Consensus Nears For Kansas Sports-Betting Bill

March 23, 2022
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Currently, Kansas is one of 17 states without legalized sports betting in the U.S. but lawmakers hoping to change that unveiled a revised proposal on Tuesday for legalizing retail and mobile wagering at casinos, professional sports stadiums and convenience stores in the state.

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Currently, Kansas is one of 17 states without legalized sports betting in the U.S. but lawmakers hoping to change that unveiled a revised proposal on Tuesday (March 22) for legalizing retail and mobile wagering at casinos, professional sports stadiums and convenience stores in the state.

The House Federal and State Affairs Committee spent 90 minutes taking testimony in support of House Bill 2740 from casino operators, a lobbyist for Major League Soccer’s Sporting Kansas City and a lobbyist for Las Vegas casino owner Phil Ruffin, who has tried for years to restart operations at the now closed racetrack in Sedgwick County.

The only opponents to offer testimony were from the greyhound racing industry, concerned about restrictions placed on their business. Gambling addiction and animal rights organizations expressed concerns while taking neutral positions on the bill.

Republican Representative John Barker, who chairs the committee, delayed advancing the bill after committee members decided to consider amendments, but said lawmakers would act on the bill as soon as Monday.

“I never thought this day would get here with three casinos … really four with the [Prairie Band] Potawatomi Nation on board the same issue at the same time,” Barker said.

The Kansas legislature has until May 20 when lawmakers are scheduled to adjourn the 2022 session to pass House Bill 2740, sending it to Democratic Governor Laura Kelly for her signature.

The bill would allow for state-wide mobile sports betting to be regulated by the Kansas Lottery, while allowing for 12 digital platforms, or skins, all tethered to the state’s four existing commercial casinos and would permit wagers on college and professional sports.

Professional sports teams, but not the Kansas Speedway, would be able to have kiosks at their stadiums, as well as allow customers to wager using their mobile device.

The bill also allows convenience stores that are lottery retailers to offer kiosks and creates a white-collar crime fund with the first $750,000 collected in tax revenue annually directed to the fund.

The bill allows the Kansas Lottery to offer instant lottery games online and gives federally-recognized tribes the ability to compact with the state to offer retail wagering, but not mobile betting.

Unlike the House substitute for Senate Bill 84 that dedicates 2 percent of gross gaming revenue for problem gambling, the House bill designates $100,000 annually be paid into the Problem Gambling and Addictions Grant Fund.

The House bill does not allow for promotional write-offs for operators, but the substitute Senate version does. The bill does include a provision to allow for the prosecution of grey-market games, also known as skill-based slot machines.

The legislation would also legalize historical horseracing (HHR) machines at Ruffin’s Wichita Greyhound Park in Sedgwick County, but it caps the number of machines at 1,000 and bans the machines at greyhound races.

Scott Beeler, a lawyer with Lathrop GPM, appeared on behalf of Ruffin Properties and in support of the bill but asked that lawmakers consider allowing racetracks to offer sports betting as the measure is worked on in committee.

According to the proposal, HHR machines would be taxed at 3 percent on the total amount wagered.

“This bill is offensive and disrespectful to the entire greyhound community,” Jim Gartland, executive director of the National Greyhound Association, said. “If the Ruffin group doesn’t want to offer greyhound races or greyhound simulcasting to operate his … machines, so be it, but why allow them to prohibit anyone else from doing so?”

“This is akin to letting a McDonald's franchise owner write the laws on what other fast-food companies are allowed to be operated in the state,” Gartland said in submitted written testimony.

Kansas would tax mobile wagering at 20 percent and 14 percent for in-person sports bets. A substitute version of Senate Bill 84 that was carried over from 2021 would tax retail wagers at 5.5 percent and mobile at 8 percent.

“We are in a position to support HB 2740,” said Whitney Damron, a lobbyist for Penn National Gaming, which is a 50-50 partner in Hollywood Casino at the Kansas Speedway in Kansas City.

Damron told the committee that the House bill addresses casinos' concerns regarding the role of the Kansas Lottery, specifically “objections to the state being both regulator and provider of sports betting.”

He said Penn National was supportive of proposals to allow casinos to offer three skins per property along with in-person wagering, while “marketing agreements with up to 50 entities, including fraternal and veterans’ organizations, allows the retailers to participate in this legislation.”

The bill also does not require the use of official league data in settling wagers. Damron said Penn supports the provision to allow for HHR machines at Wichita Greyhound Park that settles some of the challenges that the Kansas gaming industry has had in this bill before.

“The one objection we do have is tax rates,” Damron said. “The tax rates are a little high on this bill. What we would hope is through this process we would have an opportunity to bring those down to something that is at happening around the Midwest.”

Both retail and online sports betting is taxed at 6.75 percent in Iowa, while the rate is 10 percent in Colorado. Damron noted that Missouri is considering several bills to legalize sports betting with House Bill 2502 establishing a 10 percent tax on adjusted gross revenue.

Damron said estimates of $1.5bn to $2bn in wagering handle suggest the state of Kansas could receive $50m in annual revenue. An official fiscal note has not been released for HB 2740.

If the House were to approve the legislation, lawmakers would have to work out a deal with senators who passed a competing bill that was substituted in committee last year.

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