Odds improve for legalized sports betting, but Kansas still debates how to get it done
When the Rams play the Bengals in next week’s Super Bowl, are you giving or taking the points?
If you answered that question either way in Kansas, congratulations. You just violated state law.
Kansas has 11 casinos and a statewide lottery, but there’s no place and no way in the state to legally bet on the Super Bowl — or on the Chiefs, Jayhawks, Wildcats or Shockers.
Some legislators want to change that and think this could be the year.
“We got to figure out a way to get this across the line,” said Sen. Rob Olson, an Olathe Republican who chairs the Senate Federal and State Affairs Committee, which handles bills involving gambling. “This is definitely going to be a focus.”
Olson and other lawmakers said the state’s ban on sports betting is leaving millions of dollars on the table for no good reason, given that illegal betting is now as close as your cell phone.
Betting illegally in Kansas
Nobody knows for sure how much Kansans are betting on sports, but it’s common knowledge that they are.
Illegal sports betting was once the sole province of shady back-room bookies. But in the internet age, overseas sportsbooks that are outside the reach of Kansas laws will happily book bets online.
Derek Hein, a lobbyist for two of the nation’s largest online sportsbooks — DraftKings and FanDuel — said illegal betting is a major industry and a major problem in Kansas, where he submitted written testimony on a sports betting bill last year.
“Kansans without ready access to a legal market in a neighboring state can easily bet using the thriving illegal network of offshore websites that are happy to cash in on customers looking for convenience but lacking legal options,” he wrote.
“According to a study by Oxford Economics and the American Gaming Association, Kansans bet approximately $1.3 billion on sports each year through these illegal channels. But the offshore market offers no consumer protections or responsible gaming guardrails, and pays no taxes to the state.”
That reality changed the mind of Rep. John Carmichael, a Wichita Democrat who served on a special committee in 2018 to consider sports betting.
He opposed it then.
“There were folks, quite frankly like me, who feel that expansion of gambling on a societal basis is not necessarily a good idea even though it does generate additional revenue for the state,” Carmichael said.
But his position has evolved given the easy access to sports wagering through overseas sites and the fact that 33 other states have so far either implemented or approved sports gambling.
“I think it’s becoming increasingly clear that online gambling is here to stay,” Carmichael said. “So the end result is despite the bad consequences for mental health and other societal issues . . . it’s going to be available in other states, it’s going to be available via the internet.
“I think it’s rapidly becoming consensus in the Legislature that we need to go ahead and regulate the activity in Kansas and attempt to garner some tax revenue from it to hopefully offset some of the consequences.”
Sports betting wasn’t an issue in Kansas before 2018. The state couldn’t have allowed it if it wanted to.
But in 2018, the U.S. Supreme Court overturned the Professional and Amateur Sports Protection Act, a 1992 federal law that limited sports gambling to the state of Nevada, the only state that had it when the law passed.
New Jersey challenged the law as an unconstitutional infringement on states’ rights. In a 6-3 decision, the Supreme Court agreed.
“Congress can regulate sports gambling directly, but if it elects not to do so, each State is free to act on its own,” Justice Samuel Alito wrote for the majority.
The Supreme Court ruling allowed states to legalize sports betting, but it remains outlawed by Kansas statute.
Overseas online sites and even some industry publications on the internet will tell you that it’s legal for Kansans to bet on sporting events.
It’s not.
Gambling in general remains illegal, other than a few exceptions that have either been approved by voters or carved out by legislators through the years.
Fantasy sports OK, lawmakers say
In 2015, the Legislature cracked open a door into the sports betting world by passing a bill allowing Kansans to play fantasy sports. It was signed into law by then-Gov. Sam Brownback.
But that law explicitly prohibits betting on real teams and real games.
In fantasy sports, team managers, in essence bettors, assemble a fictional team of actual athletes and match their fake team against other managers’ fake teams.
Winning and losing is based on the individual statistical performance of the real players in actual games.
Fantasy sports can be played out over entire seasons, or on a daily basis using online platforms such as DraftKings and FanDuel, which advertise heavily on sports telecasts.
Lawmakers accomplished an end run around the constitutional gambling ban by excluding the money that changes hands in fantasy sports from the legal definition of a “bet,” and defining it as a game of skill rather than chance.
