The “integrity fee” is back.
Late last week, the Kansas State Legislature’s Committee on Federal and State Affairs introduced SB 23, the Kansas Sports Wagering Act, which includes an “integrity fee” to the professional sports leagues, mandates use of official league data, allows for mobile sports betting, names the state lottery as the regulator and sets a 6.75 percent tax rate. Likely the only part of this bill attractive to potential sports betting operators is the tax rate, while the professional sports leagues would get their first big win if the bill becomes law. No state with legal sports betting pays the pro leagues an “integrity fee,” while the main league proponents, the NBA and MLB, have made public efforts to call it anything else, such as “royalty” or “compensation.”
Nevertheless, the bill sets a “sport betting right and integrity fee” of 0.25 percent of total betting handle. The fee is due quarterly, and the bill goes on to note that not more than 5 percent of handle should be paid in a single month. The bill also requires operators to use “official league data” for Tier 2 wagers, which are those that involve more than the final score, like prop bets.
Bill green lights state-wide mobile, and lottery could have its own app
Several of the professional sports leagues, most notably the NBA and Major League Baseball, have been lobbying across the country for a fee of this kind by any name, but to no avail. There is currently a bill in the Missouri General Assembly that calls for a total one percent payout to the professional leagues and the NCAA. But Kansas has no professional sports teams, so it is curious why lawmakers would include a fee.
SB 23 is sponsored by the Committee on Federal and State Affairs, not an individual. The committee held a hearing — originally scheduled for two days, but cut back to one with no recommendation — on sports betting in December. After the hearing, Committee Chairman Bud Estes (R-District 119) fellow lawmaker John Carmichael (D-District 92) got into a finger-pointing match in the media about whether or not Kansas lawmakers should attend an industry conference in New Orleans earlier this month. Some lawmakers did, and last week, SB 23 was introduced.
A call to Estes’ office were not immediately returned on Tuesday.
The bill, which would legalize sports betting on or before Jan. 1, 2020, would allow state-wide mobile betting, and every operator could have up to three skins. The lottery would also be entitled to set up its own interactive sports betting platform, website and mobile app.
The bill also clearly states that sports betting can only be offered through facilities that are operated by the Kansas Lottery or contract with the lottery. It goes on to mention horse racetracks, but it appears according to a strict interpretation of the language, to leave casinos out of the in-person betting mix.
Kansas currently has four commercial casinos, including one owned by Penn National Gaming at Kansas Speedway. There are also about five Indian casinos, though they may not be affected by a new state sports betting law.
SB 23 was filed on the heels of HB 2032, which is a one-page bill that would limit in-person sports betting to horse racetracks only.
Below is a quick look at SB 23:
Mobile sports betting? Yes
In-person registration required? Not addressed
Tax rate: 6.75%
Application/renewal fee: Not addressed
Legal to bet on college games: Not addressed
Fee or royalty or compensation to pro leagues: Yes
Use of “official league data” mandated?: Yes
Regulatory body: Kansas Lottery
Where the money goes: The lottery will collect proceeds and use them for the regulation and operation of sports betting, to compensate lottery retailers, and to fund problem gambling programs.