Kansas Sports Betting Could Be Facing a Tax Increase

Kansas lawmakers are currently in discussions about possibly raising the taxes on sportsbooks as they seek a larger share of the expanded gambling revenue. This follows the state’s sports betting legislation, which has seen significant growth since its inception in 2022.

Current Tax Structure

• Kansas currently taxes gross sports betting revenue at 10%
• This 10% rate is among the lowest nationally
• Sportsbooks also pay a federal 0.25% excise tax on each wager

Since the rollout of in-person and mobile sports betting at its commercial casinos, the Kansas sports betting market has flourished. In 2024 alone, sports betting revenue reached approximately $216.7 million, showing an increase of nearly 19% compared to the previous year. Notably, nearly 99% of these bets were placed online.

Impending Legislative Changes

With the expiration of five-year terms for sports betting licenses looming in August 2027, Kansas lawmakers have imposed a moratorium on automatically renewing these licenses. The focus is now on recalibrating tax structures to better reflect the growing market.

Public Hearing Insights

Recently, a public hearing was conducted to gauge opinions on raising the effective tax rate on sports betting revenue. Some lawmakers argue that the liberalization of sports betting is primarily benefiting the casinos and out-of-state sportsbook operators rather than the citizens of Kansas.

“This has been an absolute failure,” asserted State Rep. Francis Awerkamp (R-St. Mary’s), during the Federal and State Affairs Interim Committee hearing.

Conversely, industry lobbyists like John Pappas, commend the effectiveness of Kansas’s current tax rate. They argue that such a rate has facilitated competitive odds and attractive promotions that encourage bettors to engage with state-licensed sportsbooks over unauthorized local bookies.

Tax Comparison Across States

Kansas’s flat 10% tax sits on the lower end compared to other states in the U.S. with legalized sports gambling:

• Lowest tax: Nevada at 6.75%
• Highest tax: New York, New Hampshire, Rhode Island at 51%

Kansas imposes a higher tax on other forms of commercial casino revenue at 27%, which generated more than $100 million in state income. However, it’s worth noting that tribal casinos are exempt from this taxation.

Growing Concerns of Offshoring Bettors

Kansas is not alone in deliberating higher taxes on sportsbooks; similar actions have been observed in other states:

• Illinois has raised its effective tax and introduced per-bet fees.
• New Jersey upped its tax from 15% to 19.75% this year.
• Louisiana increased their tax from 5% to 21.5%.

Consumer advocacy groups are raising alarms that these state tax hikes may drive bettors towards illegal, offshore options, reducing transparency and consumer protection in the betting market.

Final Thoughts

The discussions surrounding potential tax increases on sports betting in Kansas encapsulate the broader trends seen in the U.S. gambling industry. As gaming operations expand, the balance between taxation and market competitiveness will continue to play a crucial role in lawmaker decisions across state lines.

With the public keenly observing the developments in this area, the outcome may set a significant precedent not just for Kansas, but for similar jurisdictions across the nation.