It was the latest in the gradual erosion of the Kansas constitutional ban on gambling that’s played out over decades. Voters in 1986 approved the state lottery, along with wagering on dog and horse races. And the legislature in 2007 changed the law to allow four destination casinos across the state.
To get around the constitution, the four casinos — the Hollywood Casino in Kansas City, Kansas; Kansas Star in Mulvane; Boot Hill in Dodge City and Kansas Crossing in Pittsburg — are technically owned and operated by the state lottery, although they are actually run by casino companies under contract with the state.
Kansas is also home to seven tribal casinos, which are authorized under federal law through compacts negotiated with the state. Their compacts specifically prohibit them from engaging in sports betting and would have to be renegotiated to allow it.
Legislature looking at betting options
The plans under consideration in the Legislature take very different approaches to sports betting.
Both proposals would technically operate through the Kansas Lottery, to avoid constitutionality issues.
Senate Bill 84, which passed the Senate last year but was stymied in the House, would put sports betting in the hands of the four state-sponsored casinos.
The House substitute for it envisions a system that would be more like playing the lottery, allowing players to bet on sports in person at hundreds of locations.
In the Senate plan, one or more of the four casinos could establish an in-house sports wagering system and set up web sites and smartphone apps to allow for betting through the internet.
Each of the state casinos would be allowed to operate in partnership with up to three national online sports betting systems, called “skins” in the industry.
Some of the more well-known skins are FanDuel, DraftKings, FOXbet, Bally Bet and Caesars Sportsbook.
Bally’s, a titan in the casino and sports media industries, has already announced a deal to partner with the Boot Hill Casino to offer Bally Bet as soon as the law allows.
Anyone using the Kansas casino skins would be required to be physically present in the state when they place bets.
The House debated but didn’t pass a competing bill that took a very different approach.
Under the House substitute for SB84, the lottery would contract with as many as 1,200 retailers – gas stations, convenience stores, restaurants, bars – to offer limited sports wagering.
The lottery also would select one platform for online betting, and each casino could request approval to run an additional skin.
The original SB84 was too favorable toward casinos and the state’s share of the take would have been too small, said Rep. John Barker, chairman of the House Federal and State Affairs Committee.
He said his committee may reexamine the issue as casinos appear more amenable to negotiating with lawmakers this year.
“My leadership wants to get it done this year if it’s a good deal for the state of Kansas,” said Barker, an Abilene Republican. “But if it’s not, we won’t.”
Either bill would allow for sports betting sites at professional sports facilities. The only facilities that would qualify are in Kansas City, Kansas: The Kansas Speedway in one version of legislation, and Sporting Kansas City soccer club’s home stadium, Children’s Mercy Park, in another.
Jake Reid, Sporting’s president and CEO, envisions the nearby Hollywood Casino, already a partner of Sporting, creating a sports betting lounge at Children’s Mercy Park. He previously worked at a soccer club in England where fans were permitted to wager and said it operated without any problems.
“For us, this is all about fan experience,” Reid said. “If done under the proper legal structure we believe this can have a significant impact on how fans consume all sports.”
Where would betting be: Casino or convenience store?
The casinos made their case that they should be the exclusive providers of sports betting in the hearings leading up to the Senate passage of SB84 last year.
“We believe it is critical that the management of sports betting be limited to existing licensed lottery gaming facility (casino) managers,” the Kansas Crossing and Boot Hill said in joint testimony to the Legislature. “Kansas lottery gaming facility managers have invested hundreds of millions in their brick-and-mortar establishments in this state, are major drivers of job creation and economic activity in our host communities, and a significant generator of tax revenue for state and local governments. We have well established, rigorous compliance and responsible gaming protocols in place to ensure a safe wagering environment for consumers.”
Supporting the House plan is Fuel True, the statewide association of gas stations and convenience stores.
“We are the largest customers for the Kansas Lottery, convenience stores, grocery stores that sell lottery tickets for the state of Kansas,” said Tom Palace, former executive director and now a consultant to Fuel True.
On sports wagering, “we should be included in that because we’re part of the lottery,” he said.
The retailers ”have a financial track record with the Kansas Lottery and have the sufficient resources to support the activities required to conduct sports wagering,” he said.
