Kansas Sportsbook Tax System Faces Scrutiny, โคPotential Overhaulโฃ looms
TOPEKA, KS – Kansas’s โsportsโ betting revenue model is under increasing pressure from state lawmakers concerned about underperforming tax collections, fueled by operator deductionsโ of promotional credits. While designed to โattract bettors, these deductions are substantially impactingโข state revenue, notably given โฃKansas’s already low taxโ rate. A potential overhaul of the system is now being actively considered, with a critical juncture approaching in 2027.
the core of theโค issue โคlies โin โขthe practiceโ of sports betting operators deducting promotional credits – like frequently advertised “free $100 bets” – from their taxable revenue.Lawmakers believe closing this loophole couldโ recover โmillions in tax revenue without โขincreasing the current tax โrate.
Concerns โare escalating within the Kansas legislature. Congressman Tom โKessler voiced his worry that Kansas isn’t receiving its fair share of revenue, stating a desire to find a โ”betterโค way” toโฃ increase profits โขwithout damaging the โฃindustry. Congressman Francisโ Awerkamp was more blunt,labeling the current system a “completeโค failure” and questioning the โขviability of maintaining multiple โขoperators,even suggesting a potential shift to a single-operator monopoly model. He โฃhighlightedโข Kansas’s low ranking inโค sports betting revenue generation.
Advocates for reform point to the potential for increased funding for essential state services.Raising the taxโ rate to 15% or 20% could generate funds for schools, healthcare, and infrastructure. Though, even without a tax rate increase, eliminating the deduction of promotional credits could bring revenue closer to the 10% originally projected by the state.
The situation is further complex by neighboring Missouri‘s recent legalization of โคsports betting at a 10% tax rate. Last year, 37% of geolocation checks for Kansas sportsbooks originated in Missouri, indicating a meaningful influx of โฃout-of-state betting.With Missouriโข now offering legal sports betting, Kansas โคrisks losing this valuable import revenue.โฃ Critics caution โthat โhigherโ tax rates could inadvertentlyโ drive bettors towards illegal operators,โค making regulation more difficult.
The debate extends to the structure of the market itself. Some lawmakers propose reducing competition by adopting a single-operator model, similar โto that of Duck creek. Others maintain that despite lower tax revenues, the current multi-operatorโ system provides a more engagingโ and user-friendly โbetting experience.
Looking Ahead:โ 2027 Reset
Currently, all six licensed operators – BETMGM, CAESARS, DRAFTKINGS, ESPN BET, FANATICS, andโ FANDUEL – operate under five-year license agreements โคwith the Kansas Lottery, set to expire on August 31, 2027.
A bill passedโ by the Kansas Lottery office in April 2025 prohibits contractโฃ renewal negotiations before July 2026, effectively setting the stage for a complete reset โขof the sportsโ betting market. Lawmakers are already preparing for this pivotal moment,โ analyzing theโ current system and considering potential reforms. The next two years willโค be crucial in determining whetherโ Kansas willโค maintain its current approach or embark on a significant overhaul of itsโ sports betting regulations.
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