With a U.S. Supreme Court decision on the horizon, lawmakers in Kansas and Missouri are grappling with whether to legalize sports betting and bring an illegal, underground market into the light.
The National Basketball Association and Major League Baseball are hoping to weigh in on how they do it.
In both states, lawmakers are considering a slate of bills that would legalize betting in casinos. Some bills also would allow betting online. Leagues that oppose betting, like the National Collegiate Athletic Association, could opt out.
Supporters argue that illegal gamblers already bet more than $150 billion a year, a figure reported by the American Gaming Association.
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“This happens. These office pools, this gaming happens in the state already underground. Why not bring it to the light and tax it so that someone can benefit from it?” said Missouri Rep. Justin Alferman, a Hermann Republican.
Alferman is sponsoring one of the sports betting bills up for consideration in Missouri.
The NBA supports legalized sports betting. The Kansas City Royals and MLB won’t offer explicit support for gaming, but want a hand in shaping the regulations around the new market. The NBA and MLB each have four lobbyists in Kansas and seven in Missouri, according to lobbyist registration records from both states.
The U.S. Supreme Court may issue a decision this spring that would overturn a federal ban on sports betting, which is illegal in all but a handful of states. That has betting supporters rushing to pass bills in numerous states that would authorize bets if the court weakens or eliminates the ban.
“Our conclusion is that the time has come for a different approach that gives sports fans a safe and legal way to wager on sporting events while protecting the integrity of the underlying competitions,” the NBA said in a statement to lawmakers in both states.
The MLB, as well as the Royals, “are not advocating for the state to pass a sports betting legalization law,” Kevin Uhlich, senior vice president of business for the Royals, told Kansas lawmakers.
“But if the state does pass such a law, it must — first and foremost — guard our sport and our fans from the risks of corruption associated with sports betting,” Uhlich said.
The Kansas Lottery is generally in favor of the bill, said Keith Kocher, the Lottery’s director of program assurance and integrity. He added that the organization is still working with supporters on some details.
Bills in both states would allow people 21 and older to place bets and would bar athletes, coaches and other people associated with the games from betting on their own sport.
Studies show sports wagers in Kansas could reach between $1 billion and $2 billion a year. Winning wagers would be paid 95 percent of the gross wagers, leaving 5 percent for administrative costs, fees and profit.
The sports leagues would receive a royalty of 0.25 percent of the total amount wagered.
Assuming Kansans place $1.5 billion in bets, the state could potentially take in about $70 million in revenue, according to the state budget office.
Two Missouri bills would legalize sports betting in casinos, and one of those would legalize it online. That bill would also give 1 percent of total wagers to the leagues, which proved a point of contention Wednesday in a Missouri House committee.
A third Missouri bill would open the door for sports betting, but set forth little regulatory framework.
Missouri would impose a tax on the gambling winnings and could bring in anywhere from $9 million to $15.3 million depending on the tax rate. One bill proposes a 6.25 percent tax; the other, 12 percent. The third would raise nearly $40 million at the higher tax rate already in place for other casino games.
In Missouri, gambling proceeds must go to education.
Kansas and Missouri are not the only states trying to capture some of the sports betting dollars flowing to Nevada or into illegal gambling, said Rep. Jan Kessinger, R-Overland Park. More than a dozen states are considering or have passed sports betting bills, according to Legal Sports Report, which tracks legislation nationwide.
“It is not an expansion of gaming, rather the embracing and regulation of gaming methods currently being done either illegally or via other states,” said Kessinger, who introduced one of the Kansas bills.
Several Kansas casinos oppose the bill, saying the sports leagues should not receive a cut of the wagers because they don’t contribute to the state’s economy. They also say any sports betting should be conducted on-site and not online to maximize the benefit to local communities and ensure bettors are of age.
Whitney Damron, a lobbyist for Hollywood Casino at Kansas Speedway, told lawmakers they can wait until next year to take action. Then they’ll know the outcome of the Supreme Court case and the Legislature can examine sports betting laws passed in other states.
The Missouri Gaming Association also took issue with the royalties proposed in one of the Missouri bills because it would cut into casinos’ revenue. Lobbyist Mike Winter said this year’s Super Bowl attracted $150 million in bets to Nevada with a profit of $1.1 million for sports books there. The proposed integrity fee, he said, would have more than wiped out that profit.
“We’re not talking about some insignificant sliver of money,” Winter said.
But MLB’s senior vice president of investigations and deputy general counsel, Bryan Seeley, said the “integrity fee” would help MLB beef up its integrity and investigation staff to monitor the advent of legal sports gambling. He said MLB has been opposed to sports betting for over 100 years “because it does post a risk to our game.” He pointed to the Black Sox Scandal and former Cincinnati Reds player and manager Pete Rose’s gambling.
“If we were to have another scandal, it could cost us tens of millions of dollars,” Seeley said. “It could cost our brands and cost our clubs.”
The Kansas House Federal and State Affairs Committee held a hearing on the bill this past week. Rep. John Barker, an Abilene Republican who chairs the committee, cautioned the bill will likely not advance out of the committee this year because lawmakers want to take time to study the issue.
Still, that doesn’t mean the legislation is necessarily done for the year. Supporters could try to offer it as an amendment to other legislation during House debate.
Missouri lawmakers considered all three bills Wednesday, but they still face a committee vote.