Laura Kelly cashes in on Chiefs Super Bowl win, but is Kansas benefiting as well?
Gov. Laura Kelly's personal bet on the Kansas City Chiefs to win the Super Bowl paid off Sunday as state lottery officials report more tax revenue than expected through the first several months of legalized sports wagering.
When sports betting became legal in Kansas on Sept. 1, Kelly placed the first bet at Hollywood Casino in Kansas City, Kan. Her bet was $15 — quarterback Patrick Mahomes' jersey number — on the Chiefs to win the Super Bowl. The odds made her payout $150, which she is donating along with the original $15 to the 15 and the Mahomies Foundation.
"As we all know, betting on sports was already happening long before this bill became law," Kelly said in September. "But it was illegal, offshore operators who were profiting, not Kansas businesses. This law turns that around. It’s a common-sense, pro-business solution that keeps Kansans’ money in Kansas."
The payout to the state on its 10% tax has exceeded predictions.
How much tax revenue is Kansas getting from sports betting?
When the law was crafted, the Kansas Lottery estimated that sports wagering would generate $1.8 million in tax revenue in fiscal year 2023, which ends July 1. State coffers have already surpassed that number, bringing in $2.7 million from September through January.
Bets settled in February, including those placed on the Super Bowl, are not yet included in the available state statistics.
In the same period, casinos and their sports betting partners saw $26.9 million in net revenues off $925.8 million in settled wagers. They paid out $833.2 million in prizes with $64.3 million in promotional deductions and $2.2 million in federal taxes.
"The numbers right now look really good compared to where we thought they were going to be," Kansas Lottery executive director Stephen Durrell told the House Appropriations Committee earlier this month. "We came in at the crux of where the sports wagering year peaks. We came in right at the beginning of the football season, so right now we've had pro football, college football, college basketball, the NBA."
With football season over and NCAA March Madness approaching, sports bettors will soon be left with baseball and soccer.
"The high, high value wagering opportunities are going to go down, so our numbers are going to go down through the course of the fiscal year," Durrell said. "How much they're going to go down, I think we're going to wait and see. We've had the really good numbers because we have the stuff that everyone wants to wager on right now."
Lottery officials previously predicted annual tax revenues will grow to $6 million in fiscal year 2024 and $10 million in fiscal year 2025.
More:Sports betting is now legal in Kansas. Here's what to know when gambling on Chiefs, K-State, KU
How are the casinos faring?
"Casinos, restaurants and other venues across the state now have another way to attract Kansans to those establishments, creating jobs and driving economic growth," Kelly said in September. "Legal sports betting will also bring in additional tax revenue to our state so we can continue funding law enforcement, infrastructure, schools and provide tax relief."
Kansas has four state-owned casinos.
Through January, Boot Hill in Dodge City and partner DraftKings had seen the most settled wagers at $378 million. The state's share of the revenue was $923,000.
Kansas Star in Mulvane and partner Fan Duel were the most profitable. The state collected $1.1 million off $262.7 million in settled wagers.
Hollywood and partner Barstool saw $95.6 million in settled bets produce $472,000 in state taxes.
Kansas Crossing in Pittsburg had three partners. Caesar's has brought in the most state tax revenue at $158,000 off $49.2 million in settled wagers. PointsBet saw $3,000 in state taxes off $12.4 million in settled wagers. BetMGM had a $0 state tax bill on $127.1 million in settled wagers.
"BetMGM doesn't look like a great route to go based on this table, so what's going on there?" asked Rep. Bill Sutton, R-Gardner.
Durrell pointed to what he called an "unusual" provision allowing marketing costs to be counted against revenue.
"Some of the sports platforms were very aggressive in the way that they were trying to attract business and/or players through their advertising or free play and that sort of thing," Durrell said. "Some of the platforms were more aggressive than others and have more of a hurdle to get out from under. I think that might be, in this particular case, that might be the issue."
Where does the money go?
The first $750,000 each year in sports betting revenues goes to combatting white collar crime. Meanwhile, the attorney general's office has requested a budget increase to help investigate sports betting crimes.
Of any revenue after that, 2% goes to combatting gambling addiction. The Kansas Department for Aging and Disability Services has raised concerns that the problem gambling program's funding is insufficient to support additional demand for services.
Another 18% goes to the gaming revenues fund and state general fund.
The remaining 80% goes to a fund intended to attract a professional sports team to Kansas, though the tax revenue is unlikely to ever be enough for such an ambitious move as enticing the Chiefs to build a new stadium on the Kansas side of the metro.
Some legislators have expressed interest in changing where the money goes, and Durrell said they have the authority to do so.
"We sweep funds all the time around here," said Rep. Sean Tarwater, R-Stilwell. "So just because it goes into a fund doesn't mean it has to stay there."
More:Sports betting clears big hurdle. But an attempt to lure the Kansas City Chiefs almost backfires.
Legislators could revise sports betting law
Some lawmakers have expressed interest in revisiting the technicalities of the legislation.
One was Rep. Henry Helgerson, D-Wichita, referring to a scathing New York Times analysis of the influence lobbyists had on legalizing sports betting in Kansas and elsewhere.
"I missed some of the things that went on with the sports betting discussion in the Legislature," Helgerson said. "Who is the right party to give us recommendations about changes in the legislation? Does it come from the governor? Does it come from your office, legislators?"
Durrell said any of them could help.
"I know that there are things in that bill that I've heard expressed from both the legislative branch, the executive branch, and even the casinos and partners, that we wish had been a little bit more clearly defined," Durrell said. "As we certainly well know, sometimes the way sausage is made, there are oversights in intention of what a bill may or may not be able to do."
Helgerson highlighted the disparity between state revenues and the amount of money bet, noting the lower revenues percentage for sports betting compared to traditional casino gambling.
He said he wants to ensure the system "is actually to the benefit of the state, not just benefit of the people that are doing the betting. I'm not sure that we're seeing an economic benefit to the casinos by having the (sports) gambling in the casinos."
"The sports wagering," Durrell responded, "certainly was originally designed to be an economic benefit to the state and to the casinos, obviously. I think that the casinos would argue that having sports wagering allows for more traffic in the casinos, which then increases the revenue of traditional casino style games, which I think is true.
"The revenues difference between what the state receives and between the casinos, what they receive, that's a legislative decision and that's the way the bill was drafted."
This article originally appeared on Topeka Capital-Journal: Legal sports betting tax revenues higher in Kansas than predicted
