As state legislators in Topeka seek a bigger share of the increased gaming revenue, Kansas sports betting taxes are set to rise.

In 2022, Kansas approved mobile and in-person sports betting at its four commercial casinos.

Oddsmakers were required by the state's sports betting statute to provide the state 10% of their net revenues, or the money left over after winning bets were paid out.  Additionally, commercial sportsbooks in Kansas pay a 0.25% excise tax on each wager to the federal government.

Sports betting licenses were issued in 2022 with five-year terms that will expire in August 2027.  A suspension on the automatic renewal of sports betting contracts was passed by parliament earlier this year, citing increased tax considerations.

Vibrant Discussion

A public hearing on whether to increase the effective tax on sports betting revenue was held by the Kansas Legislature last week.  State Representative Francis Awerkamp (R-St. Mary's) is one of those who feels that the casinos and out-of-state sportsbook companies have benefited more from the liberalization of sports betting than the citizens of Kansas.

“This has been an absolute failure,” Awerkamp said during the Federal and State Affairs Interim Committee gathering.

Kansas' sports betting business has been a "success story," according to John Pappas, a lobbyist for the online gaming and sports betting sectors.  In order to keep bettors using the state's regulated, legal oddsmakers rather than illicit, offshore sportsbooks or local bookies that offer no consumer protections, sportsbooks have been able to offer attractive odds and promos thanks to a decent tax rate.

"I guess we represent different people,” Awerkamp responded. “You have your clients. I have the people of my district. The people of Kansas.”

Of the 39 states and Washington, DC, that have legalized sports gambling, Kansas has the lowest tax rate at 10% on sports betting revenue from retail and internet operations.  Nevada has the lowest, at 6.75%.  Rhode Island, New Hampshire, and New York have the highest rates at 51%.

Revenue from sports betting in Kansas increased by about 19% to $216.7 million in 2024.  Nearly 99 percent of the action involved mobile bets.  Less than $22 million was the state's portion.

All other types of revenue from commercial casinos are subject to a 27% tax in Kansas.  The state received over $100 million from that.  Tribal casinos in Kansas are not subject to state taxes.

Taxing Offshore Bettors

When it comes to considering additional taxes on sportsbooks, Kansas is not an exception.  Over the course of the last 12 months, Illinois has increased its effective tax on sports betting revenue twice. This includes a 20 cent per-bet fee that increases to 50 cents if a licensee facilitates more than 20 million bets annually.

This year, New Jersey increased its tax on internet sports betting from 15% to 19.75%.  When sports betting initially started in 2018, the state levied a 13% tax on sportsbooks.

This year, Louisiana increased its tax on sports betting from 5% to 21.5%.

Consumer advocacy groups are concerned that the state's ongoing tax increases will drive gamblers back to local bookies and abroad.  Tighter odds or less promotions and incentives to keep their business are common ways that higher taxes are transferred to consumers.