House declines to bet on sports gambling bill described as breach of contract

Opponents consider chamber’s bill a magnet for lawsuits

Rep. John Barker, R-Abilene, failed to persuade the Kansas House to accept an overhaul of the Senate's sports gambling bill and weakening the prospect of a deal being reaching in the 2021 legislative session. (Tim Carpenter/Kansas Reflector)
Rep. John Barker, R-Abilene, failed to persuade the Kansas House to accept an overhaul of the Senate's sports gambling bill and weakening the prospect of a deal being reaching in the 2021 legislative session. (Tim Carpenter/Kansas Reflector)

TOPEKA — House Republicans and Democrats banded together Tuesday to soundly reject a bill viewed as a legal liability by opening Kansas to sports wagering through betting at the state’s four casinos, horse racing tracks and through as many as 1,200 lottery retailers.

The House package rolled into Senate Bill 84 and dispatched 40-77 differed in substantive ways from the sports gambling bill passed by the Kansas Senate, which preferred to exclude the lottery and racetracks from the action. Objections to the bill hinged on individual preferences for who should operate sports books, but some House members were opposed to all manner of gambling and a couple lawyers declared the House bill a legal quagmire.

Rep. Brad Ralph, R-Dodge City, said expansion of gambling under the House bill would lead to breach-of-contract lawsuits against the state by management companies that since 2007 agreed to build and operate the state’s four casinos, including one in Dodge City, under contracts that didn’t allow sports betting.

Rep. Brad Ralph, a Republican from Dodge City, said the COVID-19 pandemic highlighted the concentration of State Finance Council power in hands of urban legislators and the lack of voice by rural lawmakers. (Sherman Smith/Kansas Reflector)
Rep. Brad Ralph, a Republican from Dodge City, said the sports gambling bill defeated by the Kansas House would turn into a vehicle for lawsuits against the state for breach of contract with the four casino managers. (Sherman Smith/Kansas Reflector)

He said the attorney general of Kansas twice asserted the state risked breaking contracts with casinos in Pittsburg, Mulvane, Dodge City and Kansas City, Kansas. The bill is flawed by requiring lawsuits to be filed in 60 days and by declaring the Kansas Supreme Court must take up the case. If Kansas were to lose the case, the bill would artifically limit financial damages to the state. And, the bill says, the state would then bind casinos to all other provisions of their contracts.

“We have lots of business folks in this chamber and I can’t imagine any one of you would sign on to a course of action that says the state gets to ignore its contractual relations and obligations to business partners of the state,” Ralph said.

He said the House bill would be a prescription for disaster if legal objections were raised.

“Let’s review,” he said. “We intentionally breach our contracts, despite advice of our counsel. We limit court access. We limit the statute of limitations. We limit recovery of damages. We yell out for all to hear that Kansas doesn’t care what its contracts say with businesses of this state.”

Rep. John Carmichael, a Wichita Democrat and an attorney, said he agreed with analysis from the attorney general’s office and the view shared by Ralph, who also is a lawyer.

“We would be liable for damages,” Carmichael said. “The state’s word in contracting would be no good. We made the deal and we’re ging to live by it and if we don’t we’re going to pay a price.”

House Speaker Ron Ryckman, R-Olathe, said the House vote didn’t necessarily signal the issue was dead for the 2021 session. There’s potential of a compromise bill, he said.

The House version would have allowed wagering at the professional soccer facility in Wyandotte County, while the Senate would also allow sports betting at the Kansas Speedway auto track. The House bill would have enabled Sedgwick County to vote again on whether to accept slot machines at a dog track, but the Senate didn’t include that element.

The Senate bill would have captured for the state 8% of casino online revenue and 5.5% of in-person casino revenue related to sports bets. The House had higher metrics: 20% of online revenue and 14% of casino revenue from sports bets would go to the state. Both House and Senate bills required those placing bets to be 21 years of age and all online bets would have to be done by a person physically in Kansas.

Before the House bill went down to defeat, Rep. John Resman, R-Olathe, gained approval of an amendment eliminating from the bill a provision that would have enabled betting on televised greyhound races in other states. Under his amendment, no legal wagering on dog races would be permitted in Kansas.

Democrats failed in an attempt to solidify that prohibition on greyhound racing, which likely cost the House bill votes from the minority party.

Rep. Brenda Landwehr, a Wichita Republican, failed to receive the necessary minimum 63 votes in the 125-member chamber for her amendment directing half of the state’s revenue from sports wagering to community mental health centers in Kansas and for 30% of revenue to the program of Court-Appointed Special Advocates or CASA.

 

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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.