A bill authorizing sports wagering in Kansas lurched forward Monday after four days of meetings with still many hurdles to cross before the legislative session ends.
A Senate committee on Monday sent a sports betting bill to the full chamber, although it would likely run up against legislation in the House that is markedly different.
The Senate is tentatively planning to debate the bill Thursday.
A major sticking point that still needs to be resolved is whether any sports betting legislation contains language that would allow the state to sell lottery tickets online — also called iLottery.
The Senate bill passed out Monday would allow lottery ticket sales online.
However, lottery officials believe the bill is so restrictive that it could make it impossible to start online lottery sales.
Nothing less is on the line than the entire sports wagering bill since Gov. Laura Kelly insists that online lottery sales be included.
“Gov. Kelly has made it clear she would veto any sports wagering legislation that does not include a narrowly defined version of iLottery,” the governor’s spokeswoman said.
Lawmakers indicated that the online lottery sales could be addressed with a floor amendment in the Senate.
“It’s my understanding there are ongoing discussions between the lottery, the casinos and other interested parties on how iLottery would fit,” said Senate Vice President Jeff Longbine.
“My pledge has been if those groups come together and agree on language, I will carry that amendment on the floor,” he said. “Right now, I don’t know what the status of that is.”
The House bill, meanwhile, includes language for online lottery sales that was written by state lottery officials.
The casino industry is more amenable to the Senate bill because it wouldn’t allow online lottery sales to include animation and music that would look like a casino game.
“It’s a very important issue,” Republican Sen. Bud Estes said of the online lottery sales.
Kelly’s administration has indicated it wants a so-called iLottery to be part of any sports gambling legislation.
There are several key differences that are already starting to surface as the sports wagering bill advances. They include:
- The Senate bill taxes sports wagering at 7.5% for bets placed at the casinos and 10% for online bets. The House bill taxes sports betting at 14% at the casino and 20% online. The House bill imposes a higher tax than Iowa (6.75%), Indiana (9.5%), Illinois (15%), Nevada (6.75%), Mississippi (12%) and West Virginia (10%).
- The House bill would allow sports betting on site at the state’s four casinos and 1,200 lottery retailers, including convenience stores. The Senate bill, meanwhile, limits on-site sports wagering to the state’s four casinos.
- The Senate bill diverts $800,000 from sports wagering revenue to revive the now-closed Eureka Downs in Greenwood County. The House bill doesn’t put any money into horse racing.
- The House bill designates that official sports league data be used for in-play wagering such as betting on balls and strikes, quarterback sacks and errors or turnovers. Supporters of using league data say it will ensure consistency for bettors. Critics say it forces the industry to buy data from a single source designated by the state.
The Senate bill is the clear favorite of the casinos.
The Senate bill is “modeled after other proven, sports betting laws in various states,” said Jeff Morris, vice president of public affairs and government relations for Penn National Gaming, the operator of Hollywood Casino in Kansas City, Kan.
“It will provide Kansas with the best approach to combat the illegal sports betting market and replace it with a regulated industry, one that drives tax revenue and has the necessary framework for responsible gaming and consumer protections.”
The state has been trying to take its lottery online for at least a year. It believes online sales are an important way of staying relevant and remaining tied to their customers.
However, lottery officials believe the Senate bill as originally drafted would make it illegal to sell lottery tickets if it’s accompanied by any music, audio or animation that resembles an electronic gaming machine.
It also would be prohibited to sell lottery tickets online if the games even appeared to operate as an electronic gaming machine.
State law bans online gambling. If casinos are going to offer app-based sports gambling, the law would need to be amended, so Lottery officials thought it would be ideal to wrap it in the same bill.
Eleven states sell lottery tickets online. Minnesota started selling lottery tickets digitally in 2014, but lawmakers stopped it, partly because they were angry it wasn’t approved by the Legislature and because it made gambling too convenient.
As currently drafted, the bill has the potential to raise overall lottery ticket sales by $3 million and increase the transfer to the state by an additional $570,000 in the first full year after it starts, a fiscal analysis shows.
The lottery estimates that going online with fewer restrictions could boost overall ticket sales by $25.7 million and increase the transfer to the state by an additional $2.9 million in the first full year after it starts.
Overall, the state netted about $295 million in lottery sales last year, up from about $245 million in 2014.
The experience in other states has indicated that online lottery sales can improve a lottery’s bottom line.
Michigan started online sales in August 2014. Sales continued to grow without eating into other lottery sales.
The net revenues from online lottery sales in Michigan have grown from about $600,000 in 2014 to about $94 million in 2018.
Meanwhile, the lottery set a record of nearly $3.6 billion in total lottery sales in 2018, up from the previous record of $3.3 billion the year before.
The Michigan Lottery’s total sales in 2014 — the year online lottery sales started — were at about $2.6 billion.
