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Sports Betting Legislation Clears Kansas Senate With Industry-Friendly Tax Rates

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The state of Kansas took a major step toward expanding gambling on Wednesday when Senate lawmakers passed a sports wagering bill by a 23-15 vote.

The bill now heads to the House for consideration, and if successful there, a potential signature from Gov. Laura Kelly, a Democrat. The Sunflower State is one of more than 20 states in 2020 considering sports betting legislation. There are 14 states currently with legal sports wagering taking place. Additionally, six states have passed laws but aren’t yet live with their respective industries.

More than $18 billion has been legally wagered on sports nationwide since the mid-2018 Supreme Court ruling that overturned the Professional and Amateur Sports Protection Act of 1992.

The Kansas legislation, Senate Bill 283, would allow both retail sportsbooks and online/mobile platforms under the regulation of the Kansas Lottery. The bill was introduced Jan. 21, taking about a month to reach a full Senate vote. The Senate debate Wednesday lasted more than four hours, according to local reports.

The passage comes as neighboring Colorado gears up to begin legal sports wagering in May and Missouri to the east considers its own policy proposals to legalize and regulate the activity. Without a legal market, Kansas would likely soon be sandwiched between two states that would take its sports gambling dollars.

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Kansas has been considering sports betting since 2018.

Details of the proposal

Each of the four commercial casinos in the state could have up to two online/mobile sports wagering platforms. Kansas is also home to five tribal casinos, which could also have access to the sports wagering market. If a tribe submits a request to negotiate a gaming compact for sports wagering, then the governor is required to negotiate in “good faith” regarding a compact.

Under the bill, retail sports wagering would be subjected to a 5.5% tax rate and online/mobile revenue would face a 8% rate. The tax would apply to revenue after applicable fees, federal excise taxes, free play, and all player payouts are made. The tax rates are friendly toward the industry.

A previous version of the bill called for a 7.5% rate for retail and a 10% rate for online/mobile.

The state would allocate 2% of sports betting revenue to problem gambling, a move applauded by the National Council on Problem Gambling. An amendment was adopted before Senate passage.

According to a fiscal note, the state is anticipating up to $900 million in annual handle in five years. The state anticipates an average hold of 6%. Kansas looked at Iowa’s sports betting performance when establishing its expectations for sports gambling. Iowa requires that bettors, until 2021, sign up in person at a casino in order to play via the internet. Kansas would not have that requirement under the current version of the bill.

Kansas’ projections are conservative, but the state is not home to any major pro sports teams.

The Senate passage is good news for several prominent online/mobile sportsbooks.

Sportsbook PointsBet in January secured a market access deal with Kansas Crossing Casino. The agreement will allow PointsBet to provide retail and online sports wagering in the state of Kansas, contingent upon state legalization and PointsBet obtaining the necessary regulatory approvals.

Kansas is home to the likes of Boyd Gaming and Penn National Gaming, two regional casino operators heavily involved with sports wagering in other jurisdictions. Boyd Gaming’s sports wagering partners include both FanDuel and MGM, which is behind the BetMGM app. Penn National Gaming will likely usher in the likes of FOX Bet to the Kansas market, under a market access deal with The Stars Group.

FanDuel’s parent company is in the process of acquiring TSG.

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