HCS HB 2989 -- GAMING (Hardwick)

COMMITTEE OF ORIGIN: Standing Committee on Emerging Issues

ILLEGAL GAMING (Sections 27.108, RSMo.)

This bill establishes the "Illegal Gaming Enforcement Fund", which will consist of a portion of moneys generated from an administrative fee imposed on video lottery terminals. Moneys in the Fund will be used by the Attorney General, prosecutors, and law enforcement to investigate, enforce, charge, and prosecute illegal gaming in this state.

INVESTIGATION OF VIOLATIONS (Section 43.375)

This bill gives the Missouri State Highway Patrol (Highway Patrol) authority to investigate any criminal violations regarding the provisions of this bill, as specified in the bill. The bill also creates the "Missouri State Highway Patrol Gambling Crimes Investigation Fund", which is to be utilized for certain purposes, as specified in the bill.

DEVELOPMENTAL DISABILITY COMMUNITY SUPPORT FUND (Section 191.250)

This bill creates the "Developmental Disability Community Support Fund" which will provide funding for the ongoing learning, education, and support of individuals with developmental disabilities. Moneys in the Fund must be distributed according the provisions in the bill.

VIDEO LOTTERY GAMING (Sections 313.425 to 313.445)

This bill establishes the "Missouri Video Lottery Regulatory Act", which will provide additional funding for Missouri education programs and additional resources for Missouri municipalities and counties.

This bill requires the State Lottery Commission to implement a system of video lottery game terminals and to issue licenses to video lottery game manufacturers, distributors, operators, handlers, and retailers. The Commission must not allow a single vendor or licensee to be responsible for implementing the program.

Video lottery game terminals must be connected to a central control system developed or procured by the Commission. No video lottery game terminal will be placed in operation without first being connected to the centralized control system, and the terminal must remain connected at all times. Video lottery game terminals must meet all applicable standards, as specified in the bill. No device that was previously determined to be an illegal gambling machine by the Commission will be licensed as a video lottery game terminal.

The Commission must impose a non-refundable application fee, such fees varying, depending on the type of application, and must be distributed as specified in the bill. The initial license will be for a period of one year. Thereafter, the license renewal period will be four years with the applicable license renewal fee paid for each year the license is renewed, as specified in the bill.

In addition to the license fees, video lottery game operators must pay the Department of Revenue an annual non-refundable administrative fee of $1,250 for each video lottery game terminal placed in service. The administrative fee will be equally divided and paid by the video lottery game operator and the video lottery game retailer. The Department will remit $200 to the Commission, and the remaining amount will be remitted to the Illegal Gaming Enforcement Fund, as specified in the bill. A license will not be issued to any person who has been convicted of a felony or of a crime involving illegal gambling.

Video lottery game operators and video lottery game retailers must enter into a use agreement for the placement of video lottery game terminals, as specified in the bill. The agreement must specify an equal division of net terminal income after adjustments for taxes and administrative fees are made. Video lottery game operators and video lottery game retailers are prohibited from offering anything of value other than the percentage of adjusted gross receipts for the placement of video lottery terminals. All licensees will remain subject to all income, property, sales, and use taxes.

A political subdivision can levy a fee upon a video lottery game retailer of $250. Such fee will be divided equally between the video lottery game retailer and the video lottery game operator, provided that all revenue generated be deposited into the General Revenue Fund of the political subdivision.

Video lottery game operators will pay winning tickets using a video lottery game ticket redemption terminal, which must be located within the video lottery game retailer's establishment in direct proximity of where the video lottery games are offered. Unredeemed video lottery game tickets expire after 180 days of issue. Any person that has been self-excluded from video lottery game play is guilty of trespassing in the first degree if such person enters a designated Video Lottery Gaming Area, as defined by the Commission.

The price of video lottery game terminal credits will be determined by the Commission, and the maximum wager played per video lottery game must not exceed $4. Notwithstanding current law regarding state or local sales tax, any cash award for the maximum wager played on any individual lottery game cannot exceed $1,199 or no more than $1 less than the minimum amount allowable by Federal law before tax withholding is required.

