Mitchell Kaminski
COLUMBIA, Mo. (KMIZ)
A Columbia lawmaker is warning that Missouri’s schools could face an increasingly difficult financial future, arguing that new revenue from legalized sports betting is not providing the boost to education voters were promised.
The state’s Department of Elementary and Secondary Education says the sports wagering money is being used to fund existing appropriations.
Under House Bill 2, $6.805 million from the Sports Wagering for Education Fund was appropriated for the foundation formula, which distributes money to school districts. Another $1.2 million was designated for career-readiness assessments and $400,000 for an online parent portal.
DESE spokesman Lucas Bond told ABC 17 News in an email that the sports wagering money going toward the foundation formula is part of the regular distribution to schools. Because the foundation formula appropriation is the same for fiscal years 2026 and 2027, the sports betting money does not represent a net increase in foundation formula funding.
In other words, sports betting revenue can replace other state revenue that would otherwise fund education without increasing the total amount of money schools receive.
“I knew that we were not going to have this windfall of money going to education,” state Rep. Kathy Steinhoff (D-Boone County) told ABC 17 News. “But I was disappointed that I maybe was not fully aware of how little would come to the Missouri revenue stream in general. It was just poorly written in a way that really favored the gambling companies.”
When Missouri voters approved the sports betting amendment in November 2024, supporters — including the Winning for Missouri Education campaign backed by millions of dollars from DraftKings and FanDuel — promoted education as a major beneficiary of legalized sports betting.
The Missouri Gaming Commission initially projected the state would collect more than $6 million for education during the first year, with annual revenue expected to reach about $20 million in the following four years.
But sports wagering generated less revenue than projected during its first year.
Steinhoff, who serves on the Missouri House Budget Committee, said the shortfall had consequences for schools because lawmakers had already built anticipated sports betting revenue into the state budget.
“The last budget year, schools did not get their full appropriation because of that sports betting. So even though we had put in the budget for schools to get X amount, they got less than that because the sports betting money did not come in,” Steinhoff said.
So far in fiscal year 2027, $3.213 million has been transferred into the Missouri Education Fund. The Missouri Gaming Commission says while there is not another transfer expected in August, they are expecting monthly transfers moving forward.
According to Steinhoff, the issue stems in part from how the amendment was written.
The amendment requires sports betting operators to send 10% of their monthly gross gaming revenue to the state for education. However, sportsbooks can deduct certain expenses before that tax is calculated, including player winnings, promotional wagers and federal taxes.
In June alone, sportsbooks deducted $244.5 million for those expenses.
Steinhoff said lawmakers had tried for years to pass sports betting legislation but were unsuccessful before the industry-backed amendment went before voters.
“If you were to talk to people that are in those circles, what they would say is that the lobbyists for those companies were very strongly engaged in Missouri. They were investing in campaigns. They were trying to educate legislators. They had legislators sponsoring bills. But every year their legislation failed,” Steinhoff said. “It kind of makes sense. I think what they said was, ‘Well, we’re going to quit paying these legislators. How about we hold on to this money and write our own our own bill, so to speak, and make it an initiative, petition and use our money in advertising.’”
State Rep. John Martin (R-Boone County) who also serves on the House Budget Committee, told ABC 17 News he opposed the amendment when it appeared on the ballot, not because of the revenue it could generate, but because of concerns about the potential impact of gambling addiction on Missourians.
“We’ve seen it’s been destructive to young people. We’ve got young people in Columbia that have been banned by the NBA because of sports betting and things like that,” Martin said in reference to Jontay Porter, after a league investigation found that he was passing along information to sports bettors, limitng his participation in games for prop bets and betting on NBA games. “I’m not supportive of it. I think there’s better ways for the state to raise money. But at the same time the voters put it in so here we are with it.”
Martin’s concerns come as research has shown that the boom of sports betting has carried consequences. According to a researcher at UCLA, legalized online sports betting saw a 28% increase in consumer bankruptcies and an 8% increase in debt collections compared to states that did not legalize it. The study also found average credit scores fell by 0.3%, and the drop was higher in states permitting mobile betting.
Young men appear to be disproportionately affected. A 2024 study from Fairleigh Dickinson found about 10% of young men in the United States exhibit behaviors associated with problem gambling, compared with roughly 3% of the general population.
