Sports betting legislation is moving forward in several states, including Kansas, Missouri, Oklahoma and West Virginia. Lawmakers there want to be ready to legalize and regulate sports betting if and when the U.S. Supreme Court lifts the federal ban, which could happen this spring.
Like sports betting legislation proposed in Indiana and Illinois, the controversial 1 percent integrity fee is included in sports betting legislation in Kansas and Missouri. In Kansas, the House Committee on Federal and State Affairs is considering HB 2752, sponsored by state Rep. Jan Kessinger. It would permit legal sports betting at casinos and online, on college and professional sports, regulated by the state lottery.
Kessinger said legalizing sports gambling would allow the state to regulate it, which would protect consumers and bring $100 million in additional revenue to the state.
“If, as the American Gaming Association said, $1.3 billion is already being bet in Kansas, why would we not want to regulate it? Currently, you’ve got illegal betting going on. Let’s regulate it. Let’s control it, and let’s from that generate $100 million in revenue,” Kessinger said.
The integrity fee would be paid to any sports governing body overseeing an event on which bets are placed. Major League Baseball and the National Basketball Association are behind the fee; their lobbyists have been circulating “model legislation” which the Kansas bill includes nearly word-for-word. Analysts have stated the fee essentially is a 20 percent tax on typical sportsbook revenue and could destroy any viable business model.
In addition to the integrity fee, the leagues also want right to “restrict or limit wagering on a sporting event” after providing notice; the right to impose “restrictions on the sources of data and associated video upon which an operator may rely in paying wagers;” the right to restrict the types of bets that may be offered; and the right to collect real-time information on operators’ wagers.
Sports wagering revenue would be taxed at not less than 6.75 percent, the same rate as in Nevada. Licenses may be negotiated on a case-by-case basis so that rate could be higher in some instances.
Kessinger said, “The biggest obstacle sports betting would face in Kansas is from those who construe it as an expansion of gaming.” He said his measure is not expanded gambling; it offers another game at casinos already operating in the state under the authority of the lottery.
In a statement, the Kansas City Royals said, “The legislation contains some of the strongest possible protections and requirements for the lottery to work hand-in-hand with Major League Baseball to monitor betting. Our relationship with our fans requires nothing less, and if the legislature is going to pass a sports betting law, it must contain the protections included in this bill.”
Sports betting legislation in Missouri also includes the 1 percent integrity fee. The Comprehensive Missouri Sports Betting and Sports Protection Act includes bills sponsored by state Senator Denny Hoskins and state Rep. Dean Plocher. The bills would allow sports betting on riverboats and online through those riverboats’ platforms. Hoskins estimated legalized sports betting could bring in $18 million – $40 million in new revenue for the state.
Plocher said, “If federal law changes to allow states to authorize sports betting, Missouri should be leading the nation in implementing an intelligent and controlled/monitored sports betting market. We are one of the biggest sports states in the country and have a robust and effective gaming network at our casinos, so we are as well positioned as any state to implement sports betting.”
Missouri
Like the Kansas bill, the Missouri legislation also permits the sports leagues to control the data used in Missouri sports wagering and grants the leagues a right to restrict which wagers a sportsbook can offer.
Hoskins considers the integrity fee as a “partnership.”
“Missouri should be lead the way in partnering with the sports leagues to implement a strictly monitored sports betting market that protects consumers and preserves the integrity of the sports we love,” he said.
MLB attorney Bryan Seeley stated the integrity money would help the league ensure the “integrity” of the game by making sure players don’t bet on games, for example. He added the teams should receive a portion of the profits since they provide entertainment. “We believe compensation is appropriate,” Seeley told lawmakers. St. Louis Cardinals lobbyist Chris Roepe added, “This is the path that we think protects the integrity of the game.”
The bills would tax adjusted gross receipts at 12 percent, and add on a 2 percent administrative fee for the Gaming Commission Fund.
A survey by the American Gaming Association found more than 1.3 million Missourians spend about $2.8 billion on illegal sports betting every year, Hoskins said. “This has a major impact for our state, our citizens and our business community. For every dollar placed on an illegal sports bet, that’s one less dollar in tax revenue that could be invested in improving the lives of individuals and families across Missouri.”
The casino industry opposes the integrity fee and is supporting state Senator Caleb Rowden’s bill that has a lower overall tax rate and gives the Missouri Gaming Commission greater regulatory power.
“I believe my bill provides a better path forward,” Rowden said.
But Kansas City Royals Senior Vice President Kevin Uhlich said found fault with Rowden’s bill. “As noted, the right for a casino to profit on sports betting must come with serious responsibility and robust, air-tight requirements, as the stakes are simply too high,” Uhlich said.
Missouri Gaming Association Executive Director Mike Winter commented that sports betting has a low profit margin. Casinos are more interested in legalizing it in order to bring more people to the on-site sports book. “We don’t see this as a huge panacea for us,” Winter said.
The Missouri legislative session will end May 30.
Oklahoma
In Oklahoma, the House Appropriations and Budget Committee recently voted 17-8 in favor of a bill that would bring legal sports betting to Oklahoma casinos operating under the State Tribal Gaming Act. Sponsored by state Rep. Kevin Wallace, the measure would allow the approximately 70 tribal casinos operating across the state to offer sports pool wagering “on the outcome of sporting events or other events, other than horse or other animal races.”
Sports book revenue would be taxed at 10 percent, as proposed in West Virginia’s sports book legislation. Based on that rate, exclusivity fee revenue would be an estimated $9.8 million per year, with $8.6 million directed to the Education Reform Revolving Fund and $1.2 million to the General Revenue Fund.
The bill does not include an integrity fee and does not spell out procedures or regulations regarding how sports wagering would be conducted.
West Virginia
In West Virginia, the House Finance Committee approved Senate Bill 415 which would legalize sports betting at the state’s five casinos and on smartphones.
Lottery Commission Chief Accountant Paul Barrett said sports betting would attract players from the 10 million out-of-state population that lives within 90 miles of a West Virginia casino. “We believe 70 percent of our traffic will come from out-of-state,” he said.
John Cavacini, West Virginia Racing Association president, said the casinos hope to replicate the success they had when West Virginia was the first state in the region to legalize casino table games.
The Lottery Commission estimated sports betting could raise about $5 million in first-year revenue, but a Lottery-commissioned study indicated sports betting eventually could generate $182-$315 million or more annually. Taxed at 10 percent, the state could receive $18-$30 million a year.
The bill now will go to the full House.
New York
Twin measures to revive the prospects for legal sports betting in New York have been routed to the Judiciary committees of the state Assembly and Senate.
The bills, S1282 and A5438, both dating back to February 2017, were reintroduced by Tony Avella and David Weprin, respectively, both Democrats representing sections of the New York City borough of Queens.
Both propose to amend the state constitution to authorize gambling on professional and collegiate sporting events at racetracks, OTBs and casinos, depending on regulations to be drawn up and passed by the legislature.
To get to that point, though, a unified measure would have to be approved in successive legislative sessions and then go before the state’s voters in a referendum, which means legalization couldn’t occur before the fall of 2019