Each Operator must not operate more than eight terminals at any one video lottery game retailer location. A political subdivision can further restrict the number of video lottery game terminals at each retail business to five terminals, provided that the restrictions do not apply to high volume truck stops. A person under the age of 21 cannot play video lottery games and the retailer is responsible for preventing anyone under age from playing. Video lottery game operators must have a video surveillance system within the immediate area of the retailer's establishment where video lottery game terminals are located and must maintain the footage for 30 days. The video operator must also post a warning sign that gambling can be addictive and a sign with the problem gambling helpline in red lettering at least one inch high on a white background, as specified in the bill.

Video lottery game operators must pay to the Commission 31% of the video lottery game adjusted gross gaming revenue. The Commission will retain an amount necessary to cover administrative expenses, and the remainder will be appropriated equally to public elementary and secondary education and public institutions of higher education, with 20% of such funds to be appropriated to the newly created "Public Elementary and Secondary School Construction and Rehabilitation Grant Fund", as specified in the bill.

Video lottery game operators must pay to the Department of Revenue an additional "municipality and county administration tax", as defined in the bill, of 3% of the video lottery game adjusted gross gaming revenue. The Department will distribute the funds to the cities and counties where the video lottery gaming terminals are located. The Commission may require fingerprint submissions as part of the application process of licensing, as specified in the bill.

The Commission must adopt rules for the implementation of video lottery terminals, including a provision that a distinct area of the business or building that is not accessible to anyone under the age of 21.

The Commission must procure a centralized computer system no later than 90 days following the effective date of this bill, and establish start and operational dates no later than 365 days following the effective date of the bill.

Participation in the state lottery will not be construed to be a lottery or gift enterprise in violation of Article III, Section 39 of the Constitution of Missouri.

This bill allows any municipality or county to adopt an ordinance prohibiting video lottery game terminals within 120 days after the effective date of the Act and the Commission must be notified within seven days of the passage of the ordinance. If a municipality or county later passes an ordinance allowing video lottery game terminals, it is not allowed to adopt any subsequent ordinance regarding the prohibition of video lottery terminals for 10 consecutive years. A municipality may then only pass an ordinance to prohibit video lottery game terminals no sooner than five years.

An applicant for licensure must not be denied a license because of the applicant's operation, handling, leasing, licensing, servicing, or placing of machines or devices. However, the applicant must attest that the video lottery game retailer does not own or possess any illegal gambling devices. This bill also preempts local jurisdictions that enact or enforce a law or regulation on taxes, fees, or conduct in the use of video lottery games. However, nothing will prevent a political subdivision from prohibiting the hours of operation during which video lottery game terminals may be used for game play between 1:30 a.m. and 6:00 a.m..

This bill requires the Commission to prescribe an application form for licensure, which includes certain information, as specified in the bill. The Commission must require every licensee to post a bond, a bonding fee, or a letter of credit in an amount determined by the Commission. Licenses granted by the Commission are nontransferable. The Commission must revoke a license upon certain findings, as specified in the bill. A person who knowingly makes a false statement on an application is guilty of a class A misdemeanor.

A licensee will be subject to penalties, suspension, or revocation of a license for an act that is injurious to public health or welfare. The types of acts or omissions committed by the licensee that may be grounds for discipline are specified in the bill. The Commission may also refuse to issue a license. The applicant or licensee must be notified in writing by the Commission with the reasons for the refusal or discipline. The applicant or licensee has 30 days to file a request for a hearing with the administration hearing commission.

The Commission can file a complaint with the administrative hearing commission against any applicant or holder of a license or any person who has failed to renew or surrender their license. If the administrative hearing commission finds that the grounds for disciplinary action are met, the Commission will determine the disciplinary action, as specified in the bill.

The Commission will have the power and authority to adopt and enforce certain rules and regulations to regulate video lottery games, as specified in the bill. The provisions found within Sections 313.425 to 313.445, and 572.020, 572.070, and 572.100 are non-severable, whereby an individual section that is subsequently found to be invalid will mean that the remaining provisions are also deemed to be invalid.