Under the House proposal, neighborhood lottery retailers would be allowed to offer what the gambling industry calls “Tier 1” wagers.
Those are bets placed before a game starts and winning and losing is based on the final score.
Fuel True would be fine with local retailers being allowed to handle those simple bets and letting casinos and their online skins meet the demand for more exotic “Tier 2” wagering, Palace said.
“Tier 2” wagers, also called “prop bets,” are more high-risk, high-reward wagers on particular occurrences that might happen in a given game. You can make prop bets before or during a game using a mobile app.
Both the Senate and House proposals would allow Tier 2 betting, but only inside casinos or through their authorized online platforms.
Some of the simpler and more popular prop bets are things like how many points a particular player might score in a basketball game, or how many passing yards a football quarterback will throw for, or which team will score the first touchdown.
But those just scratch the surface.
For major events like the Super Bowl, sportsbooks offer props not only based on what happens on the field, but extraneous matters such as who will win the pregame coin flip, how long it will take to sing the national anthem, whether Snoop Dogg will smoke onstage during the halftime show, or even the color of Gatorade that will be dumped on the winning coach in celebration — this year’s early favorite is orange.
DraftKings, which operates a major online sportsbook in addition to hosting fantasy sports, has already announced it will offer more than 700 prop betting opportunities before and during next week’s Super Bowl.
State of Kansas could make millions
One of the biggest differences in the Senate and House bills is the amount of money the state would take from its gamblers.
Under the Senate plan, the state would get 5.5% of the total betting revenue on wagers placed in person at a casino. The state would get 8% on online bets.
In the House plan, the state’s cut would be 14% on money bet at casinos and 20% of bets made at lottery retail outlets and online.
Olson said he’s ready to deal on most details to get a bill passed. But he’s adamant that the final plan include online wagering to maximize the state’s income.
“I’m going to try to work out some of these differences, but it’s obvious mobile is the way to go,” he said. “I want to find that happy medium where we get this passed and it’s working and we see this revenue like Iowa’s.”
Iowa collected $3.1 million in taxes on sports betting last year, up from $1.8 million in 2020.
That state taxes online gambling at 6.5%, according to a report compiled by the Kansas Legislative Research Department.
In Colorado, the first bets were taken in May 2020. From November 2020 to November 2021, the most recent 12-month period available, the state’s legal sportsbooks handled nearly $4 billion in bets and the state took in more than $12.2 million in taxes.
Nebraska is the only other state adjacent to Kansas that has passed a law to allow sports betting, but it hasn’t set up its system yet.
Carmichael, the one-time opponent turned reluctant supporter of sports betting, said he favors the Senate plan that would limit it to the four casinos and their online skins.
“I recognize that bars, restaurants, convenience stores, they all would like to also get into this wagering business,” he said. But, he added “in a place people drink more than they probably should, their judgment becomes impaired, they get into it with their friends, they’re in essence betting on their credit cards one way or another, that can lead to very bad consequences.”
He also said he’s concerned that having up to 1,200 sports betting stations would make it too hard to enforce a minimum age limit of 21, which is in both the Senate and House bills.
Even with that limitation, he said he still worries that younger people will access their parents’ betting accounts online. But putting age verification in the hands of the casinos is probably the best way that can be done, he said.
“The (Senate’s) casino model would allow the established state-owned casinos, which of course are operated by the big gaming companies, to establish online gaming,” Carmichael said. “In a perfect world, we would limit it to the brick and mortar establishments, but that approach is probably not competitive with the other online offerings that are rapidly evolving throughout the country.”
Sen. Jeff Longbine, a member of the Federal and State Affairs Committee, said he sees the House plan as a bigger gamble because it puts much more of the operation of sports betting directly under the lottery.
“I think one of the major differences between the House and the Senate positions is … under the Senate position, the casinos take all of the risk and the House version, the state takes the risk,” said Longbine, an Emporia Republican. “That’s a major distinction we need to keep in mind as we move forward.”
Katie Bernard and Kevin Hardy of the Kansas City Star contributed to this report.
Editor’s note: Anyone who needs help with a gambling problem can call or text a national hotline at 800-522-4700 or go to www.ksproblemgambling.org, the website of the Kansas Coalition on Problem Gambling.
