.svg)
Kansas lawmakers have approved a provision in the state's budget law that sets the stage for changes to the state’s sports-betting tax rate.
The provision passed on Friday (April 12) bars the Kansas Lottery from negotiating any new contracts or contract extensions with casinos for the management of sports betting at any point during the upcoming fiscal year, which runs through June 2026.
Kansas Governor Laura Kelly had issued a line-item veto of the provision on Thursday after the budget was passed last month. But later that day the Senate voted to override the governor's veto, and the House followed suit on Friday.
Each of the state’s six sports-betting operators have management contracts that run through August 2027, or five years following the state’s 2022 sports-betting launch, so no contracts are at imminent risk of expiring.
However, the move does allow the state legislature to reassess the state’s sports-betting model, which has frustrated some lawmakers due to a low 10 percent tax rate and accompanying provisions that allow operators to fully deduct promotional play from taxable revenues.
“We are one of the states with the lowest amount of money that we’re getting from sports wagering, and it’s all due to the original contract and how they split things up,” said Representative Barb Wasinger, who proposed the budget provision during a House committee hearing last month.
Wasinger said negotiations to extend the contracts of sports-betting operators are already underway.
“That’s not helping Kansans, so we would like to be able to stop the negotiations so that we have time to renegotiate the percentage of what we get and how it plays out.”
Some Kansas lawmakers wanted to revisit the tax rate situation earlier, following an initial marketing blitz that led some operators to report little to no taxable revenue after deducting bonuses and other promotional expenses.
The deductions sliced the state’s effective tax rate to 3.9 percent of total revenue in fiscal year 2022, 5.8 percent in fiscal year 2023, and 6.6 percent in the current fiscal year, which runs through June 30.
However, Kansas Lottery officials had warned that since the operators had signed five-year contracts under those fiscal terms, the state could face legal issues if the tax rate or deductions were changed.
“The folks that are building the sports wagering platforms, the retail sportsbooks, they’re investing the money, they’re doing that based upon an assumption of what the rate is at that time,” Keith Kocher, Kansas Lottery’s director of gaming facilities, told local online news outlet The Beacon in 2023.
“If it was going to be changed, then they might have an argument that, ‘Hey, we wouldn’t have built the Taj Mahal, we would have built, you know, the tree house’.
“The legislature can change the law. There’s no question about that; they have that inherent right,” Kocher added. “Now, the consequences of doing that are unknown.”
By pausing any effort to extend contracts for sports betting, the Kansas legislature has likely set up a debate during the state’s 2026 legislative session to revisit the sports-betting tax rate.
Friday was the last day of this year’s regular legislative session and state lawmakers will not reconvene in Topeka until January, unless a special session is called.
