Sports fans will be able to bet on their favorite teams and players as sports betting becomes legal in Kansas starting on Sept. 1, a week before the NFL regular season begins and NASCAR comes to the Kansas Speedway.
While fans try to make a couple of extra bucks on the side, the Kansas Lottery will be collecting 10 percent in tax revenue off every bet made. What’s that eventually worth to the state? It’s not clear.
In estimates provided to the Kansas Legislature in April, the Kansas Lottery guessed the state would receive $1.8 million in 2023, $6 million in 2024 and $10 million in 2025. But lottery officials say those estimates are already off because the legislation changed after they were made, most notably when the tax rate was proposed at 20 percent instead of the eventually passed 10 percent. No new projections have been made since.
The $1.8 million number was used again in June when the Kansas Legislative Research Department (KLRD) and Division of the Budget sent a memo to the Legislative Coordinating Council and Gov. Laura Kelly for 2023 budget revenue estimates. KLRD said no better estimate was available.
The amount raised by sports betting will determine how much money is available to lure a professional sports team to Kansas, ideally the Kansas City Chiefs from across the state line. That’s because the majority of tax revenues from sports betting is earmarked for a fund for that purpose.
Senate Bill 84 found bipartisan support in the state legislature and was signed into law by Kelly, who called legalized sports betting a common-sense solution that keeps Kansans’ money in Kansas and drives business to sporting events, casinos, restaurants and other entertainment venues.
“I want to thank all our partners for working with us to get this done in time for football season,” Kelly said.
There are still some hurdles to jump over before anyone can place a bet on the Chiefs to win Week 1 against the Arizona Cardinals, scheduled for Sept. 11.
The Kansas attorney general’s office said there are “significant legal issues” regarding the Kansas Lottery’s proposed sports betting regulations, which need approval by the attorney general’s office.
“Our initial review has identified significant legal issues with the agency’s proposed regulations,” said John Milburn, spokesman for the attorney general, in a statement Thursday, Aug. 18. “Within days, we will be providing our formal feedback to the Lottery and giving them the opportunity to correct the legal deficiencies. We intend to approve these regulations as soon as the agency fixes the legal problems in their initial version.”
The attorney general’s office says they received the proposed sports betting regulations from the Kansas Lottery on Aug. 10 and have also begun to review the Kansas Racing and Gaming Commission’s regulations received on Aug. 17, but did not state whether there are any issues as well. Milburn did say the review of the gaming commission’s proposed regulations is being expedited.
On Friday, Aug. 19, the attorney general’s office sent their regulations feedback to the Kansas Lottery with questions or corrections on 15 proposed regulations.
“The lottery has had an excellent working relationship with the attorney general’s office and there is always an exchange of ideas and legal theories when it comes to rule and regulation approval,” said Cory Thone, spokesman for the Kansas Lottery. “This is an ordinary course of business with the lottery and the attorney general’s office, and the lottery is confident that any issues the attorney general has potentially identified will be worked out very quickly.”
Todd Allen, the gaming commission’s director of sports wagering, told The Beacon that he has not had any feedback from the attorney general’s office in regards to his agency’s proposed regulations.
The gaming commission still has several steps to take before the self-imposed Sept. 1 deadline, including background checks of the companies behind the sports betting platforms that have partnered with the state’s four casinos. The commission also needs to test the machines that will be in operation.
The four state-owned casinos have already announced partnerships with online companies that accept bets on sporting events, called sportsbooks, that operate all over the country. Each casino is able to partner with a maximum of three online sportsbooks. So far, no tribal casinos has announced any partnerships with a sportsbook. Here are the partnerships we know so far:
Boot Hill Casino: Bally Bet and DraftKings
Hollywood Casino at Kansas Speedway: Barstool Sportsbook and FOX Bet Sportsbook
Kansas Crossing Casino: Caesars Sportsbook and PointsBet
Kansas Star Casino: BetMGM and FanDuel
The gaming commission and Kansas Lottery both believe they will be ready for the Sept. 1 launch day.
“We’ve seen a lot of states around the country take an exorbitant amount of time to launch this,” said John Holden, sports business professor at Oklahoma State University. “Kansas is on an expedited path. Because it has gone so quickly, there probably are going to be things like this that come up until everything goes live.”
The NFL is the most bet-on league in the country, so time truly is money. A delay of even one week of betting could cost the state significant money in lost tax revenue. Not that the tax revenue will be spent any time soon.
Kansas has been an outlier regarding use of the tax revenue when compared to the other 35 states that have also legalized sports betting.
The first $750,000 made in tax revenue will go towards the White Collar Crime Fund, created to investigate criminal offenses related to illegal wagers. After that, 80 percent of the remaining funds will go to the Attracting Professional Sports to Kansas Fund, money to finance a potential stadium built in Kansas that will require public funds. Only 2 percent will go to the Problem Gambling and Other Addictions Grant Fund. The balance remains in the Lottery Operating Fund.
The most notable targets for professional sports teams to be lured to Kansas are the Kansas City Chiefs and the Kansas City Royals, which have stadiums in Missouri. Clark Hunt, owner of the Kansas City Chiefs, has previously said the club is only looking to renovate Arrowhead Stadium rather than looking for a new home. That was after Chiefs President Mark Donovan said the club was considering stadium pitches in Kansas during the NFL owners meeting in April.
“It’s very unique,” said Holden. “I think expending any public money to bring a professional sports team to your city or state is a terrible idea. There are many public causes that could better use that money than the Kansas City Royals or the Kansas City Chiefs.”
That said, Holden predicts Kansas will benefit from legalizing sports betting before its neighboring states. Neither Oklahoma nor Missouri has legalized online sports betting, making Kansas a potential hotbed for out-of-state bettors to cross state lines to place bets legally. Billboards in Kansas City, Missouri, have already gone up advertising the arrival of sports betting in Kansas.
“I think there’s a real sort of opportunity for Kansas,” Holden said. “It has got an opportunity to have a little mark in a sort of dry area of the country.”