Kansas Sports Betting Bill Includes Integrity Fees

Kansas lawmakers introduced a sports betting bill Jan. 17, a measure that includes an “integrity fee” for sports leagues and other regulatory stipulations that many gambling stakeholders and lawmakers in other states have vehemently opposed.

The Kansas Sports Wagering Act follows up on a similar bill introduced last year that also sought to legalize sports betting in the state. Introduced in early 2018, before the Supreme Court announced it had struck down the federal sports gambling ban, the bill gained little momentum in Topeka.

Since the Kansas bill failed last spring, eight other states are taking legal wagers and several more are set to do so sometime this year. Up to two dozen additional states are expected to introduce similar bills in the coming months.

That momentum, particularly from its Midwestern neighbors, has accelerated a sense of urgency in the Kansas Legislature.

The latest bill was introduced on behalf of the Senate Committee on Federal and State Affairs, chaired by Sen. Bud Estes, an outspoken gambling expansion advocate. He said lawmakers had “a workable solution sitting here,” the Hutchinson News reported.

The bill will need to pass through committee, the full legislature as well as the governor’s office, all of which could be difficult in a state that has been historically reticent toward many forms of gambling.

It will also likely face opposition in its current form from more conservative detractors in the Republican-dominated legislature – and possibly even gambling advocates.

Kansas Bill Includes Integrity Fees

Current language in the 39-page bill calls for a 0.25 percent cut of all gambling winnings on bets placed on sporting events to be returned to organizations that hosted the competitions. Supported by major American professional and amateur sports leagueslike the NFL and NCAA, backers say this is a fair compensation for the ability to take wagers in the first place and that it will help protect the sanctity of the competitions from external corruption.

Detractors in the gambling industry, as well as lawmakers in other states, have refuted the league’s claims and in some cases have gone so far as to call the integrity fee appeals as “money grabs.” Keenly aware that a cut of profits for the leagues mean less for state gambling purveyors as well as tax coffers, legislators have widely opposed any compensation for outside organizations.

None of the eight states taking bets remit integrity fees. As it stands now, Kansas could be the first to do so. Fee opponents fear this could hurt the market’s revenue potential or even jeopardize its overall sustainability.

With integrity fees faltering in most other states, sports leagues have reorganized their pitch around what they call “data fees,” or restitution for league-sanctioned competition data. Aside from score results and point total outcomes, the current Kansas bill mandates all gaming purveyors use league data for prop contests or in-game betting.

For example, that could come into play for bets on “Will Ezekiel Elliott have a fumble during the game?,” a scenario that played out with the Dallas Cowboys running back in the current NFL season. The league retroactively reversed its decision on a play that caused a fumble. In this situation, the NFL would have final say about what actually occurred, not a third-party gaming company, to determine the result of the wager.

To fulfill that scenario, it would likely necessitate some sort of financial arrangement to compensate the leagues in exchange for the official data.

League fees are just a few points of contention Kansas lawmakers will need to resolve.

Lottery Maintains Preeminence

Kansas law mandates an unusual regulatory structure that requires the state lottery to oversee all gambling entities. Even casinos are technically subcontracted subsidiaries of the government-controlled lottery.

Lottery-centric models in other jurisdictions have garnered scrutiny from many industry stakeholders as it potentially excludes multiple competing entities, which offer more options for bettors, to prop up a de facto monopoly. However the Kansas model would in practice allow multiple private companies to operate, just under the lottery umbrella.

That scenario would also circumvent the necessity for a state constitutional amendment, which would require approval via a ballot measure from voters in a gaming-skeptical state and would likely delay legalization until the next election. That means gambling could be postponed until 2021 or later – if it’s even approved by voters at all.

Conversely, the current legislation could allow sports betting as soon as this year in a best-case scenario.

Straightforward passage of any legislation is difficult for any governing body, and gambling has been no exception. Even in the most progressive gaming states, legislation passage and further regulatory implementation has taken multiple months.

Further minutia will need to be resolved and agreed upon by in both houses of the GOP-controlled legislature, and then will need the signature of Democratic Gov. Laura Kelly.

Meanwhile, similar negotiations over sports gambling measures are already taking place in state capitals across the country, which may up the sense of urgency in Topeka.

Midwest Considers Sports Betting

If Kansas passes a bill this year it likely won’t be alone.

Following successful sports betting legalization rollouts along the east coast, the Midwest is the next region poised to embrace sports betting. A host of states in the area have introduced bills, with several among the most likely to jurisdictions to see their legislative efforts come to fruition.

That includes Missouri, which is closely eyeing the actions of its western neighbor. The Show Me State is set to take up a bill and lawmakers from both parties have increasingly shown interest in sports betting.

Other neighbors like Colorado and Oklahoma have also considered legislation, as have states further outside the Kansas borders like Iowa and Illinois.

These external actions could further influence Kansas lawmakers to move quickly so the Sunflower State can have an edge in the race to take sports bets. The comprehensive legislation introduced this week shows Kansas will be in the thick of the action.