Kansas’ Sports Betting Bill Includes Royalty Provisions

Kansas’ lawmakers have long been debating the idea of legalizing their sports betting & online gaming industries. After PASPA was repealed and the state’s staggering pension problem loomed, some have been more inclined to embrace these solutions, but as it turns out – for the wrong reasons.

Kansas Lawmakers Would Say ‘Aye’ to Sports Betting, But…

Kansas is not the warmest place for sports betting presently. The industry is de facto non-existent, with new plans being charted about the introduction of regulated market for placing wagers.

However, the majority of lawmakers agree that all sports betting should be levied with integrity fees, which will be paid to major sports competitions throughout the country, meaning the NBA, NFL, NHL, and MLB.

Integrity fees have been a long debated, and somewhat dismissed, issue, with the majority of business experts, observers, gaming brands, and even politicians agreeing that there’s little evidence to suggest the necessity for such measures.

Missouri to Mull Sports Betting Royalty Fee in January, 2019

Some of the leagues and individuals to support the measures have decided to drop the subject and focus on the windfall that sports betting grants their entrusted bodies. Similarly, Adam Silver, the NBA’s commissioner, originally requested integrity fees, arguing that leagues were entitled to these “royalties“, but Mr. Silver has since relented.

NBA General Counsel Dan Spillane has also been another high-profile executive who had demanded that leagues should be paid “royalties,” not integrity fees. Here’s what Mr. Spillane said, cited by CDC Gaming:

It’s a royalty in a way. These are our games. (They) are the backbone of the whole business of sports betting, and we think it makes sense for us to be compensated. We’ve invested billions of dollars in creating this product. You can’t have sports betting without our game.

We generate a lot of fan interest … that translates into people participating in sports betting. We think it’s reasonable for us to be compensated for that input just like every other supplier.

However, the focus has shifted towards banking on providing reliable sports betting data in real-time when the NBA signed its first gambling data deal with Genius Sports Group and Sportradar AG in November, 2018.

Senate Bill No. 23 Is Readying to Introduce Land-Based and Online Wagering

Kansas is now looking at Senate Bill No. 23 which is more commonly referred to as the Kansas Wagering Act. Should the Act be passed successfully, bettors on the territory of the state would enjoy land-based and online (mobile) sports betting.

However, as per the specifications of the bill, the operator of these actions will be the Kansas Lottery, essentially centralize the control over the industry in the hands of the state.

The market will not be shut down for retailers, racetracks and gaming facilities, which have entered into a successful agreement with the Kansas Lottery.

The Integrity Right/Fee Provision in Bill No. 23

Kansas’ efforts to regulate its sports betting market come with the determination to introduce the so-called integrity fee or “right”. Under the terms of the Bill, operators will have to pay the royalty at the end of each quarter, meaning January 1, April 1, July 1, October 1.

The fee required by this section shall be in an amount equal to 0.25% of the aggregate amount wagered on sporting events […] such fee shall not exceed an amount equal to 5% of the aggregate gross revenue on wagers placed on sporting events.

The integrity fee is estimated at 0.25% of the operator’s total wagers generated from sports events. While this could bite seriously into the profits of companies, the Bill also specifies that this amount cannot exceed 5% of the GGR in the quarter.

If Kansas is successful, the state will be the first place to effectively pass a sports betting law where integrity fees are part of the active legislation. Washington D.C. also tried to introduce royalty fees in its own legal framework for sports betting, but the idea was dropped altogether later.