Kansas sports betting license extensions now in question

The recent legislative maneuvers surrounding Kansas sports betting licenses have raised significant concerns regarding the future of the market. On April 11, 2023, the House of Representatives passed a critical amendment to the state budget, SB 125, that could potentially alter the landscape of sports wagering in the state.

The amendment, introduced on the final day of the Kansas legislative session, explicitly states that for the fiscal years 2025 and 2026, “no expenditures shall be made by the above agency from moneys appropriated from the state general fund or from any special revenue fund…to negotiate or enter into any contract or extension or renewal of an existing contract for the management of sports wagering with any lottery gaming facility manager.”

This provision implies that while the immediate market may remain unaffected, the long-term stability and growth of sports betting in Kansas are now uncertain. Jeremy Kudon, a lobbyist for the Sports Betting Alliance (SBA), reassured stakeholders via X that, “None of the leading online sports betting (OSB) operators in Kansas will cease operations as a result of today’s vote. Most contracts with the lottery run well into 2027.” The SBA encompasses prominent operators such as FanDuel, DraftKings, BetMGM, and Fanatics.

In addition to these industry leaders, Caesars Sportsbook and ESPN Bet also operate within the state. According to Covers, these six operators are licensed through August 27, 2027. However, if the amendment remains unchanged, it suggests that their operations could be jeopardized after this date. Notably, the newly passed amendment is set to expire on June 30, 2026. Kansas launched its sports betting market in 2022, making these developments particularly significant for operators and consumers alike.

The SBA’s response to the amendment reflects their concerns for the integrity of the Kansas sports betting market. The iDevelopment and Economic Association (iDEA), which also represents the SBA members, criticized the legislative change, highlighting the potential negative implications. John Pappas, iDEA’s state advocacy director, stated, “This reckless budget maneuver threatens to dismantle a successful, regulated sports betting market. It serves no meaningful fiscal purpose, but instead diverts dollars and consumer protections away from Kansans—pushing them toward illegal, unregulated gambling sites that lack accountability.”

Lawmakers Exploring a Single-Source Model

The recently enacted amendment does not outright prohibit sports wagering; however, it holds the potential to reshape the market structure significantly. Insight from various sources suggests that a resolution may still be achieved before the amendment reaches its expiration.

Controversially, some officials are considering a shift toward a single-source model for sports betting, a framework that has shown limited success in markets where it has been implemented. A prime example is Washington, DC, where the sole-source approach resulted in a stagnating market until officials broadened access to multiple platforms in July, leading to increased revenue and consumer engagement. The prevailing industry consensus is that such monopolistic structures stifle competition, adversely impacting consumers and limiting tax revenue.

Brendan Bussmann, Managing Partner at B Global Advisors, remarked, “In a state like Kansas, which leans conservative, there seems to be a desire to rediscover the failures of monopoly models. The experience shows that diversified markets drive substantial revenue growth, and this principle should apply to any future gaming expansions.”

In a recent performance report, Kansas sports betting garnered a handle of $248.4 million and generated $8 million in revenue for March, according to the state lottery. While handles saw a slight year-over-year decrease of 1.7%, revenue increased by an impressive 12.4% compared to March 2024, yielding $803,000 in tax revenue for the state and elevating the fiscal year total to $13.1 million.

Adapting to Rapid Policy Changes

The unfolding situation in Kansas is emblematic of a broader trend where bookmakers across the United States are navigating a landscape of shifting regulatory frameworks. States like Illinois, which initiated sports betting with a 15% tax rate, have since transitioned to a sliding scale that ranges from 20% to 40%. Ohio’s tax rate has increased from an initial 10% to 20% and has been proposed to rise further, while Maryland has elevated its own rate from 15% to 20%, with proposals for even higher rates being debated.

Further complicating matters, Massachusetts has submitted a bill proposing an extraordinary tax rate of 51% alongside renewed restrictions on in-play and prop betting as well as advertising. Conversely, a proposal in Vermont aims to eliminate the state’s sports betting and lottery industries entirely.

Additionally, federal lawmakers are advocating for the SAFE Bet Act, which would shift oversight of sports betting to the federal level, adding another layer of complexity to the state-based regulatory environment. Bussmann commented, “Every attempt at increasing tax rates and imposing stricter regulations merely exacerbates the illegal market, undermining legitimate businesses and consumer protections.”

As Kansas navigates these turbulent waters, the future of its sports betting market hinges on the effective balance of regulation that fosters both growth and consumer safeguard.