Casino operators likely will need to give ground on internet lottery to get Kansas sports betting, according to a lawmaker on the House side.
The Senate passed a KS sports betting bill favorable to the state’s casino industry on Wednesday.
However, Rep. Don Hineman tells Legal Sports Report that Gov. Laura Kelly will not support the sports betting bill as passed by the Senate. Hineman indicates that the governor wants more money for the state in the bill through the online lottery.
“There will definitely be some changes on the House side,” Hineman said. “I don’t expect the Senate bill to survive intact, especially because the administration is against it. It will at least have to be amended to open up the iLottery a bit to provide more of an online presence.”
iLottery negotiations underway in Kansas
In a lot of ways, Kansas is shaping up to take a similar road to Michigan sports betting.
In the Wolverine State, the House passed a bill agreeable to the casinos. Then the administration engaged on the Senate side to get more money for the state with a particular focus on protecting the iLottery.
S 283 allows for limited state lottery ticket sales online with restrictions requested by the casinos so that the online games aren’t too much like slot machines.
Rep. John Barker, chair of the House Committee on Federal and State Affairs, developed H 2671 in collaboration with the governor’s office. The Senate bill is expected to head to his committee, where he can help facilitate the discussion between the casino industry and the administration.
“I think the lottery director and administration need to complete negotiations with the casinos and more completely define the guard rails for iLottery to better delineate what is allowed for the lottery and what is reserved for the four casinos,” Hineman said. “If that’s done and the administration gets comfortable with the product, it has a good shot to survive.”
Kansas sports betting language better in Senate bill
Hineman indicated that he likes the bill passed by the Senate better than the legislation currently in the House.
“The Senate did pass a very good bill, in my opinion,” Hineman said.
The House bill sets a tiered tax rate of 14% for bets placed at casinos and 20% for online, which Hineman says is too high. He also thinks the way the House bill allows sports betting in Kansas at more than 1,200 lottery retail vendors in the state is problematic in the heavy competition it provides for casinos.
The Senate bill is favored by the casino industry for its tiered tax structure at 7.5% for wagers made at casinos and 10% for wagers placed online.
“We’re very happy with SB 283 as it passed the Kansas Senate,” said Jeff Morris, vice president of public affairs for Penn National Gaming. “I think it has some of the best practices we’ve learned from other states on how to make a successful sports betting law. The tax rate is comparable with neighboring states. Iowa is 7.5% and Colorado is 10%, so it’s right there in the middle and allows us to compete with those markets.”
Kansas has four state-owned casinos operated by private companies.
Possible poison pill on the horizon
Hineman warned that Barker could try to slip a provision into the gaming bill to reduce the tax rates for slot machines at dog and horse racing parks. Such an amendment narrowly failed on the Senate floor.
Kansas previously authorized such racetracks, but they aren’t operating due to the belief that they can’t be profitable at the current 40% tax rate. Casinos in the state pay a 22% tax on slot machines.
“If he does that, it will be in violation of casino operating contracts,” Hineman said. “They will sue and our own attorney general says they will win. The current tally of what we would owe them is $150 million. That’s pretty significant, especially when the anticipated revenue stream from sports betting in the Senate bill is about $5 million a year for the state.”
What’s next for KS sports betting bills
Hineman indicated that it’s difficult to know what to expect as far as support for Kansas sports betting in the House.
“On the Senate side, they were in favor of sports betting. On the House side, we really don’t know yet. It’s new territory in terms of legislative discussions. I’ve been frustrated that we haven’t had more of a conversation about it. But now that the Senate passed their bill, it’s time for those of us who are advocates on the House side to step up and start engaging our colleagues to help them understand the issue.”
The House Committee on Federal and State Affairs is one of three committees exempt from the deadline to pass over bills to the other chamber. So the Kansas House could still send its sports betting bill over to the Senate even though the regular crossover deadline has passed.
The deadline for legislation to pass in Kansas is April 3. If the House passes the Senate bill with changes, it would need to go to a conference committee.
The legislature will return April 27 to wrap up the session by addressing bills vetoed by the governor: the omnibus appropriations act and omnibus reconciliations spending limit bill.