The Kansas Sports Betting Market is Heading Toward Major Change

The Kansas sports betting market is speeding toward major changes. And though some of them may be temporary, others will have a lasting impact on The Sunflower State—as well as, potentially, the legal sports betting at large.

Earlier this year, the Kansas legislature ed a bill that effectively bans the Kansas State Lottery. Since that department oversees the regulation of sports betting in Kansas, many are wondering whether this will impact the state’s gambling operations. Some have even posited that Kansas online sportsbooks could be forced to shudder as a result of the ruling.

For the time being, at least, the most extreme scenario isn’t on the table. The potential expansion of sports betting in Kansas is now definitely on hold. But lobbyist Jeremy Kudon put to bed the idea of current operators landing in jeopardy. “Just want to clarify: None of the leading OSB operators in Kansas will go dark as a result of today’s vote,” he posted on X (formerly Twitter).

It turns out, as Kudon also notes, that Kansas sports betting sites have contracts with the state that extend through 2027. They should be safe until then, at least, because they do not have to renegotiate deals with the state.

Still, the age of this bill portends some change. Immediately, it wasn’t quite clear what that would be. Now, however, certain ramifications are beginning to take shape. 

Kansas Sports Betting Tax Rate Could be on the Rise

The most prominent of potential changes that may come about is the prospective increase of the Kansas sports betting tax rate. As Anna Kaminski explains for the Kansas Reflector:

“The Legislature’s moratorium, which will apply to fiscal years 2025 and 2026, could open up Kansas’ sports betting market to new regulations or more influence from state lawmakers if they decide to take up the issue in the 2026 session. Among possible changes, one option is an increase in the share of money the state collects from sports wagering revenues. The state currently collects 10 percent of all revenue from both mobile and retail platforms.”

If this is the most groundbreaking thing to come out of the Kansas lottery ban, it isn’t all that seismic. In fact, revisiting tax rates has become standard practice.

With legal online sports betting in the United States now roughly seven years old, policymakers are looking to capitalize even further on what is considered a lucrative revenue stream. Sportsbooks are accepting hundreds of billions of dollars in bets every year. It should come as no surprise that states want a larger piece of that pie.

Kansas has ample reason to be particularly thirsty, too. A 10 percent tax rate is on the lower end for the United States, especially when looking at online operators. Sure, not every market has the leverage to tax sportsbooks at a 50 percent clip, like the New York sports betting market does. But smaller and similarly sized markets, such as Illinois (20 to 40 percent) and Massachusetts (20 percent), have rates that are double the size or larger of Kansas’ current sports betting tax.    

Raising the Tax Rate Can Make a Monumental Difference

Right now, we do not know what type of tax rate Kansas might target. Select markets have sought to implement 40 percent or larger clips. Many of those attempts have failed. 

To say on the conservative end, let’s say Kansas sports betting starts charging a 20 percent tax rate. In 2024, The Sunflower State generated $12.7 million in sports betting tax revenue. Since the new (theoretical) tax rate would be double the current 10 percent, this means Kansas would have made $25.4 million off sports betting last year if the 20 percent clip was already in place. That is a massive difference in raw dollars. 

The question, of course, is whether the state has the lever over sportsbooks to increase taxes. 

Kansas will Face Push-Back from Sports Betting Operators

Sports betting tax hikes typically receive plenty of push-back from operators. That makes sense. Sportsbooks are in the money-making business. They will protect their profit margins whenever possible.

At the same time, they have withstood tax increases inside other markets. Kansas will be no different. The Sunflower State isn’t the biggest market, but it’s still a medium-sized earner relative to other states. 

What’s more, online sports betting sites in the USA will likely look to preserve their presence in active markets more than ever. The industry has not peaked, so to speak. But as it becomes less novel, exponential growth will give way to incremental growth. Eventually, the progressive curve could flatten out—or close to it. That’s the natural order of operations. 

Market expansion can help combat stagnancy. But fewer than a dozen states have yet to legalize some form of sports betting. At least a handful of those holdouts will inevitably change course. Some won’t. Regardless, the market for expansion isn’t endless. And sustaining exponential growth even in the near term can prove difficult so long as flagship markets like Texas and California remain out of the loop.

This all serves to give the Kansas sports betting market plenty of leverage. Their power is even greater when you consider current operators must renegotiate their compacts in just a couple of years’ time. If they want to stay put, they’ll consent to a tax increase. 

Granted, it may not be as steep as Kansas initially seeks. But if we fast forward to 2027, and the state’s sports betting tax still sits at 10 percent, it’ll be a legitimate surprise. 

Take a look at this list of the top online sportsbooks so you can find one that works for all of your sports betting needs: