The House voted Wednesday, for the third year in a row, to legalize online sports betting in Mississippi.

Proponents say this could generate tens of millions of dollars a year in new tax revenue, but critics warn it would fuel gambling addiction and hurt brick-and-mortar casinos.

The approval of HB 1581 sets the House up for another showdown with the Senate, where legislation to legalize online betting has died amid opposition from the casino industry and concerns over gambling addiction. The measure is mostly the same as one the House passed last year, but an amendment introduced on the House floor before the bill passed Wednesday, with an 85-31 vote, marks a significant change. The amendment would require Mississippi to eventually make a one-time $600 million transfer from its Capital Expense Fund to help shore up the state’s pension system.

In remarks on the House floor, Gaming Chairman Casey Eure, a Republican from Saucier who authored the bill, said Mississippians have attempted to place around 10 million online sports wagers in Mississippi since September of 2025. Of those, he said, 81,000 traveled to other states to bet. These figures show that Mississippi is missing out on between $40 million and $80 million a year in taxes as a black market continues to thrive, he said.

“These are Mississippi residents crossing into other states, and the outcome of that is that Mississippi receives zero tax revenue, there’s zero oversight, zero consumer protection against these people placing bets, and problem gambling goes undetected and unmanaged,” Eure said.

The bill would require gambling platforms to partner with a brick-and-mortar casino before operating in the state, and casinos would be allowed to partner with up to two platforms. The gambling platforms would be required to utilize geofencing technology intended to ensure that wagers are only accepted from players located within Mississippi.

It would also create a $6 million fund, generated from taxes on sports betting and replenished each year until 2030, that casinos could draw from if their revenues decrease as a result of legalized online betting. Any money remaining in that fund would be diverted to the Public Employees’ Retirement System, which has unfunded liabilities of about $26 billion.

Tying online betting legalization to PERS is the primary change in this year’s legislation. The amendment approved on the floor and authored by Rep. Hank Zuber, a Republican from Ocean Springs, would allow for tax revenue from mobile sports betting to keep flowing to PERS as long as the pension system’s assumed investment return rate stays at or above what it was on January 1, 2020. If that rate drops below the 2020 level, the money would stop flowing to the pension system.

Most notably, once the pension board sets its assumed return rate at or above that 2020 benchmark, the state must make a one-time $600 million transfer from the Capital Expense Fund into the pension system. The Capital Expense Fund pays for things such as equipment purchases and infrastructure projects, such as water systems and emergency repairs to state buildings.

Democratic Reps. Robert Johnson of Natchez and Omeria Scott of Laurel said it would be unwise to divert money away from the Capital Expense Fund amid budgetary pressure from state tax cuts and slashes to federal programs by the Trump administration.

“When we talk about taking 600 million out of (the Capital Expense Fund) is this an appropriate fast-paced use of these funds?” Johnson said.

The House and Senate are still at loggerheads over how to shore up the Public Employees’ Retirement System. The Senate has already sent the House a bill to put half-a-billion dollars of the state’s current surplus into PERS, in addition to putting $50 million a year over the next decade. House leaders have proposed a recurring revenue stream for PERS, either from the state lottery or by legalizing mobile sports betting.

When the bill passed out of committee on Monday, some House lawmakers said the legislation wouldn’t do anything to stop platforms from partnering only with the state’s largest casinos, raised concerns over gambling addiction and questioned the revenue-generating potential of mobile betting amid the rise of largely unregulated prediction markets.

Addressing concerns over addiction, Eure said his bill would require gambling companies to collect player data to identify problem gamblers and to implement age verification services on their platforms.

The bill would also permit the Mississippi Department of Human Services to identify gambling winners who owe child support and to have casinos withhold gaming winnings, a policy some lawmakers have been trying to pass for years.

Senate Gaming Chairman David Blount, a Democrat from Jackson who has thus far opposed mobile sports betting legalization, did not take up a similar bill in his committee. He told Mississippi Today in January that the rise of “prediction markets,” exchanges where people bet on the outcomes of future events, erodes the revenue the state could generate through traditional online betting. These markets, dominated by platforms such as Kalshi, are different from traditional sports betting because traders set prices.

Under the Trump administration, the Commodity Futures Trading Commission has taken a lax approach to regulating prediction markets, allowing platforms to expand their offerings in states around the country, including states such as Mississippi, where mobile sports betting remains illegal.

Traditional sports betting giant DraftKings, which has lobbied Mississippi House Speaker Jason White to legalize online betting, launched its own prediction market product last month.

Eure told Mississippi Today that he agreed that prediction markets would cut into the revenue online betting would produce. But he said the U.S. Supreme Court could resolve ongoing legal challenges involving platforms such as Kalshi, and that federal regulation could help Mississippi claw lost revenue back.

HB 1581 now heads to the Senate for consideration.