If anything was made clear at Wednesday’s truncated Kansas Senate Federal and State Affairs Committee sports wagering hearing it was this: potential sportsbook operators are clearly on board. Representatives from four operators in the state testified and to a man, they all came out in support of the latest Kansas bill, SB 283, which would legalize state-wide mobile through casino properties as well as retail sportsbooks.
The hearing was cut short after 90 minutes, when committee Chairman Bud Estes suggested that he didn’t want to put anyone out, but that the hearing would recess until Thursday morning. Those who had planned to testify either as neutral or opposing parties, were asked to return for a second day.
But Wednesday was all about lauding Kansas lawmakers for filing a bill with operator-friendly tax rates (7.5% gross gaming revenue for in-person wagers and 10% for online) and none of the pro league requests for an “integrity fee” or “royalty,” or mandate that licensees purchase “official league data,” which many have already done through commercial agreements.
In fact, most of the questions and discussion were centered around Kansas’ unique situation in which the Kansas Lottery, which would oversee sports betting, would be required to be the “licensee or owner” of any sports betting software. This would be a similar situation to how other online gaming functions in the state, and there is a workaround in place that could also be used for sports wagering.
Operators tout benefits of state-wide mobile
On balance, operators had few complaints about SB 283. Jeff Morris of Penn National (which also recently purchased a 36% stake in Barstool Sports) was the first to testify, and covered all the high points, saying that state-wide mobile is critical to quashing the illegal market, explaining how lower tax rates allow for better competition among legal operators and against the black market, and calling out the professional leagues. The bill would also permit each casino two have up to two “skins” or online brands.
“This bill checks all the right boxes to make sports betting operations successful,” he said during testimony.
With regard to the pro leagues, Morris offered this: “The pro leagues pushed for an integrity fee, but that that was unanimously rejected by states. … Undeterred, the leagues have quickly pivoted to (asking for a mandate for) official league data. The request for the mandate of official league is an attempt by the leagues to charge us twice for official league data.”
— Kyle Burkhardt (@KB3737) December 31, 2019
There is no data requirement in SB 283. Only three states have legalized sports betting with such a mandate. And the integrity fee or royalty has fallen by the wayside in nearly every state, though lawmakers in neighboring Missouri have filed two bills with the integrity fee — a direct off-the-top cut of all wagers made on a league’s contests. On Tuesday, a Missouri House bill that has a data mandate and a 0.25 off-the-top “royalty” fee, got out of committee and is headed to the House floor.
Back in Kansas, committee members are clearly feeling the pressure as sports betting gets legalized around them, this week in particular as the Kansas City Chiefs prepare for Super Bowl LIV. One lawmaker asked Morris if he thought Kansas had “missed a good opportunity.”
Said Morris: “You do have the chance to get ahead of Missouri, but sports betting is going on all around you.”
The lawmaker went on to question whether or not Iowa, which has had legal sports betting since September, was benefiting from action on the Chiefs. Morris replied in the affirmative, leading the lawmaker to say, “Oh, good, we’re sending Iowa money.”
OK also pulling casino money from Kansas
With that thought in mind, Matthew Bergmann from the Boot Hill and Kansas Crossing casinos, pointed out that his properties are suffering casino losses from competition over the Oklahoma border. Bergmann used that piece of information to segue into being a big proponent of mobile sports betting as a way to bring “additional revenue to the state and (local areas) because mobile is accessible and is a vital part of casinos.”
On balance, Wednesday’s hearing had little drama and only one side of the story. The rest will come Thursday, but Kansas lawmakers may well have already gotten what they need — the go-ahead from the people who will operate sports betting in the state.
Because Wednesday’s hearing was cut short, there was no opportunity to consider a vote. Kansas’ legislative session adjourns on May 31.