Kansas lawmakers are digging into sports betting.
On Tuesday, the committees for Federal and State Affairs in each legislative chamber held their first hearings on the issue. Stakeholders on both sides testified before the committees in an effort to shape the legislation going forward.
Two sports betting bills are already filed in the House, and the Senate is reportedly working on a draft of its own.
First KS hearings on sports betting
H 2752 is one of the House bills on file, and it was the one up for discussion on Tuesday.
Like the other, this one would legalize wagering in Kansas pending a favorable ruling from the US Supreme Court. Unlike the other one, though, H 2752 was crafted under the guidance of professional sports leagues.
The bill follows the new blueprint that the NBA and Major League Baseball have begun to propose. Pitched as a way to protect the integrity of sports, their model has faced opposition from lawmakers in several states.
The House hearing opened with a thorough rundown of the “legal barriers to sports betting in Kansas.” State law needs to be amended, and something will need to happen at the federal level regarding PASPA.
Six states have recently legalized sports betting, and more than a dozen others are actively considering legislation. Add Kansas to the latter category, as it has now entertained the first meaningful discussions.
And as more states explore legalization, stakeholders have begun to articulate their opposing stances with more clarity.
MLB offers its side
MLB’s Deputy General Counsel Bryan Seeley was in Topeka to provide testimony on the league’s behalf.
By now, we’re familiar with the script Seeley follows (and he is, too). Having done this in several states in recent months, he speaks with polish on the topic.
After introducing himself to the Kansas committees, Seeley got right down to business. “My job at Major League Baseball really centers on protecting the integrity of the game,” he opened. “Threats to the integrity of baseball can come from a lot of different sources.”
Boom. “Integrity” twice in the first two sentences. Seeley cited cheating, PEDs and off-field issues as potential threats to integrity. And, of course, sports betting and the “manipulation of our game in a way to enrich people who are betting on sports.”
As is tradition, Seeley painted the edges of the strike zone while laying out the framework of the bill. He cited data usage and betting limitations as tools to protect the game before delivering the payoff pitch: the integrity fee.
That fee would give the league one percent of all money wagered as compensation for increased diligence and increased risk in an expanded market. And it’s become the primary sticking point among lawmakers.
“I’m not here to tell you today that Kansas should legalize sports betting,” Seeley found his go-to line. “I’m here to tell you that if Kansas does legalize sports betting, there are some very important things that we care about, that we hope will be in any bill that Kansas passes.”
In addition to Seeley’s verbal testimony, three others provided written support for H 2752:
- Rep. Jan Kessinger – Kansas House of Representatives
- Dan Spillane – NBA Assistant General Counsel
- The Kansas City Royals
A unified stance against the league model
We’re tracking more than 40 sports betting bills, and Kansas H 2752 is one of only a handful that follows the leagues’ blueprint.
While West Virginia was considering its law, we speculated about why the leagues were expending so much effort in the quiet mountain state. It doesn’t have any professional sports teams, nor a huge gaming industry, and it ranks just outside the bottom ten in population.
It might be small, but being one of the first puts the state in a mighty position with regard to sports betting legislation.
By failing to get their requests granted in WV, the leagues might struggle for a foothold in other states. Why should Kansas casinos pay additional fees that casinos in neighboring states don’t?
Some of the arguments used by WV lawmakers have already migrated over to Kansas, and the opposition has grown educated on the specifics of what the leagues are requesting.
Here’s the general foundation of stakeholders’ stances against the integrity fee:
- Sports betting is not a money-maker; it’s a casino amenity
- Money should be kept in the state’s pockets, not the leagues’
- State agencies are best equipped to regulate and monitor sports betting
- Burdensome fees and data concessions put the state at a disadvantage in the market
If lobbyists on the operators’ side can continue to present this list convincingly, the leagues will have a hard time making inroads. Here’s how they argued the points before the Kansas committees:
Casino stakeholders weigh in
The casinos are not in support of H 2752, and there’s no hiding why.
Hollywood Casino
Whitney Damron, representing Hollywood Casino, was among those who provided testimony against the bill. Here’s Damron’s opening statement:
We do stand in front of you today and express our support for sports wagering if it’s done in an appropriate manner, a safe manner that protects the integrity of the game.
We don’t support House bill 2752 in front of you for a number of reasons. First and foremost is the integrity fee, which you’ve heard about, is not done in any other jurisdiction, and we don’t think it’s appropriate in Kansas, either.
We support legislation that’s very similar to what West Virginia just recently adopted…
As expected (and feared by the leagues), the West Virginia sports betting law is already being held up as a model for other states. It was just passed last week, and it does not include integrity fees and other concessions.
In front of the Senate committee, Damron argued that sports betting would provide plenty of intrinsic benefits to the leagues.
“We’re driving attention,” he said. “We’re driving interest in the games that they regulate. That’s more eyeballs on the screens, that’s higher advertising. We think there are sufficient increases that will come to them without asking the state to carve out shares for [leagues].”
Kansas Star
Boyd Gaming Director of Government Affairs Richard Klemp didn’t even bother submitting written testimony on behalf of Kansas Star. “When we saw the Hollywood testimony, it said everything we think is necessary,” he said.
Klemp did provide plenty of input through his verbal testimony, though. He argued that Kansas is well-trained in regulating gaming under both the Lottery and Racing & Gaming commissions. He cited the state’s “nine-year spotless track record” of integrity.
“We don’t have to reinvent the wheel here,” he said. According to Klemp, tying sports betting to casino reward programs takes care of many of the know-your-customer concerns.
He also provided one of the more memorable lines as he addressed Rep. Kessinger, who moved to introduce the bill. Kessinger testified that a 0.25 percent fee is “becoming the industry standard.”
“I disagree with that,” Klemp said. “I think the industry standard is the gold standard of Nevada, which has zero percent of an integrity fee.”
He took it one step further, too, playing a bit of chicken with the state:
If the integrity fee became part of the law, it’s doubtful whether Kansas casinos would even put in a sportsbook. It takes the profit out of the picture. Again, we don’t expect to make a lot of money, but we do like to do a little better than break even.
Cleverly, Klemp also noted that MLB and the NBA are invested in DraftKings and FanDuel, two daily fantasy sports operators who seem to be moving toward sports betting.
Boot Hill, Kansas Crossing
Matthew Bergmann testified on behalf of the two state-run casinos.
He agreed with the stance of his previous colleagues, but he spent some time on another of the leagues’ asks. They’re requesting that their data sources be the only ones used to settle bets at sportsbooks. It amounts to a “data monopoly,” though the leagues argue its based solely on concerns for customer confidence.
Bergmann is a lawyer, so he approached the proposal from that stance. “I am aware of at least two federal court opinions that indicate that statistics or sports data is not intellectual or protected copyright property,” he said. “And I just wanted to state that because I think there’s a differing opinion as to the use of data on any such potential bill.”
He argued that wagering has “been successful for decades in other jurisdictions” without requiring official league data. “In its current form, we would respectfully oppose at this time,” he said of the bill.
