape, and industry stakeholders are closely examining the draft guidelines that were recently sent to Governor Mike Kehoe for approval. Though the draft regulations largely adhere to established norms, they reveal some intriguing insights into the state’s approach to online sports betting. The Missouri Gaming Commission (MGC), which has set its sights on a June launch date, has proposed a licensing framework that introduces significant fees, unique stipulations, and regulatory uncertainties that could shape the landscape of sports betting in the state.

Licensing Fees and Structures: A Mixed Bag

The draft regulations introduce a tiered licensing system that will dictate the cost of entering Missouri’s sports betting market. For most, the fees are steep, with mobile licenses set at $500,000 for both application and renewal (every five years). Retail licenses come in at a slightly lower price tag of $250,000 for both the application and renewal process.

However, some categories show signs of specialization and nuance. For example, the application fee for official league data providers is set at a relatively modest $10,000, although a sliding scale annual fee structure has been introduced based on sales volumes. Providers selling data worth up to $500,000 will pay $10,000, while those surpassing $2 million will face an annual fee of $150,000. This is a move in line with Illinois' approach, but one stakeholder has already raised concerns about it being a “de facto tax” on official data providers.

In a further twist, the draft regulations introduce a unique requirement: operators will be responsible for purchasing and installing all necessary hardware and software to allow for remote monitoring of sports wagering. While this clause isn’t unprecedented, it raises questions about the logistics and potential costs involved for operators. They may push back on this provision during the upcoming public comment period.
Stand-Alone Licenses and the Potential for More Market Entry

Two stand-alone mobile licenses are available, priced higher than tethered options. These licenses are likely to be sought by companies without a physical presence or market-access partnership in Missouri. However, the draft regulations are vague on how many skins each casino operator will be allowed. With six major casino companies owning Missouri’s 13 riverboat casinos, it remains unclear if each casino will be allowed a single digital license or if the number of licenses will be tied to the total number of properties owned.

In theory, stand-alone mobile operators could fill the gap left by traditional land-based casino operators. But as the Missouri Gaming Commission has suggested in public statements, the regulations seem to indicate that land-based operators may be allowed only one mobile license per company, not per individual casino location. This could create a more competitive environment where non-casino entities are granted direct access to the state’s market.

Ambiguities and Areas of Concern

Despite the detailed nature of the draft regulations, some provisions remain ambiguous, opening the door to interpretation that could cause uncertainty for both regulators and operators. For instance, the term “affiliate” is used in Section CSR 45-20.040, relating to the revocation of a license due to associations with persons whose sports betting or gaming-related licenses have been revoked. However, the term is not clearly defined, leaving room for ambiguity in enforcement.

Further, Section CSR 45-20.040 also highlights moral character and reputation as grounds for denying a license, which, while common in the gaming industry, is another area ripe for subjective interpretation. The language used, referring to “unsavoury reputation” or “notorious” individuals, could be contentious, especially considering the varied perceptions of public figures in the industry.

Additionally, the draft regulations contain a clause on refusing to issue or renew occupational licenses for individuals convicted of a broad spectrum of crimes, including minor violations like moving violations or trespassing. While this may be standard in gaming regulations, it could be seen as overly broad, and stakeholders may seek clarification during the public-comment period.

The Issue of Digital “Brawls” and Obscenity

One section of the draft regulations that attracted early attention was the requirement for operators to “prevent or suppress” violent or obscene activity during online wagering. This provision mandated that operators should stop or report any “brawl” or “obscene activity” occurring during digital betting. It raised questions about the practicality of monitoring such activities in an online environment, where operators typically do not have the same level of oversight as in physical sportsbooks.

The Missouri Gaming Commission swiftly removed this section before submitting the draft to the governor. While the language around digital “brawls” may have been a step too far, it does highlight the challenges in applying traditional gambling regulations to the rapidly evolving world of digital platforms.

The draft regulations introduce a competitive bidding process for the awarding of “direct mobile licenses.” The bid criteria will focus on the ability of applicants to generate substantial revenues for the state and attract a high volume of customers. This language mirrors the approach of states like New York, where the state’s gaming commission has emphasized maximizing revenue and platform growth when evaluating bids.

Moreover, Missouri’s draft regulations indicate that the competitive bidding process will occur every five years, suggesting that licenses will not be automatically renewed. This introduces an element of volatility for operators who may face the prospect of having to compete for their license again after five years, potentially destabilizing long-term business planning.

 

While the draft regulations paint a detailed picture of Missouri’s sports betting framework, several aspects remain in flux, especially when it comes to how some of the ambiguous language will be interpreted and enforced.

Looking Ahead

While the draft regulations paint a detailed picture of Missouri’s sports betting framework, several aspects remain in flux, especially when it comes to how some of the ambiguous language will be interpreted and enforced. The 30-day public-comment period, set to begin once the regulations are signed by Governor Kehoe, will provide stakeholders with a chance to offer feedback. This could lead to revisions and further clarification, especially on the issues of licensing fees, suitability for licensure, and the regulatory power of the MGC.

As Missouri gears up for a June launch, stakeholders from operators to data providers to potential bettors will be watching closely to see how the regulations evolve and what changes may emerge after the public-comment phase. It’s clear that Missouri is positioning itself as a state open to the expansion of sports betting, but the final version of the regulations will have a lasting impact on the market’s growth and its ability to attract top-tier operators.
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