Kelly eases off push for iLottery in sports wagering bill

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Gov. Laura Kelly is backing off her insistence that online lottery ticket sales be part of any sports wagering bill passed by the Legislature.

The governor would still like to have so-called iLottery approved by the Legislature, but it’s no longer the dealbreaker it was a year ago.

“We would very much like to see iLottery as part of a final bill, but we are not insisting that it be part of it,” the governor’s chief of staff, Will Lawrence, said in an interview Wednesday.

Lawrence said the administration wants to let the process play out and see if lawmakers can reach an agreement.

While Kelly’s decision to distance herself from the legislation improves the chances of passage, there are a still number of major hurdles to overcrome, namely the tax rate and whether sports bets could be placed at 1,200 retailers across the state.

The House bill calls for higher taxes than the Senate bill — some of the highest in the country.

The House bill also would allow sports betting at retailers, while the Senate bill does not.

Casino executives say that Kansas, with sport betting at 1,200 retailer outlets, would have more locations to gamble on sports than any state in the country.

The iLottery, however, has been one of the biggest hurdles to authorizing sports wagering in Kansas.

The Kelly administration has vigorously pushed for wrapping iLottery together with sports wagering, hoping that it would help boost lottery sales.

Online sales are seen as a way for lotteries to stay relevant and remain tied into their customers.

Michigan started online sales in August 2014, for instance. Sales have continued to grow without eating into other lottery sales, officials there said.

The net revenues from online lottery sales in Michigan grew from about $600,000 in 2014 to about $94 million in 2018.

Casino executives, however, have been reluctant to go along with iLottery, fearing the graphics, animation and music in the iLottery app might look too similar to their slot and video machines and effectively water down their customer base.

They do not oppose including games such as Powerball, Mega Millions or other related games online, however.

They oppose the House bill partly because it includes a robust iLottery provision.

They support the Senate bill because it limits the online lottery games to ensure they don’t include audio or visual displays so they don’t look like a slot machine.

“At the end of the day, we believe Kansas could join 25 other states that have legalized betting on sports, provided the legislation required to cross the finish line remains focused on sports wagering,” said Jeff Morris, spokesman for Penn National Gaming.

Penn National Gaming operates Hollywood Casino in Kansas City.

Republican state Rep. John Barker, the lead sponsor of the House bill, said he expects to remove the iLottery provision in his bill.

Before the session started, top aides to the governor rolled out a sport betting proposal in a virtual meeting with casino executives, lobbyists and legislators.

The proposal called for the state to share iLottery revenues with the casinos, which could bring them millions more in extra revenue.

It also included the possibility of allowing certain retailers to offer parlay sports bets, which involve two or more bets combined into one.

The proposal apparently didn’t grab the interest of the casinos.

The revenue from iLottery in Kansas also is projected to exceed the revenues from sports wagering.

The House bill is projected to generate approximately $4.5 million for the state from sports wagering, while the Senate bill would bring in $2.25 million.

The Kansas Lottery believes internet lottery games could increase overall ticket sales by $25.7 million and increase the transfer to the state by $2.9 million in the first full year after it started.