EXCURSION GAMBLING BOAT ADMISSION FEE (Sections 313.805 to 313.835)

Currently, the commission has jurisdiction over excursion gambling boats to enforce certain rules and regulations. This bill adds the power to annually adjust admission fees imposed on excursion gambling boats for inflation.

Currently, excursion gambling boats must pay the Commission a $2.00 admission fee for each person embarking on such a boat, and the Commission distributes those fees according to existing law. This bill requires that an admission fee of $2.00 be assessed every two hours for each person who is present within the gambling area of the excursion boat, and annual adjustments to those fees, are specified in the bill. Distribution of the admission fees are described in the bill, including a portion of the fees to be remitted to the Department of Natural Resources Historic Preservation Revolving Fund which will contract with the charitable organization for the construction of a facility for the acquisition and preservation of artifacts related to Missouri's riverboat heritage.

The bill also states that all present and future forms of remote wagering on excursion boats will require certain access fees, as specified in the bill.

CRIMINAL PROVISIONS FOR GAMBLING (Sections 572.010 to 572.100)

The bill modifies the definition of "advance gambling activity" by stating that the owning, operating, supplying, or servicing of video lottery game terminals under the provisions described above does not constitute advancing gambling activity.

This bill modifies the definition of "contest of chance" by stating that the outcome of a gambling contest is determined by any element of chance.

The bill modifies the definition of "gambling" by stating that gambling does not include any licensed activity or persons participating in such licensed activity, licensed video lottery game terminals, or video lottery games.

This bill repeals the current definition of "gambling device".

The bill modifies the definition of "slot machine", as specified in the bill, including the provision that a slot machine or gambling device does not include licensed video lottery game terminals or video lottery games.

Currently, if a person commits the offense of gambling, he or she is guilty of a Class C misdemeanor. This bill changes the offense to a Class A misdemeanor.

The provisions found within Sections 313.425 to 313.445 are non- severable, whereby an individual Section that is subsequently found to be unconstitutional must mean that the remaining provisions are similarly held to be invalid.

Currently, a person commits the offense of possession of a gambling device if the person makes certain use of a slot machine. This bill adds the use of a gambling device to these provisions.

Any video lottery game operator or video lottery game retailer with a gambling device currently in use or a gambling device that would be determined to be illegal after the passage of this bill may continue to operate such devices before August 28, 2027, by submitting to the Commission certain financial records, as described in the bill. Any video lottery game operator or video lottery game retailer can elect to remove any gambling device from the premises; any such removed gambling device will not be replaced.

The provisions found within Sections 313.425 to 313.445 are non- severable from each other and Sections 572.020, 572.070, and 572.100; therefore, if an individual section is subsequently found to be unconstitutional, the remaining provisions are similarly held to be invalid. The provisions in Sections 572.020, 572.070, and 572.100 must become effective on August 28, 2027.

Currently, the state preempts any local jurisdiction in the criminalization of gambling. This bill states that the term "gambling" does not include the licensed activities and provisions under Sections 313.425 to 313.437. The Commission will have concurrent authority and jurisdiction to investigate and enforce violations of this bill and seek prosecution of these criminal violations.

This bill is similar to SB 862 (2026).

HCS HJR 169 -- STATE REVENUE (Murphy)

COMMITTEE OF ORIGIN: Standing Committee on Ways and Means

Upon voter approval, this constitutional amendment establishes the "Taxpayer Protection Act".

The provisions of this amendment must be in addition to the limits, requirements, and other provisions of the Hancock Amendment. Other limits on district revenue, spending, and debt must only be modified by future voter approval.

This amendment provides further provisions related to individual or class action enforcement suits.

The amendment provides that, when annual district revenue is less than annual payments on certain general obligations, certain requirements for districts must be suspended to address the deficiency.

This amendment provides that ballot issues brought under certain requirements must be decided in a regularly scheduled state general election, general municipal or local district election, or on the first Tuesday after the first Monday in November of odd-numbered years. Any district, as defined in the amendment, may consolidate certain ballot issues and voters may approve a delay of up to four years in voting on ballot issues.

At least 30 days before a ballot issue election brought under the requirements of the amendment, the district must mail a title notice or set of notices addressed to all registered voters at each address of one or more active registered electors. Title notices must have a certain order of preference and must include certain information.

Among other requirements, the title notices must include district estimates of the maximum dollar amount of each tax increase and of the district's fiscal year spending without the increase for the first full fiscal year of each proposed tax increase. Except by later voter approval, if a tax increase or fiscal year spending exceeds any such district estimates, the tax increase must be reduced by up to 100% in proportion to the combined dollar excess, and the combined excess revenue must be refunded in the next fiscal year. This excludes emergency tax revenue.

For proposed district bonded debt, title notices must also include information related to the principal amount, the principal balance and repayment costs. The district's bonded debt must not be issued on terms that could exceed its share of the maximum repayment costs.

Ballot titles for tax or bonded debt increases must include specified language.

With two exceptions, as specified in the amendment, a district must have voter approval in advance for any:

1) New tax;

2) Tax rate increase;

3) Mill levy above the rate of the prior year;

4) Valuation for assessment ratio increase for a property class;

5) Extension of an expiring tax; or

6) Tax policy change directly causing a net tax revenue gain to any district; and

7) Creation of multi-fiscal-year direct or indirect district debt or financial obligation without adequate cash reserves

Each district must reserve a certain amount of its fiscal year spending, not including bond debt service, for fiscal year 2028, fiscal year 2029, and every fiscal year thereafter to be only used during declared emergencies.

This amendment prohibits emergency property taxes. Emergency taxes must be spent on specified conditions.

The maximum annual percentage change in state fiscal year spending, the maximum annual percentage change in each local district?s fiscal year spending, and the maximum annual percentage change in each local district?s property tax revenue must be calculated as specified in the amendment. The calculations for maximum annual percentage change in state fiscal year spending, local district?s fiscal year spending, and local district?s property tax revenue are to be adjusted by voter- approved revenue changes. The calculations for the maximum annual percentage change in a local district?s fiscal year spending and local district?s property tax revenue are to also be adjusted by certain reductions specified in the amendment. These calculations exclude emergency tax revenue. If revenue exceeds these maximums for a given fiscal year, the excess must be refunded in the next fiscal year unless voters approve a revenue change as an offset.

The amendment sets the initial district bases to the current fiscal year spending and property tax collected for tax year 2025. The district bases and limitations to spending and property tax revenue are adjusted by enterprise status and changes to bonded debt. Certain changes are exceptions to and separate from any district base.

This amendment provides that additional surcharges and fees must not be implemented for the sole purpose of avoiding limits under the provisions of this amendment. If there are additional revenues from these sources, they must be included in the calculation of the spending limit.

The amendment provides that, if a local district adopts or has adopted a tax abatement, such local district must add the amount of such abatement into its revenue calculation.

This amendment prohibits new or increased transfer tax rates on real property, new state real property taxes, and new local district income taxes. The amendment provides that neither an income tax rate increase nor a new state definition of taxable income can be applied before the next tax year.

This amendment requires valuation notices to be mailed annually and allows such valuations to be appealed annually. Additionally, property tax bills and valuation notices must include the actual value, as specified in the amendment.

The amendment provides that, with exceptions as specified in the amendment, a local district is allowed to reduce or end its subsidy to any program delegated to it by the General Assembly for administration.

The General Assembly may enact laws to implement the provisions of this amendment.

HCS HJRs 173 & 174 -- TAXATION (Davidson)

COMMITTEE OF ORIGIN: Standing Committee on Commerce

Upon voter approval, this constitutional amendment repeals Sections 4(d) and 26 of Article X of the Missouri Constitution and adopts two new sections in their place relating to taxation.

The amendment authorizes the General Assembly, when enacting any law imposing a tax measured by income, to define income by reference to provisions of federal law as those provisions may become effective from time to time, whether retrospective or prospective. The General Assembly must set the rate or rates of any such tax and may make exceptions, additions, or modifications to any federal provisions referenced in defining income.

The amendment establishes a mechanism to reduce and eliminate the state individual income tax based on increases in net general revenue collections. For a calendar year, the rate of the individual income tax must be reduced by one-hundredth of one percent if net general revenue collections in the previous fiscal year exceed by at least $20 million the amount of net general revenue collections for the fiscal year ending June 30, 2025. The amount of net general revenue collections for the fiscal year ending June 30, 2025, must be adjusted annually by the rate of inflation. If the minimum amount of net general revenue collections required to trigger a reduction is met, each additional increase in net general revenue collections in the previous fiscal year by $20 million beyond that minimum must result in an additional reduction of one-hundredth of one percent, up to a maximum reduction of one and six-tenths percent in a calendar year.

If the rate reductions required under the amendment would cause the individual income tax rate to fall below one and four-tenths percent for any tax year, the rate imposed must instead be 0%. If the reductions do not eliminate the individual income tax by January 1, 2032, the tax may continue until it is eliminated according to the revenue triggers and rate reductions established in the amendment. For any tax year beginning on or after the date the individual income tax rate has been reduced to 0%, no individual income tax may be enacted or imposed by the state. The amendment specifies that elimination of the tax does not affect the collectability of liabilities or debts for tax years beginning before the date of elimination and does not apply to an earnings tax or similar tax imposed by a political subdivision. For purposes of this provision, "individual income tax" is defined as the tax imposed on the income of natural persons under Sections 143.011 and 143.041, RSMo.

The amendment defines certain terms used in the tax reduction provisions. "CPI" is defined as the Consumer Price Index for All Urban Consumers for the United States as reported by the Bureau of Labor Statistics or a successor index. "Net general revenue collections" is defined as the total general revenue collections net of refunds for a fiscal year as officially reported to the public by a government body specified by law. "Rate of inflation" is defined as the percentage, if any, by which the CPI for the preceding 12-month period beginning September first and ending August 31st exceeds the CPI for the 12-month period beginning September 1, 2025, and ending August 31, 2026. "Twenty million dollars" is defined as the $20 million adjusted annually by the rate of inflation.

The amendment provides that state and local sales and use taxes, or similar transaction-based taxes, may not be expanded to impose taxes on any service or transaction that was not subject to sales, use, or similar transaction-based tax on January 1, 2015. Notwithstanding that limitation, the General Assembly may authorize the expansion of sales and use taxes to transactions involving goods and services if legislation expressly states that the expansion is enacted for the purpose of reducing and eliminating the State individual income tax and reducing local tax rates, and the legislation includes a finding by the General Assembly that the expansion is anticipated, directly or indirectly, to lead to the reduction and elimination of the State individual income tax and the reduction of local tax rates.

Beginning January 1, 2029, any political subdivision that imposes a sales and use tax must, in the manner and frequency provided by law enacted by the General Assembly, annually adjust one or more specified tax rates or levies in order to reduce revenue generated in an amount substantially equal to the additional revenue produced by any sales and use tax base expansion authorized under the amendment. These adjustments may include changes to the rate of the sales or use tax, the operating levy for personal property taxes, the operating levy for residential real property taxes, the operating levy for all property taxes levied by a political subdivision that imposes the same rate of levy upon all taxable property, or the rate of any tax imposed on earnings. The amendment specifies that under no circumstances may a county or other political subdivision make an adjustment that results in a reduction in funding to public schools within or serving the jurisdiction. Beginning January 1, 2028, each sales and use tax rate imposed directly by the Missouri Constitution, except the rate imposed under Article XIV of the Missouri Constitution, must be adjusted in the manner provided by law to produce substantially the same amount of tax revenue as the median annual amount of tax revenue produced during the three state fiscal years ending in 2024, 2025, and 2026, after the revenue for each fiscal year is adjusted for inflation. The State Auditor must determine the reasonable estimate of the median annual revenue amount and calculate the reduced rates necessary to produce that amount.

The amendment also provides that any tax or revenue increase resulting from legislation enacted for the purpose of reducing and eliminating the state individual income tax and reducing local tax rates, if enacted within three years of the effective date of the amendment, will not be considered new annual revenue for purposes of Section 18(e) of Article X of the Missouri Constitution and will be exempt from the requirements of Article IV, Sections 30(b), 30(c), and 30(d) of the Missouri Constitution.

The amendment includes ballot language for this proposed constitutional amendment.