House panel adds slots vote to sports wagering bill

Photo Credit: Creative Commons Sports Betting by Marit & Toomas Hinnosaar licensed under CC BY 2.0

A new sports wagering bill emerged from a House committee Friday with a provison authorizing a vote for slot machines in Sedgwick County.

The House Federal and State Affairs Committee approved a bill allowing sports wagering that is already much broader than one approved by the Senate.

The bill allows for the Kansas Lottery to contract with the state’s four casinos to run a sports book on behalf of the state, either in person or online.

It also would allow sports betting at up to 1,200 retailers that sell lottery tickets across the state.

The Senate bill limits onsite sports betting to the four state-owned casinos as well as Kansas Speedway and Children’s Mercy Park, home of Sporting Kansas City.

Casino executives say the House bill would give Kansas more locations to gamble on sports than any state in the country.

But on Friday, the House committee agreed to allow Sedgwick County residents to hold an election authorizing slot machines.

The committee also agreed to cut taxes on slot machines at racetracks to 22% from 40%, potentially making it more feasible for a racetrack owner to operate slots.

Casino mogul Phil Ruffin wants the sports wagering legislation to include now-defunct Kansas racetracks as well as a cut in the tax rate on slots at the tracks.

“This disproportionate tax rate makes it impossible for Kansas’ racetracks to operate in
the black. Therefore, not a single racetrack in Kansas is in operation today,” Ruffin lobbyist Jason Watkins told lawmakers last month.

“This taxing inequity and associated closure of the tracks has resulted in Kansas foregoing hundreds of millions of dollars in gaming revenues, lost property, sales, income taxes, the loss of thousands of well-paying jobs, and the prevention of untold economic development opportunities,” Watkins said.

Back in 2007, Sedgwick County voters narrowly rejected a proposal for slot machines at Greyhound Park, which subsequently closed.

“Over the years, the people of Sedgwick County have wanted to vote again on this and have tried in many different ways,” said House Majority Leader Dan Hawkins.

“This bill…gives us the ability to have another vote in Sedgwick County,” the Wichita Republican said Friday.

Hawkins pointed to a poll of 500 registered voters, of which 91% said they should be allowed to vote a second time on the slots.

Two years ago, the Sedgwick County Commission refused to put the issue on the ballot, saying that was the authority of state lawmakers.

Commissioners expressed concern that the election could have made the county and state vulnerable to lawsuits because it could have violated the state’s noncompete agreements with its four casinos.

The 2007 law authorizing casinos in Kansas bars expansion of gambling in other areas of the state until 2032.

If the state is found to be in violation of the law, it could mean it would have to pay millions back to the casinos that have already paid privilege fees to operate in Kansas, plus years of interest, which is now estimated at $16 million.

Five years ago, Kansas Attorney General Derek Schmidt issued an opinion saying that allowing a revote on Greyhound Park may breach the state’s contract with the Kansas Star casino in Mulvane.

Schmidt wrote that allowing a revote would potentially give the Mulvane casino cause to demand repayment of its privilege fee or other damages.

Hawkins’ proposal provides a means for seeking a ruling from the state Supreme Court on whether expanding gambling in Wichita would violate the state’s noncompete agreement with the casinos.

Once the vote occurs, Hawkins said an action seeking a declaratory judgment can be taken to the Supreme Court to determine whether slots would be a legal expansion of gambling in Kansas.

Democratic state Rep. Vic Miller of Topeka asked Hawkins about an attorney general’s opinion raising the potential of a breach of contract in a 2019 letter to the Sedgwick County counselor.

The letter detailed similar reservations from Schmidt’s 2016 opinion.

Miller expressed concerns about whether allowing a revote in Sedgwick County compromised the state legally, exposing taxpayers to millions in liability.

He questioned the wisdom of voting on an amendment to a bill that had not had its own hearing separate from the primary topic of the legislation.

Hawkins emphasized that no contract for slots could be let until the Supreme Court resolves the question about a possible breach of contract.

“That has to happen before a contract is actually signed so those determinations can be made by the Supreme Court,” he said. “We’ll know at that point.”