Kansas lawmakers may soon be following the trend of raising tax rates on the state’s sports betting operators.
Some legislators believe the state should be generating more revenue from the industry. Kansas has one of the lowest rates in the country, taxing its sports wagering revenue at 10%. But sportsbooks are able to write off its promotional spending, thus making the effective rate for most operators 6.5%.
However, that could change soon as lawmakers discussed ways to increase revenue during a meeting of the Special Committee on Federal and State affairs on Monday.
Funds Could Be Used To Attract A Pro Sports Team
Last year, the state collected $17 million worth of taxes from sportsbooks. But only Arizona and Michigan have lower tax rates on their sportsbooks.
Arizona taxes online sports betting revenue at a 10% clip, and in-person betting revenue 8%. Michigan taxes all sports betting revenue at 8.4%.
“There has been some concern over the amount of money that the state actually gets as far as actual hard revenue from this section of the betting,” said Rep. Tom Kessler. “We’re talking about the finances of it, where that money is at, where that money goes, and whether or not there’s a better path.”
The Sunflower State legalized sports betting in 2022. Since then, most of the tax revenue has gone to a fund to help attract a pro sports team to the state.
According to local media, lawmakers hoped to attract either the Kansas City Chiefs or the Kansas City Royals to move from the Missouri side of the border to the Kansas side.
Both states have made pitches to the two franchises. In its latest proposal to the Chiefs, Jackson County officials promised a new stadium deal if the NFL franchise crossed the state line.
Kansas would be the latest in a long line of states hiking taxes on its state’s sportsbooks.
Earlier this year, Louisiana, Illinois, Maryland, and New Jersey all passed tax hikes on the industry.
Illinois’ tax hike was the steepest. In the Land of Lincoln, operators pay a 25-cent tax on the first 20 million wagers they accept. Then, the tax doubles to 50 cents for every bet beyond that threshold.
As a result, some sportsbooks enacted transaction fees for their Illinois customers. There’s no indication Kansas would do anything that drastic.
