Kansas casino managers betting Senate bill catalyst for legalizing sports gambling

Past disputes over operational details of sports books hindered reform

By: - February 10, 2021 2:53 pm

Jeff Morris of Penn National Gaming and the Hollywood Casino in Kansas City, Kansas, endorsed a Senate bill crafted to bring legal sports betting to Kansas. (Screen capture by Kansas Reflector)

TOPEKA — The four companies managing state-affiliated casinos in Kansas linked arms Wednesday to urge legislators and the governor to join two dozen other states in legalizing online or casino sports gambling.

The issue has been percolating at the Kansas Capitol since the U.S. Supreme Court in 2018 upheld the right of states to regulate sports gaming. Half the nation’s states have taken the plunge into sports betting, while lawmakers in Kansas struggle to settle on a framework acceptable to the Kansas Lottery, casino management companies, politicians and lobbyists.

Jeff Morris, an executive with Penn National Gaming licensed to operate Hollywood Casino at Kansas Speedway in Kansas City, Kansas, said the latest incarnation of a solution for Kansas — Senate Bill 84 — was suitable from financial, regulatory and marketing perspectives. In the Senate Federal and Affairs Committee, he joined representatives of state-authorized casinos in Mulvane, Dodge City and Pittsburg in support of the bill.

“We believe legal sports betting has the potential to provide a meaningful shot in the arm to Kansas’s gaming industry and to provide a new revenue stream to the state of Kansas,” Morris said.

He said the prospect of opening sports books in casinos and online in Kansas would be a welcome response to proliferation of illegal slot machines and cannibalization of the U.S. industry from relentless gaming expansion. The advent of legal sports betting in Kansas can be useful as COVID-19 continues to hinder casino operations with capacity limits, he said.

Opponents of this legislation on sports betting are scheduled to testify Thursday to the Senate Federal and State Affairs Committee. In the past, the legislation has been held hostage to competing views on who should manage sports books and how widely Kansas should offer opportunities to bet on the Kansas City Chiefs, University of Kansas basketball and other athletic events. Issues related to the state’s share of sports betting revenue and potential of opening up sports books at defunct horse or dog tracks complicated the debate.

The Senate Federal and State Affairs Committee is considering a bill legalizing sports betting in the state. The committee heard Wednesday fom proponents of the bill and plans to take testimony from opponents Thursday at the Capitol. (Screenshot/Kansas Reflector)
The Senate Federal and State Affairs Committee is considering a bill legalizing sports betting in the state. The committee heard Wednesday fom proponents of the bill and plans to take testimony from opponents Thursday at the Capitol. (Screenshot/Kansas Reflector)

The Senate bill acknowledged sports betting could contribute to societal problems by requiring $750,000 generated by sports books to be deposited in the state’s white-collar crime fund. In addition, a portion of sport wagering revenue would be set aside for the state’s problem gambling and addiction fund.

In 2020, the Senate approved a bill legalizing sports gambling at the four state-owned casinos. That bill was ignored by the House, which preferred a strategy enabling 1,200 lottery retailers to be at the forefront of sports wagering in Kansas. The House’s alternative didn’t gain traction before COVID-19 abruptly ended the legislative session. Gov. Laura Kelly, in the past, expressed support for legislation permitting the Kansas Lottery to take the lead on sports gambling.

Under the new Senate bill, in a concession to the Kansas Lottery, a ban on the sale of lottery tickets by electronic mail, the internet or telephone would be deleted from state law.

Ryan Soultz, who represents Boyd Gaming and the Kansas Star Casino in Mulvane, said legalization of sports wagering in Kansas as outlined in the bill would improve the industry’s appeal to a younger demographic more comfortable with online experiences and not as likely to visit a casino. Success of sports-book gambling will foster economic development, support local communities and generate government revenue, he said.

“Sports books are another amenity in offering a compelling casino entertainment experience and helps draw a new, younger demographic to the property. This
increase in visitation leads to incremental spending in food and beverage, hotel stays and other gaming offerings,” Soultz said.

Executives with the Boot Hill Casino and Resort in Dodge City and the Kansas Crossing Casino in Pittsburg said the Senate bill, which was similar to the Senate bill debated in the 2020 session, made economic sense for state-owned casinos in Kansas and provided “reasonable terms to compete with illegal black market sports betting that is available throughout the country.