The language of Amendment 2 has also left lawmakers with limited control over how the revenue is used. Steinhoff said that because the measure was passed through an initiative petition, lawmakers have less flexibility to change how the system works.
“If the legislators had been able to pass that and they tried, I mean, for several years prior to the people voting on it, there was a lot of movement at the Capitol for legislators to come together and pass that We would have had a little bit more control over how the money came in,” Steinhoff said.
School districts also cannot see how much of the state funding they receive comes specifically from sports betting revenue.
According to Columbia Public Schools Chief Financial Officer Heather McArthur, districts do not receive a breakdown showing whether a particular dollar came from sports betting, the lottery or general revenue.
“Gaming revenue earmarked for education is generally included in the Classroom Trust Fund line on district payment statements,” McArthur told ABC 17 News in a statement.
McArthur added the state is currently distributing that money according to its original budget appropriation, though DESE could make additional distributions or withholdings later in the fiscal year as revenue projections become clearer.
Steinhoff said the structure creates a risk for schools if sports betting revenue again falls short.
“It’s an easy thing to advertise, lottery and sports betting and then the money goes to the schools and yeah, that’s true. The money goes to schools, but it’s not additional money to the schools,” Steinhoff said. “So now we’re spending money that wouldn’t have gone to the schools from our general taxes on other things. When that money now doesn’t come in, we’re actually shortchanging the schools and in some twisted way, sports betting and the lottery can actually hurt the schools if they don’t perform at the level that we anticipate.”
The uncertainty comes as Missouri faces broader questions about how much money will be available for education in the coming years.
Federal COVID-19 relief funding that helped schools during the pandemic has expired, while Gov. Mike Kehoe has called for changes to the state’s foundation formula. A task force is working on proposed changes to the foundation formula, with recommendations expected in December.
“We’re in a tight budgetary time,” Martin said. “That will be one of the big challenges there, predicting what we’re going to need to cut, maybe $1.3-or-so-billion from the budget to get us back on track over the next couple of years. So potentially looking at about 700 million budget reduction.”
Steinhoff believes the financial pressure to become increasingly visible in school districts.
“It’s going to be a really dark period I think for Missouri all around. The places where we will see it probably hit the most is where our budgets the largest, and that’s in health care and education. The last two years, the governor’s recommendation was to keep the foundation formula money flat,” Steinhoff said. “This year, we underfunded the foundation formula by about $200 million. So I don’t foresee him thinking he wants to spend any more money. He also put together a task force to rewrite the foundation formula. One of the ultimatums was to keep spending flat. I don’t know how many businesses are out there that they can expect to keep spending flat and have good outcomes. That’s certainly not true in education.”
According to Martin, Missouri’s revenue has increased by about 40%, while state spending has grown by roughly 50%.
“We definitely got to rein back in spending,” Martin said. “Between us and the Senate we got a lot of work to do to figure out where those trimings are going to happen.”
Martin added school districts in his statehouse district are already preparing for the possibility of tighter budgets as they wait to see how the foundation formula is changed.
“They realize their budgets, they’re having to really tighten their belts. So obviously there’s concerns,” Martin said. “I’ve gotten concerns from our school districts about, what the future holds, obviously, knowing that the foundation [formula] the new ones coming out, just kind of see where that lands and then how that affects each individual school.”
Steinhoff said she has also heard concerns from school districts, with the effects of flat foundation formula funding already being felt, particularly in rural Missouri.
“Toward the end of the session is when it started to hit the school districts. I know a lot of lawmakers were hearing from their school districts, especially our ones in our rural areas that are barely hanging on and then could not even receive the money that they were counting on,” Steinhoff said. “We are going to probably see some school closures in the coming years.”
For Steinhoff, the debate over sports betting revenue is ultimately part of a much larger question about how Missouri will fund public education as other sources of temporary funding disappear.
“I don’t see how this ends. I mean, it’s increasing class sizes. It’s reducing the number of teachers. It’s limiting the resources that are available to students,” Steinhoff said. “I think almost every school that I know of is struggling financially. They’re not really delivering on the level that they’re capable of doing, and funds are restricting them. So it’s a really scary place for us to be.”
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Image courtesy of the University of Missouri.
