Kansas sports betting deal tangled over who runs it and who gets a cut

by Stephen Koranda, Kansas News Service

Legalizing sports gambling in Kansas seemed like a safe bet earlier this year. It’s a new source of tax dollars and enjoys bipartisan support.

Yet so far, attempts to advance a sports gambling bill have struck out.

In baseball terms, it’s the bottom of the ninth inning for the issue this year.
Lawmakers return this week for the final days of the session. If they don’t advance a bill, sports gambling in Kansas will be benched until 2020.

Kansas is one of dozens of states racing ahead on sports betting after the U.S. Supreme Court knocked down a federal ban last year. States are competing for the attention of sports fans and the tax dollars siphoned off their bets.

Where should you bet and whose eyes are on the data?

Where gamblers would actually place their bets has been one of the sticking points in the debate.

Inside the Hollywood Casino in Kansas City, Kansas, General Manager Rick Skinner stands among 2,000 blinking, beeping slot and video poker machines. To him, sports gaming would fit right in among the gambling already happening at the casino.

“It would just be another great attraction for the bricks-and-mortar facilities in the state,” he said. “We’re one of four casinos in Kansas, but we have four competitors right across the river.”

Sports betting could help the state-owned casinos in Kansas compete with those Missouri gambling halls and bring gaming money to the state.

Skinner wants lawmakers to consider another thing: whoever runs the sports book takes on financial risk.

In the long term, the house ultimately wins, but that can come with big short-term losses. The low-scoring Super Bowl and Tiger Woods making a surprise comebackboth ended up costing sports books money.

Does the state want to take on that risk by running gaming directly?

“Tiger Woods winning the Masters was a prime example,” Skinner said. “It was the biggest one-day loss in sports book golfing.”

Online apps for sports betting, and who runs them, pose another tricky issue.

Penn National Gaming operates the Hollywood Casino at Kansas Speedway. If allowed, company officials argue they can compete with widespread illegal online gambling that already draws in more than $60 billion a year.

“If we can’t compete with them, people will continue to go to the unregulated market,” said Jeff Morris, vice president of public affairs and government relations Penn National Gaming. “We have the compliance pieces in place to provide a safe wagering place for our customers.”

But some lawmakers want to keep the casinos out of sports betting.

Republican state Rep. Francis Awerkamp wants the Kansas Lottery to run sports gaming directly to keep casinos from mining sophisticated details about gamblers’ betting habits. Armed with that date, he said, casinos could target gamblers with marketing that might lead problem gambling.

“Are we trying to encourage people to gamble more?” he asked earlier this year. “Is that a common good? I don’t think that’s a proper use of personal data.”

Morris said casinos take steps to combat problem gaming, like voluntary exclusion lists, and a sports betting app would be no different.

Proposals for legalized betting typically include provisions for some of the revenue to help treat gambling addiction. One plan would have routed 2 percent of sports gambling revenues to treatment programs, which is the same rate collected on other gambling at state casinos.

Mining for sports betting gold

The topic is attracting so much attention because tens of millions of dollars could be at stake.

It’s been difficult for state researchers to pin down financial estimates for sports gambling in Kansas. They referenced a study estimating between $1 billion to $2 billion in bets placed in Kansas per year if it was made legal.

A billion dollars in bets would leave around $50 million left for administrative costs, fees and profit, state staff estimated. How much of that would be collected by the state depends on how the gambling is structured.

If the state directly runs sports gambling, then more money would go into state coffers. If casinos run it and the state simply collects taxes, Kansas government could take in a few million dollars.

Sports leagues also want a cut, and a say. More gambling means they’d have to spend more policing against players who’d be tempted to shave points or otherwise fix a contest.

Major League Baseball argues it’ll have to spend time and money combating cheating, so it should get a cut of the revenue.

The league also wants to block certain types of bets, like whether the first pitch of a game will be a ball or a strike. It could be easier to cheat on something like that than change the entire outcome of a game.

MLB says cheating could ruin the image of a sports league.

“Major League Baseball has an obligation to our fans and our sport to ensure any sports betting law does not damage our game,” said MLB Senior Vice President and Deputy General Counsel Bryan Seeley in testimony to Kansas lawmakers earlier this year.

Devilish details

The Kansas Constitution says the state must run any gambling. That’s why it technically owns the four casinos in the state and hires gaming companies to build and operate them.

But a state-run sports book could take several forms — something operated directly by the Kansas Lottery, bets taken through lottery retailers or a state smartphone app. Or the lottery could simply oversee betting run by casinos.

The devil’s in the details, and the details are proving especially devilish. Time is running out to smooth over differences between groups such as the state lottery, casinos and convenience stores.

“Trying to get them all on the same sheet of music just takes time,” Republican state Rep. John Barker said before lawmakers took their spring break.

Barker chairs the Kansas House committee considering the issue. He’s urged the parties to try to reach an agreement lawmakers could consider after the session resumes this week.

State regulators, casinos and the sports leagues have been in negotiations.

While time is running short, sports betting has another high-profile supporter, Democratic Gov. Laura Kelly.

“I’m hoping that they can come to an agreement on sports betting,” she said last week. “Other states are moving ahead with that and I would really hate for Kansas to be left behind.”

Stephen Koranda is Statehouse reporter for Kansas Public Radio and the Kansas News Service, a collaboration of KCUR, Kansas Public Radio, KMUW and High Plains Public Radio covering health, education and politics. Follow him on Twitter @kprkoranda.
Kansas News Service stories and photos may be republished at no cost with proper attribution and a link to ksnewsservice.org.

See more at https://www.kcur.org/post/kansas-sports-betting-deal-tangled-over-who-runs-it-and-who-gets-cut

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