“The addition of sports betting enables the state-owned casinos to expand the retail customer base,” said Clark Stewart of Boot Hill Casino. “It not only provides another revenue source, but an amenity within the casinos to help attract customers to the state of Kansas. The addition will also reduce the number of Kansas citizens driving across the borders to place wagers on sporting events.”

Stewart and Bruce Christenson of Kansas Cross Casino said it was “critical that the management of sports betting be limited to existing licenses lottery gaming facility managers” that previously invested hundreds of millions of dollars in brick-and-mortar facilities and operate under regulation by Kansas.

House Minority Leader Tom Sawyer, a Wichita Democrat, says the 2021 Legislature needs to work hard on a bill to legalize sports gambling because the state government needs the new revenue. (Nick Krug for Kansas Reflector)
House Minority Leader Tom Sawyer, a Wichita Democrat, said prior to the 2021 legislative session that Kansas lawmakers ought to work diligently on a bill to legalize sports gambling because the state government needs the new revenue. (Nick Krug for Kansas Reflector)

Under the Senate bill, federally recognized Native American tribes with a presence in Kansas could negotiate a sports wagering compact with the governor.

The Kansas Lottery would be authorized to enter contracts with the state’s four casino managers for operation of in-person sports gambling as well as sports wagering through mobile devices and internet websites. Each casino operator would be able to enter contacts with two interactive sports wagering platforms pending approval by the Kansas Lottery and background investigation by the Kansas Racing and Gaming Commission. If no more than one casino launched an interactive sports wagering system within two years of passing the law, the Kansas Lottery would be allowed to step into the void.

Individuals would have to be 21 years of age to place sports bets in Kansas. Online sports wagering platforms would be limited to sports bets by people physically in the state, but wagering could occur on events outside Kansas. However, the Kansas Lottery could block betting on specific sports events.

The bill would grant to the Kansas Speedway racetrack and Children’s Mercy Park, where Sporting Kansas City soccer team plays, to enter into contracts to offer online sports wagering at the racetrack or stadium.

Facilities engaged in sports betting in Kansas would be required to maintain records for anyone making wagers greater than $10,000 in a 24-hour period. These records would be maintained for 30 days following the sporting event and up to three years if requested by the Kansas Lottery or Kansas Racing and Gaming Commission.

Morris, of Penn Gaming and Hollywood Casino, cautioned against requiring casinos to individually purchase “official league data” for operation of sports books. A bill introduced in the Kansas House would mandate payment of data fees to professional sports leagues, he said.

“Many gaming operators, including Penn National, have signed commercial deals with the leagues for specialized, proprietary in-game data, such as how fast a puck is traveling or who had the hardest slap shot, to grow interest in sports wagering. This proves that these deals can be reached privately and should not be legislatively mandated,” he said.

Boyd Gaming’s Soultz said the legislation reasonably required 7.5% of sports wagering revenue at casinos and 10% of sports gambling revenue from online platforms be transferred to the Kansas Lottery. These percentages represented a middle-ground compromise between House and Senate positions staked out during the 2020 session.

The Kansas Lottery estimated sports wagering at state-owned casinos and through mobile applications would generate $360 million to $600 million annually in gross wagering, which could produce annual revenue to the state of $2.1 million to $3.5 million. Kansas could reach $900 million in annual gross wagering on sports within five years, the Kansas Lottery estimated, and deliver approximately $5.3 million in revenue to the state.

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Tim Carpenter
Tim Carpenter

Tim Carpenter has reported on Kansas for 35 years. He covered the Capitol for 16 years at the Topeka Capital-Journal and previously worked for the Lawrence Journal-World and United Press International. He has been recognized for investigative reporting on Kansas government and politics. He won the Kansas Press Association's Victor Murdock Award six times. The William Allen White Foundation honored him four times with its Burton Marvin News Enterprise Award. The Kansas City Press Club twice presented him its Journalist of the Year Award and more recently its Lifetime Achievement Award. He earned an agriculture degree at Kansas State University and grew up on a small dairy and beef cattle farm in Missouri. He is an amateur woodworker and drives Studebaker cars.

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